Wade Clark Mulcahy LLP

<p style="text-align: justify;">As the ever-changing landscape of COVID-19 insurance litigation gets more and more crowded, courts are becoming even more attentive to the language of the insurance policies at issue. In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2021/01/Ultimate-Hearing-Solutions-II-LLC-v.-Twin-City-Fire-Insurance-Co..pdf">Ultimate Hearing Solutions II, LLC v. Twin City Fire Insurance Co., </a></em>the Eastern District of Pennsylvania Court dissected an insurance provision titled “Virus Coverage” and found for the insurer based on a strict reading of the policy.</p>
<p style="text-align: justify;">Plaintiffs are LLC’s that operate hearing aid stores throughout Pennsylvania and other states. Plaintiffs sought coverage under their Business Owner’s Insurance Policy issued by Defendant-Insurer for alleged losses they sustained because of COVID-19 and the recent Closure Orders, as they were characterized as “non-essential” businesses. Defendant-Insurer denied coverage, and Plaintiffs then sued for breach of contract and bad faith. The parties later filed cross-motions for summary judgment.</p>
<p style="text-align: justify;">Among other arguments, Plaintiffs focused on the Virus Coverage provision in their Policy, which stated that Defendant-Insurer “will pay for loss or damage by…virus.” In interpreting this coverage provision, the court first referenced a later provision in the policy, which defined such loss as direct physical loss or damage caused by the virus.  Next, in response to the Plaintiffs’ argument that denying coverage for their claims would result in the policy only providing illusory coverage, the court, looking to the language of the policy, denied this argument and held that since the Virus Coverage also applied to fungi, rot, and bacteria, which could all easily create physical damage of the type described, the provision was not illusory.</p>
<p style="text-align: justify;">This case demonstrates that even as we continue to wade into the unknown waters of COVID-19 litigation, courts are relying on the plain language of the policy in analyzing whether a policy would provide coverage for damages related to COVID-19.</p>
<p style="text-align: justify;">Thanks to Abby Wilson for her contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>