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Art Gallery’s Covid-Related Losses Are Not Covered By Insurance Policy

January 7, 2022

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<p style="text-align: justify;">In <em><a href="">10012</a> Holdings, Inc., d/b/a Guy Hepner v. Sentinel Insurance Company, LTD</em>., the United States Court of Appeals for the Second Circuit affirmed the District Court’s decision to dismiss plaintiff’s claim for failure to state a proper basis for relief. Guy Hepner, a New York City-based fine arts gallery displaying the works of Andy Warhol, Pablo Picasso, and many others, filed suit against its insurer Sentinel for breach of contract after Sentinel denied coverage under its policy for financial losses suffered by Guy Hepner as a result of government mandated Covid-19 restrictions.</p>
<p style="text-align: justify;">At various times during the current Covid-19 epidemic, New York has suspended the operations of non-essential businesses in an attempt to quell the spread of the Covid-19 virus. Guy Hepner argued that the financial losses it suffered due to closing its doors should be covered under various provisions dealing with property damage. These sections generally provide coverage where the insured’s business is unable to operate due to property damage, and as a result, the insured suffers financial losses. However, the United States District Court for the Second Circuit ruled in favor of Sentinel, stating that because Guy Hepner “alleges only that it lost access to its property as a result of COVID-19 and the governmental shutdown orders, and not that it suspended operations because of physical damages to its property”, Guy Hepner’s losses were not covered by the policy.</p>
<p style="text-align: justify;">This ruling is one of many examples in which the courts have refused to interpret insurance policy sections dealing with businesses losses caused by property damage as also encompassing business losses caused by government shutdown initiatives.</p>
Thanks to Brian Zappala for his contribution to this post. Please contact <a href="">Heather Aquino</a> with any questions.

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