In their amicus curiae letter, United Policyholders supports coverage of an insured`s business interruption related to the SARS-CoV-2 virus and COVID-19. UP argues that decades of case law and the California State Court of Appeals show what the insurance industry and policyholders have long had. A federal judge in Massachusetts has dismissed a lawsuit filed by an East Coast seafood restaurant chain seeking coverage for losses related to the COVID-19 pandemic, joining a chorus of courts that determine the company`s losses are not due to direct physical loss or property damage. DECADES OF CASE LAW HAVE WARNED INSURERS THAT THE “PHYSICAL LOSS OR DAMAGE” CLAUSE IS BROAD AND NOT LIMITED TO “SIGNIFICANT, DEMONSTRABLE PHYSICAL CHANGES” IN PROPERTY. In its submission, UP addresses a COVID-19 issue for Legal Sea Foods, whose business interruption policy did not include excluding the virus. UP submits that the lower court erred in this case when it concluded that the COVID-19 virus does not affect the structural integrity of the property in the manner provided for by the Directive and therefore cannot constitute “direct physical loss or property damage”. A virus is unable to damage physical structures because “the virus harms people, not property.” Although previous Massachusetts authorities understood that less tangible substances on or in properties such as odors can result in physical loss or property damage, the district court ignored these decisions and instead focused on SAS International, Ltd. vs. General Star Indemnity Co., a key case that leads to both of these points. This letter was written pro bono by John Ellison and Luke Debevec of Reed Smith LLP I.
THE POLICYHOLDER`S INTERPRETATION IS SUPPORTED BY EVIDENCE THAT THE INSURANCE COMPANY INTENDED TO COVER VIRUS-RELATED BUSINESS INTERRUPTION AND REMOVED THE VIRUS-RELATED EXCLUSION BECAUSE IT KNEW POLICYHOLDERS EXPECTED SUCH COVERAGE. Review complaints, responses, requests, orders and treatment notes submitted on January 1, 2011. Additional or older documents may be available in Pacer.
