May.24.2021
Courts Dismiss COVID-19 Business Interruption Claims
On May 13, 2021, the district court for the Northern District of Georgia granted American Family Insurance Company’s and Midvale Indemnity Company’s motion to dismiss a COVID-19 business interruption claim filed by the operators of two barbeque restaurants. The court concluded that the plain meaning of the phrase “direct physical loss” requires that there be “actual, physical damage to the covered premises” and the plaintiffs failed to allege any change to the physical condition of property due to COVID-19 closure orders. Order at 11. The court further found that the policy’s unambiguous virus exclusion bars coverage because the plaintiffs “claim no losses that were not caused, at least indirectly, by the virus.”
May.18.2021
Courts Dismiss COVID-19 Business Interruption Claims
On May 7, 2021, the district court for the Northern District of Illinois granted Westfield National Insurance Company’s motion to dismiss a Chicago bakery and a salon’s complaint alleging coronavirus-related business interruption losses. Determining the virus exclusion unambiguously bars coverage for loss indirectly caused by the coronavirus, the court found meritless the plaintiffs’ argument that the government closure orders, rather than the virus, caused their losses. Order at 7-8. Including the virus exclusion within the policy “undercuts” any argument “that Westfield unjustifiably denied” their claims.
Id. at 10.
On May 10, 2021, the Circuit Court of Cook County, Illinois granted with prejudice Motorists Commercial Mutual Insurance Company’s motion to dismiss a COVID-19 business interruption claim filed by the operator of automobile dealerships and repair shops. The court found that business in
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On May 12, 2021, New Jersey Governor Phil Murphy signed into law a bill requiring insurers to go on record as to whether their policies, which provide coverage for the loss of use and occupancy and business interruption, cover global virus transmission or pandemics. The law first requires an insurer to disclose to new and renewing insureds whether the policy provides such coverage. The Commissioner of Banking and Insurance prescribes the form and manner of providing this notice for this first provision. The law also requires any insurer who has in force such a policy to so inform its insured in writing (via mail or electronic means) within 30 days of the date of enactment.
Can a Tenant Stop Paying Rent as a Result Of COVID-19?
When the government ordered the closure of all non-essential
businesses, tenants quickly turned to their leases to see if the
pandemic would qualify as force majeure and discharge them from
their rent obligations.
Hengyun International Investment
Commerce Inc.
v.
7614
Québec Inc., 2020 QCCS 2251,
(
Hengyun ) was one of the first Canadian cases
to consider force majeure in the context of COVID-19
government-mandated shutdowns. It sparked hope for tenants that
rent relief was possible.
In
Hengyun, the Landlord and the original Tenant,
VFC, entered into a five-year lease to operate a gym. VFC soon made
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