Transportation Insurance Company is on the receiving end of a proposed class action in which a California sales and marketing business claims the insurer has wrongfully denied claims for COVID-19-related damages.
The 15-page breach of contract lawsuit says that the plaintiff purchased a Transportation “all-risk” special property insurance policy that included business income, extra expense, and civil authority coverage. According to the case, no exclusion or limit for damages from viruses was included in the policy, which purported to cover all “direct physical loss or damage.”
The plaintiff business claims its Newport Beach, California property sustained damage due to the physical presence of the novel coronavirus. According to the suit, this development, as well as government mandates in California in response to the COVID-19 crisis, forced the plaintiff to shut down operations and take measures to prevent further interruption and change. The complaint argues that the presence of a virus constitutes a physical interaction with a property, making it dangerous and less valuable.
The plaintiff claims that although these circumstances triggered coverage under his Transportation insurance policy, the defendant denied the business’s claim. As the case tells it, Transportation’s decision to deny the plaintiff’s claim is not specific to one business but is “part of a common plan or business policy” that has likely affected many other policyholders.
“Defendant has broadly refused to pay any amount of coverage for claims made under the Business Income, Extra Expense, or Civil Authority coverage,” the complaint alleges. “These refusals were not made on the basis of any of Plaintiff or Class Members’ individual circumstances. On information and belief, the refusal to pay is uniform and is part of Defendant’s business strategy.”