Ninth Circuit Court of Appeals Certifies COVID-19 Question to the California Supreme Court

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While insurers have been successful in dismissing most COVID-19 property damage claims, especially in federal court, many of the coverage issues that arise in federal court actions are resolved based on state law. When a federal court finds that resolution of a dispute is governed by state law and that there is no controlling state law precedent, the court may certify the state law question to that state’s supreme court for resolution.

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COVID-19 and Insurance Premiums

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The COVID-19 pandemic has brought about myriad issues including whether there is insurance coverage for losses allegedly caused by the virus and its collateral effects. In the United States, insurance companies have been largely successful in avoiding coverage in the majority of disputes over whether commercial property policies provide coverage under business income and extra expense provisions for COVID-19 losses. That is because most commercial property policies require direct physical loss or damage to property for coverage to apply.

To avoid the issue of alleging and proving direct physical loss, one insured took a different tactic. It argued that it was being overcharged its insurance premium because its exposure to loss was much lower due to COVID-19. An interesting and novel approach.

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Reinsurance Trials Set Back by Pandemic

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One year into the pandemic I thought it might be a good time to reflect on how the shutdowns have affected reinsurance trials. What, you say? A reinsurance trial? Aren’t they all arbitrated? Well, yes, most are, but not every reinsurance contract has an arbitration clause and, moreover, not every case brought against a reinsurer is a breach of contract case.

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When the Court Denies a Motion to Dismiss – COVID-19

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As the COVID-19 business interruption cases are decided, many are keeping score. So far, the tally is in favor of the insurance industry, with a number of cases being dismissed for lack of direct physical loss of or damage to covered property by a covered peril.

Most of the cases filed seeking coverage have been met with motions to dismiss by the insurance company. As many of you know, a motion dismiss seeks to throw the case out of court because, on its face, the complaint does not state a cause or action. Basically, the court is saying that the allegations of the complaint, even if true, cannot as a matter of law, lead to coverage. Some courts allow the policyholder to file an amended complaint and some do not. It depends on the specific facts and allegations.

But not all courts have granted the insurance companies’ motions to dismiss. In a recent case, a Missouri federal court denied the motion. In this blog post I examine why.

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Direct Physical Loss of or Damage to Property Under California Law

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Decisions are starting coming down with some frequency in the myriad COVID-19 business interruption coverage cases. This blog post will highlight some aspects of a very recent decision by a California federal court that dismissed the policyholder’s complaint. The court, under California law, addressed the direct physical damage condition of the property policy.

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Reinsurance Aggregation and COVID-19 Losses

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Insurers are paying COVID-19-related claims on all sorts of insurance policies, including workers’ compensation, directors and officers, general liability, event and travel cancellation, production stop loss, accident and health and many others. While the focus of attention is on business interruption, those are not the losses being paid on a daily basis.

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Direct Physical Loss Bars Coverage for COVID-19

In yet another COVID-19 decision finding in favor of the insurance company, a Washington, D.C. Superior Court has denied summary judgment to a policyholder and granted summary judgment to the insurer on the issue of direct physical loss.

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Why Can’t Reading the Policy Be a Thing?

I read an article in the New York State Bar Association’s Commercial and Federal Litigation Section‘s magazine, the NY Litigator, Summer 2020, Vol. 5, No. 2, called “A Guide to Insurance Coverage for Business Losses Arising from the COVID-19 Pandemic,” by Bradley J. Nash. The article discusses how there may be coverage under business interruption insurance provisions.

What the article fails to do, and what many policyholder-side articles fail to do, is focus on the purpose for the insurance policy and the actual language contained in the policy. We have written extensively on this on both my prior firm’s Insurance and Reinsurance Disputes Blog and in other publications.

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