An insurance company is maintaining in federal court that its virus exclusion bars all pandemic loss.
West Bend Mutual Insurance Co. is urging the Seventh Circuit to reject an appeal by an Illinois bar and a jewelry store in their business interruption suit. West Bend argued that their policy’s virus exclusion clearly bars coverage for all pandemic-related loss, according to a Law360 report.
The insurer said that the bar and the jewelry store have not alleged a tangible injury or permanent dispossession of property. West Bend also said that the businesses failed to show “direct physical loss of or damaged property” to trigger coverage.
“Although COVID-19 is unprecedented, it does not change the terms of the policies,” West Bend said. “Plaintiffs did not pay for or obtain a guarantee of income.
In May, Mashallah Inc., which operated a jewelry store in Chicago, and Ranalli’s Park Ridge, which owns Holt’s, a bar and restaurant in Park Ridge, Ill., asked the Seventh Circuit to reverse a lower court’s dismissal of their lawsuit, Law360 reported. The businesses said that the lower court wrongly held that it was COVID-19 – and not government lockdown orders – that caused their losses.
However, West Bend said that the businesses’ argument is flawed. The insurance carrier said that courts have repeatedly ruled that government closure orders do not constitute or cause direct physical loss of or damage to property and are not governed under property policies.
“As plaintiffs themselves allege, the closure orders were issued ‘in an effort to slow or stop the spread of COVID-19,’” West Bend said. “There is no genuine dispute that the closure orders were issued in direct response to COVID-19 and would not have been issued but for COVID-19.”
The carrier argued that the businesses were not entitled to civil authority coverage either, because they never lost physical access to their properties.
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“Ranalli’s continued to operate and provide takeout and delivery,” West Bend said. “As for Mashallah, the closure orders permitted it to conduct minimum basic operations at its insured premises.”
West Bend also asked the court to toss the businesses’ claim that it engaged in deception and unfair conduct by wrongly describing the policy limits. West Bend said it had repeatedly informed the business of coverage details and never misrepresented the policies.
Both businesses hold all-risk policies from West Bend, according to Law360. Both maintain that their revenue was significantly harmed by government shutdown orders during the COVID-19 crisis.
