COVID-19
Most Courts Are Rejecting All Risk Insurance Policy
Claims Related to COVID-19 The overwhelming majority of courts have concluded that
neither COVID-19 nor the governmental orders associated with it
cause or constitute property loss or damage for purposes of
insurance coverage. So concluded the district court in
Out West Restaurant Gp., Inc. v. Affiliated FM Ins. Co.,
No. 20-cv-06786, 2021 WL 1056627 (N.D. Cal. March 19, 2021). The
court continued, These decisions have reasoned that the virus
fails to cause physical alteration of property because temporary
loss of use of property (if any) during a pandemic and while
government orders are in effect does not qualify as physical loss
In
Berkley Specialty Ins. Co. v. Masterforce Constr. Corp., No. 4:19-CV-01162, 2021 U.S. Dist. LEXIS 14006 (M.D. Pa. Jan. 26, 2021) (Brann, J.), the Court recently concluded that, under Pennsylvania law, all reasonably foreseeable damages to third-party property caused by faulty workmanship do not constitute an “accident” sufficient to trigger coverage under a commercial general liability (“CGL”) insurance “occurrence” policy. The Court also emphasized that there could be no bad faith finding where the insurer has a “reasonable basis for denying benefits” under the policy or where coverage is “debatable.”
The underlying state court action arose after the homeowners contracted with a construction company to install a new standing seam metal roof. Although the company purported to be the contractor that would install the roof, it hired a subcontractor to install the roof and instructed him to conceal his identity as a subcontractor and represent himself as an emp
In Short
The Situation: Corporate policyholders, and
their individual officers and directors, often incur significant
fees and costs when forced to respond to government subpoenas that
may require extensive document productions and testimony.When
responding to subpoenas, policyholders too often overlook whether
their directors and officers ( D&O )
coverage may cover costs associated with those responses.
The Result: Many courts have held that a
subpoena constitutes a claim as defined in most
traditional D&O insurance policies, and similarly have held
that the subpoena need not allege an express wrongful
act to trigger coverage for defense costs.
Looking Ahead: Policyholders should carefully