Zurich American Insurance Company faces a proposed class action filed by a Kansas college that claims the insurer failed to pay for covered losses sustained after the school was forced to close due to the COVID-19 pandemic.
Filed by Benedictine College, the 21-page lawsuit claims Zurich has falsely claimed the plaintiff’s insurance policy does not cover the school’s losses and specifically excludes losses related to viruses.
“Plaintiff promptly made a claim for coverage under the Policy. But Defendant has refused to honor its promise to provide the protection that Plaintiff purchased,” the complaint states.
The plaintiff effectively closed its Atchinson, Kansas campus in mid-March in response to the COVID-19 pandemic and resulting state stay-at-home orders, the lawsuit states, arguing that by that time, it was “more likely than not” that persons infected with the virus were present on the school’s property. According to the case, the insured property was rendered unsuitable for its intended use due to restrictions imposed by government entities.
The plaintiff argues that as a direct result of its campus closure, the school has suffered “devastating” financial damages, including the cost of room-and-board reimbursements, lost revenue from on-campus events and summer classes and programs, and the increased cost of cleaning and disinfecting campus facilities.
Per the complaint, the plaintiff’s Zurich all-risk insurance policy purported to cover “direct physical loss of or damage caused” to the insured location by all covered risks except those specifically excluded. Although the policy does contain an exclusion for “contamination”—defined as “any condition of property due to the actual presence of any foreign substance, impurity, pollutant, hazardous material, poison, toxin, pathogen or pathogenic organism, bacteria, virus, disease causing or illness cause agent, Fungus, mold or mildew”—an amendatory endorsement explicitly removes the word “virus” from the definition, the lawsuit states.
“The decision by Defendant to explicitly remove the word ‘virus’ from the Contaminants exclusion evinces a clear intent by Defendant to provide coverage for viruses, like COVID-19, under the Policy,” the suit charges.
The plaintiff further argues that its Zurich insurance policy provides additional coverage for “several different types of losses” arising from COVID-19, including time element, extra expense, civil or military authority, ingress and egress, and decontamination costs coverage, among others.
Despite the policy’s clear language, Zurich has maintained that the plaintiff’s policy does not cover losses “of the type Plaintiff has suffered” and specifically excludes coverage for losses related to viruses such as COVID-19, the suit says.
Echoing a similar case filed against Factory Mutual Insurance Company by two Missouri schools, the lawsuit looks to represent all institutions of higher education covered by one of the defendant’s policies in effect during the COVID-19 pandemic, with a proposed subclass of those who purchased their policies in Kansas.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.