A proposed class action claims The Hartford Financial Services Group, Inc. and Twin City Fire Insurance Company have wrongfully denied claims for COVID-19-related damages even though the policies at issue specifically cover losses stemming from a virus.
Filed by the operator of two Charleston restaurants, the lawsuit out of South Carolina claims the plaintiff and similarly situated policyholders suffered damage when Governor Henry McMaster ordered all food and beverage establishments to close for dine-in service effective March 17. According to the suit, the defendants have “systematically” denied claims for coverage of pandemic-related losses regardless of the specific language in proposed class members’ policies.
“The Defendants simply decided that COVID-19 related business income loss claims would not be covered, notwithstanding the nature of the claim and the specific and unique language of the Policy,” the complaint states.
The plaintiff argues that its “Spectrum Business Owner’s Policy” purported to include business income, extra expense, civil authority, extended business income, and business income from dependent properties coverage. Importantly, the “all risk” policy does not include a form commonly used in the insurance industry to exclude losses stemming from viruses and bacteria, the lawsuit says. Rather, the plaintiff’s policy expressly includes coverage for virus-related losses in a “Limited Fungi, Bacteria, or Virus Coverage” form that covers “direct physical loss or direct physical damage to Covered Property caused by . . . virus,” according to the case.
The plaintiff says that after the restaurant “promptly and properly” submitted a claim for business income losses caused by the governor’s shut-down orders, the eatery received a form denial letter that the suit alleges was simply a “preordained formality” that the insurers decided to send before even reviewing the claim.
According to the suit, the plaintiff’s counsel responded to the denial letter, after which the defendants sent a second denial letter asserting that “there is no coverage under the Policy because the claim does not allege a ‘direct physical loss.’”
The plaintiff disagrees with the insurers’ assessment, arguing that “direct physical loss” is undefined in the policy and must therefore be “liberally construed in favor of coverage.” Contrary to the defendants’ argument, the damage suffered by the plaintiff and similarly situated businesses falls under a “specified cause of loss,” as stated in the policy, the suit says.
The plaintiff stresses that the claims in its lawsuit differ fromprevious litigationin which the policies at issue did not expressly include virus-related damages.
The lawsuit looks to cover those who entered into an insurance contract with the defendants that provides business income and extra expense coverage and contains Form SS-40-93-07-05 (“Limited Fungi, Bacteria, or Virus Coverage”) and who suffered loss due to government orders issued in response to the COVID-19 crisis.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.