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All Risk Insurance Policy Does Not Cover Restaurant From Covid Loss (PA)

April 8, 2022

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<p style="text-align: justify;">In a recent case from the Eastern District of PA, <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/04/Humans-Res.-LLC-v.-Firstline-Natl-Ins-Co..pdf">Humans &amp; Res., LLC v. Firstline Nat’l Ins Co.</a>,</em> the court granted the defendant’s summary judgment against the plaintiff who sought coverage under an all-risk property policy. Finding that COVID-19 related loss did not fall under an all-risk property policy and did not give rise to the expectation that it would.  The plaintiff in the case owned a BYOB restaurant. The Pennsylvania Governor instituted a stay-at-home order in response to the COVID-19 pandemic. The large establishment was limited to takeout and delivery. In response the plaintiff owner chose not to provide take out and delivery options. The plaintiff argued that since the chose not to offer carryout or delivery, the orders caused the restaurant to lose revenue and suffer business income losses.</p>
<p style="text-align: justify;">The plaintiff filed a declaratory judgment that the business losses it incurred due to the closure orders were covered under the policy. The court found in favor of the defendant finding that the Insurance policy does not cover the losses caused by COVID-19. The plaintiff then cross moved on the grounds that they believed the “all risk policy included coverage for business losses suffered in the event of a business interruption.” The defendant moved to dismiss the claims based on the policy did not extent to pandemic-related closure. Additionally, the policyholder specifically did not request coverage for global pandemic related closure. The court further explained that all-risk policies do not create an objectively reasonable expectation of coverage of all losses, especially where the policy’s coverage is limited by exclusions.</p>
<p style="text-align: justify;">This case is a good example of how a policy language can dictate the outcome even in an all-risk policy. Although mostly related to COVID-19 damages an all-risk policy will still be confined to a general coverage area with limits.</p>
<p style="text-align: justify;">Thanks to Kevin Riley for his contribution to this post.  Should you have any questions, please feel free to contact <a href="mailto:tbracken@wcmlaw.com">Tom Bracken</a>.</p>

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