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Court Says Loose Bolt Remedied by Tightening Does not Constitute “Direct Physical Loss of or Damage” to Property

In AMAG Pharmaceuticals, Inc. v. American Guarantee and Liability Insurance Company, the United States District Court for the District of Massachusetts held that a loose bolt or fitting that could be remedied simply by tightening it did not constitute “direct physical loss of or damage” to equipment covered under an all-risk property insurance policy.[1] About The Author

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Posted in Uncategorized

Oklahoma Supreme Court Rejects “Loss of Use” Argument, Nixes COVID-19 Business Interruption Suit

There is a clear nationwide trend of federal courts disposing of COVID-19 business interruption suits.[1]  Insureds are not clearing their initial burden to establish direct physical loss or damage to property, or they are running afoul of virus and contamination exclusions.  Relatively few state supreme courts, however, have weighed in to resolve the issue, thereby providing guidance to their own lower courts and federal courts that must follow state law.[2]  Insurers and insureds alike have been watching to see which way the Oklahoma Supreme Court would hold.  In Cherokee Nation v. Lexington Ins. Co., 2022 OK 71, the Court joined the national mainstream and ruled against the insured.  About The Author

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Wind Before Storm May Blow Away Flood Exclusions

Flood exclusions may not apply when floods are preceded by winds strong enough to independently cause the loss, according to a recent decision issued by the Western District of Louisiana. In Doxey v. Aegis Security Ins. Co., No. 2:21-CV-00825, 2021 WL 2383834 (W.D. La. Jun. 10, 2021), an insured sought coverage for wind damage sustained to his home by Hurricane Laura under a property insurance policy that excluded coverage for damage “caused by, contributed to or aggravated by” flooding. The policy also contained an anti-concurrent causation clause, which excluded losses caused by excluded perils “regardless of any other cause or event contributing concurrently or in any sequence to the loss.” The insurer denied coverage under the flood exclusion on the

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Posted in Causes of Loss, Windstorm

Coronavirus: Is There Coverage Under Property Insurance Policies?

Coronavirus (“COVID-19”) has disrupted events, supply chains, sales, and entire industries.  As a result, businesses are going to look to their property insurers to recuperate lost business income, as well as expenses related to cleaning, sanitizing and decontamination.  The first lawsuit alleging a business interruption loss was filed yesterday in Louisiana, and there are most likely others that will be filed in the coming days and weeks. Almost all property policies require direct, physical loss or damage to property to trigger coverage.  Whether claims related to COVID-19 can meet this threshold requirement largely depends on whether the case law in a given jurisdiction construes the phrase “direct physical loss or damage” narrowly or broadly.  In addition, an analysis of the

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Posted in Coverage
About The Property Insurance Law Observer

For more than five 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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