The Minnesota Court of Appeals recently handed policyholders an important win in Life Time Inc. v. Zurich American Insurance Co., reversing a trial court ruling that had capped coverage under a communicable disease endorsement of a commercial property policy at the $1 million per-occurrence limit.

Relying on the express language of the communicable disease coverage at issue, the appellate court held that government shutdown orders — not the COVID-19 pandemic itself — constituted the operative occurrences under Life Time’s policy.

By interpreting the cause of loss in this way, the court expanded Life Time’s recovery from a single $1 million per-occurrence limit to 29 separate limits, one for each jurisdiction that independently ordered closure of Life Time’s business operations.

The Dispute

Life Time, a national fitness company, purchased a Zurich commercial all-risk insurance policy for the policy period of Dec. 15, 2019, to Dec. 15, 2020. In addition to broad coverages for physical loss and damage to property, the policy provided a stand-alone grant of coverage for “Interruption by Communicable Disease.” This coverage provided up to $1 million per-occurrence limit, without any aggregate limit other than the policy's full coverage limit of $350 million, when governmental orders addressing communicable disease resulted in the suspension of Life Time’s business activities.

In 2020, state and local authorities issued orders shuttering Life Time’s 150 health clubs nationwide. Life Time sought coverage under the policy’s communicable disease endorsement. The insurer argued that the totality of Life Time’s claimed loss resulted from the pandemic — a singular cause of loss — thus limiting coverage to a single $1 million per-occurrence limit. The trial court agreed, awarding summary judgment to Zurich.

The Court’s Decision

The Court of Appeals reversed. The court correctly began its analysis with the communicable disease coverage grant of the policy, which expressly predicated coverage on “order[s] of an authorized governmental agency enforcing any laws or ordinance regulating communicable disease.” The court reasoned that without such an order, there could be no coverage under the policy.

The court concluded, therefore, that it was government action in the form of various orders that triggered coverage under the policy. From that, the court reasoned that Life Time’s losses, which stemmed directly from the governmentally ordered closures, were caused by each independent order or body of orders issued by a single jurisdiction.

Zurich argued that it was the pandemic that caused Life Time’s loss. The court rejected that argument as being inconsistent with the policy language and requiring it to effectively rewrite the policy.

The court also rejected Zurich’s reliance on proximate cause cases and noted that Minnesota courts apply a more pragmatic approach of relying on the policy language in determining what constitutes an occurrence under the policy. Here, the court held that Life Time’s losses did not flow directly from the mere existence of COVID-19, but from discrete government decisions to close gyms at different times and in different places.

In the court’s view, each order was an independent cause of loss and separate from the threat of the spread of communicable disease, even if prompted by the same underlying public health threat.

Having determined that shutdown orders were the operative cause of Life Time’s losses, the court next turned to the orders to determine the number of occurrences, each of which implicated its own per-occurrence limit. In doing so, the court examined whether multiple orders could be treated as part of a “series of similar or related causes.”

The court held that orders from different jurisdictions were issued independently and therefore should be treated as separate occurrences. Consistent with that reasoning, the court held that multiple orders from the same jurisdiction — such as renewed shutdowns after temporary reopening — were sufficiently connected such that they would aggregate to a single occurrence.

Applying this framework, the court found that the loss arose out of 29 independent occurrences, affording Life Time a potential recovery up to $29 million.

Following the Court of Appeals’ decision, Zurich filed a petition for review with the Minnesota Supreme Court on Sept. 8. The Minnesota Supreme Court has yet to indicate whether it will exercise its discretion and review the decision.

Key Takeaways

As it stands, the Minnesota Court of Appeals' decision in Life Time offers several important lessons that extend well beyond the context of the COVID-19 pandemic and related litigation.

First, the case illustrates the power of precise policy wording. The communicable disease endorsement at issue did not hinge on the mere existence of COVID-19; it expressly required governmental action as the coverage trigger. By enforcing that language as written, the court rejected Zurich's attempt to rewrite the policy by framing the pandemic as one overarching occurrence.

For policyholders, the takeaway is clear: Endorsements and specialized provisions often contain narrower or alternative triggers that can unlock coverage, even when insurers — such as Zurich here — press for occurrence aggregation to limit coverage. Practitioners advising policyholders should scrutinize those provisions carefully before conceding to a broad single cause theory.

Second, Life Time shows that occurrence analysis is highly fact-dependent. The court treated separate government shutdown orders as distinct occurrences but aggregated multiple orders within the same jurisdiction. This approach highlights that occurrence counting is not a rigid formula, but a contextual inquiry guided by policy language and the nature of the triggering events. Coverage practitioners should be prepared to marshal the factual record — the timing, source and independence of each triggering act — to argue for or against aggregation.

Third, the ruling has drafting implications for insurers and negotiation implications for policyholders. If insurers intend to collapse related events into a single occurrence or cap coverage across jurisdictions, they must write that intent explicitly into the policy. The absence of such language leaves room for courts to recognize multiple recoveries. Policyholders and their counsel should take advantage of this drafting gap, both in litigated disputes and in renewal negotiations where clearer occurrence aggregation provisions may be proposed.

Fourth, as the Life Time opinion shows, the number of occurrences directly affect the quantum of recovery under the policy. This impact should be evaluated and addressed, in light of the risk and exposure to be insured, at the front end of the procurement process to ensure that the number of occurrences defense does not adversely affect recovery on account of policy deductibles or retentions.

Finally, while most, but not all, COVID-19 coverage suits are resolved, the issues raised in Life Time will recur in coverage litigation with different factual predicates. The same occurrence analysis will apply to disputes over long-term claims, data breaches, supply chain disruptions, environmental releases and construction defects.

In each case, the battle lines will be drawn around whether a series of related acts is one occurrence or multiple occurrences. The Minnesota Court of Appeals' reasoning provides fresh support for treating distinct events or incidents as separate occurrences, a position that can significantly expand available limits under the policy.

For policyholders and their counsel, Life Time is a reminder that courts remain willing to enforce coverage grants as written — and that careful attention to policy language can make the difference between a capped recovery and a meaningful one.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.