A Slate Hill, New York daycare operator alleges Utica National Insurance Group has wrongfully denied its claim for losses stemming from the closure of all non-essential in-store businesses in the state amid the COVID-19 crisis.
According to the 30-page suit, the plaintiff’s businesses have been considerably limited in that the child care centers can only provide care for the children of customers who work jobs deemed essential during the state-wide pandemic shutdown. The complaint says the plaintiff’s covered business losses stemming from the interruption of services began on March 7, when a state of emergency was declared in New York, and were amplified on March 20 when civil authorities required all non-essential businesses to cease operations.
Per the complaint, the plaintiff is awaiting a response to its business interruption claim. The suit states, however, that Utica sent the plaintiff a letter noting its intention to deny any claims for similarly situated businesses. According to the case, Utica has asserted its policies do not cover business interruption closures unless there is physical property damage, and that all losses are excluded when caused by a virus.
The case says the plaintiff’s all-risk Utica National insurance policy covers claims related to physical loss and/or direct physical damage unless a loss is specifically excluded or limited under the terms of the policy. The virus or bacteria exclusion in the plaintiff’s policy does not apply to the closure of the plaintiff’s business given the daycare’s operations have been hampered by an order issued by civil authorities, the lawsuit states.
Despite the coverage scope of the plaintiff’s policy, which purportedly extends to damages resulting from business interruption when there is property damage, Utica National nonetheless accepted the daycare’s monthly premiums with no intention of providing coverage for losses stemming from orders issued by a civil authority, the complaint alleges.
“Defendant asserts any loss resulting from property damage or from Civil Authority Orders to cease normal business operations are excluded under the terms of the Policy’s Virus or Bacteria Exclusion,” the suit reads. “Defendant is wrong.”
Relaying the civil authority orders issued in every state to combat the spread of the novel coronavirus, the lawsuit claims the mandates pertaining to the closure of non-essential businesses are evidence of state and local governments’ awareness that COVID-19 causes property damage. The suit says this is particularly true for businesses such as the plaintiff, for whom customer or client interaction creates a heightened risk of property becoming contaminated.
The case looks to cover all child care centers who have incurred business interruption and lost income as the result of a civil authority order issued in response to the COVID-19 pandemic.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.