Hunton Insurance Recovery Blog

On August 25, 2020, an article by Syed Ahmad and Michael Huggins was run in Mealey’s Insurance concerning the use of direct and circumstantial evidence to show the presence of COVID-19 for purposes of seeking business interruption coverage.  A key takeaway from the article is that direct evidence of COVID-19 at a premises, such as through positive test results, may not be necessary to establish the presence of COVID-19.  Instead, insurers and courts should consider circumstantial evidence, with equal weight as may be given direct evidence, such as witness testimony that employees ...

Hunton special counsel Scott DeVries was quoted August 14 in a Bloomberg Law article titled “More Virus Insurance Suits Could Follow as Consolidation Fails.” The article discussed a federal panel’s refusal to centralize hundreds of businesses’ lawsuits against their insurers over pandemic-related coverage. Elaborating on the ruling, DeVries observed that “Insurance contracts are a matter of state law interpretation, so I would be surprised if there weren’t different rulings in different jurisdictions. You could see how some policyholders might have held off on ...

The My Choice Decision

On August 19, 2020, the Ninth Circuit issued its decision in My Choice Software, LLC v. Travelers Casualty Insurance Co. of America, No. 19-56030, 2020 WL 4814235, holding that longstanding rules of insurance policy construction required reversal of a district court holding denying a duty to defend. Specifically, the Court determined that the Intellectual Property Exclusion in a Travelers policy did not unambiguously preclude the possibility of coverage for a claim against the Insured, My Choice, and that Travelers accordingly had a duty to defend.

Over the past couple of months, we have written on decisions by various European insurers to pay policyholders for their COVID-19 related losses. That positive trend is now moving across continents.

On August 18, 2020, the United States Court of Appeals for the Eleventh Circuit affirmed a District Court’s 2018 ruling that Sparta Insurance Company need not cover a south Florida restaurant’s lost income and extra expenses resulting from nearby road construction. But, in doing so, the appeals court appears to deviate from even its own understanding of “direct physical loss” under controlling Florida law.

Benchmark Litigation recently identified the Top 250 Women in Litigation. The list is based on an extensive research process, feedback from clients, and one-on-one interviews. Benchmark has identified the litigators who have participated “in some of the most impactful litigation matters in recent history” and have earned “hard-won respect of their peers and clients.” Lorelie S. Masters was included in the list for the seventh time.

In a victory for policyholders, a federal district court found that COVID-19 can cause physical loss under business-interruption policies. In Studio 417, Inc., et al. v. The Cincinnati Insurance Co., No. 20-cv-03127-SRB (W.D. Mo. Aug. 12, 2020), the court rejected the argument often advanced by insurers that “all-risks” property insurance policies require a physical, structural alteration to trigger coverage. This decision shows that, with correct application of policy-interpretation principles and strategic use of pleading and evidence, policyholders can defeat the insurance industry’s “party line” arguments that business-interruption insurance somehow cannot apply to pay for the unprecedented losses businesses are experiencing from COVID-19, public-safety orders, loss of use of business assets, and other governmental edicts.

We previously reported on the July 30 argument before the MDL Panel regarding plaintiffs’ motion to consolidate more than 275 COVID-19 Business Interruption cases.

As the effects of coronavirus continue, organizations and companies now are considering whether events in late 2020 and early 2021 can take place or need to be converted to virtual events.  What insurance effects will those changes and cancellations have? Consideration of these important decisions requires a review of both event-cancellation insurance and a consideration of force majeure and other such issues.

On August 6, 2020, in Rose’s 1 LLC, et al. v. Erie Insurance Exchange, Civ. Case No. 2020 CA 002424 B, a District of Columbia trial court found in favor of an insurer on cross motions for summary judgment on the issue of whether COVID-19 closure orders constitute a “direct physical loss” under a commercial property policy.