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Eleventh Circuit Becomes Second Federal Appellate Court To Hold No Coverage For COVID-19 Business Losses

In the second federal appellate ruling on Covid-19 business losses, the Eleventh Circuit has joined the Eighth Circuit in holding that they do not trigger coverage because they do not involve “physical loss” or “physical damage” to property. In Gilreath Family & Cosmetic Dentistry Inc. v. Cincinnati Insurance Co., No. 21-11046, Slip. Op. (11th Cir. Aug. 31, 2021), the insured dentistry practice canceled routine and elective dental procedures at the beginning of the Covid-19 pandemic in response to state orders and CDC recommendations. Because these procedures made up the bulk of its business, the insured lost a substantial portion of its usual income. To recover that lost income, the insured filed a claim for business interruption coverage with its insurer.

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Posted in Federal Appeals

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

JPML Will Not Allow Centralization of MDL Covid-19 Lawsuits

On April 20, 2020, two policyholders involved in Covid-19 class action suits filed the first motion with the Judicial Panel on Multidistrict Litigation (MDL) asking for the transfer and coordination or consolidation of two class actions suits filed in the U.S. District Court for the Eastern District of Pennsylvania with nine so-called “related actions” filed in federal courts in Illinois, Florida, New York, Wisconsin, Ohio, California, Oregon, and Texas and “subsequent tag-along actions.”[1] Others followed suit in attempting to transfer, coordinate, and/or consolidate actions into several MDLs. There are currently more than 100 insurance companies named as defendants in the cases proposed for transfer. About The Authors

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Posted in Business Interuption, Direct Physical Loss or Damage

Correlation or Causation for Coronavirus-Related Business Income Losses

In the wake of the Coronavirus (COVID-19) pandemic, countless businesses have reduced or closed operations—some permanently. Flights have been canceled, hotels and restaurants have closed, and employees have been told to stay home. Naturally, businesses will seek to offset their financial losses during this period. Some businesses may file insurance claims under their Business Income coverage. Common Business Income (and Extra Expense) Coverage Forms might state: “We will pay for the actual loss of Business Income you sustain due to the necessary ‘suspension’ of your ‘operations’ during the ‘period of restoration’. The ‘suspension’ must be caused by direct physical loss of or damage to [covered] property ….” There has been much discussion of what constitutes “physical loss” and of policy

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Posted in Hurricane Ike, Uncategorized

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 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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