Insurance coverage for losses suffered during pandemic-related shutdowns will be the focus of an upcoming hearing at the Superior Court of Pennsylvania.
The court is set to hear an appeal by the Scranton Club regarding a lawsuit it had filed against Tuscarora Wayne Mutual Group in June 2020, where it alleged that the company wrongly denied its claim under the business interruption portion of its policy.
Attorneys representing the social club are hoping to overturn a ruling that upheld Tuscarora's motion to dismiss.
“It's a typical tactic of insurance companies to look for any way to get around paying on a policy where they collected premiums for decades,” Dan Munley, whose law firm represents the Scranton Club, told the Times Tribune. “I'm much more concerned about the mom-and-pop businesses that lost everything as a result of the pandemic than I am for billionaire insurance companies.”
The Scranton Club’s lawsuit is one of many filed nationwide challenging insurance companies’ denial of coverage for shutdowns related to the COVID-19 pandemic. Over 2,000 such cases have been filed in state and federal courts as of January, according to the litigation tracker maintained by the University of Pennsylvania Law School.
The suit is also one of three that Judge Terrence Nealon ruled on in Lackawanna County, the Times Tribune reported.
Nealon had agreed that shutdowns caused by COVID-19 could equate to physical damage in the other two cases. However, he granted Tuscarora’s motion in the Scranton Club case because he found that the club did not allege in its lawsuit that the virus was present in the building, and therefore could not prove any direct physical loss or damage.
Ken Stoller, assistant vice president of the American Property Casualty Insurance Association, said in a statement that business interruption insurance covers the destruction of property in scenarios such as a fire or weather event.
He added that interpreting COVID-19 as physical damage could impact the stability of the insurance industry and its ability to pay claims.
“These policies are not intended to cover diseases or pandemic-related losses,” he said. “In the vast majority of cases, insurers did not price policies to include such coverage, and policyholders did not pay for it.”
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