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Southern District of New York Holds Contamination Exclusion is Ambiguous as Applied to Covid-19 Business Losses

The Southern District of New York recently held that a contamination exclusion was ambiguous in the context of Covid-19-related business interruption losses. Accordingly, the court held that the issue was inappropriate to decide at the summary judgment stage and denied both parties’ cross-motions for summary judgment.    In Thor Equities LLC v. Factory Mut. Ins. Co., No. 1:20-cv-03380 (S.D.N.Y. Mar. 31, 2021), an insured commercial property owner sought business interruption coverage under its property insurance policy. The parties filed cross-motions for summary judgment, asking the court to determine the applicability of two exclusions, one of which was a contamination exclusion. The exclusion excluded “contamination, and any cost due to contamination including the inability to use or occupy property or any

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Posted in Contamination

Eleventh Circuit Confirms Cleaning is not Direct Physical Loss

The Eleventh Circuit has provided some clarity to Florida businesses and their insurers dealing with COVID-19 claims. In Mama Jo’s Inc., d.b.a. Berries v. Sparta Ins. Co., No. 18-12887 (11th Cir. March 18, 2020), the Court held that a restaurant’s lost income and extra cleaning costs due to nearby roadwork did not trigger coverage because it did not involve direct physical loss or damage. In the underlying case pending in the Southern District of Florida, Mama Jo’s, Inc. v. Sparta Ins. Co., 17-CV-23362-KMM, 2018 WL 3412974, at *9 (S.D. Fla. June 11, 2018), the Court considered whether there was a direct physical loss when construction debris and dust from road work required the insured to clean its floors, walls, tables,

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Posted in Coverage, Direct Physical Loss or Damage
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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