COVID-19 business interruption coverage is denied for this property owner after no physical damage is detected.
SAS International, Ltd. operates a real estate business in which it owns and leases commercial properties to other businesses in Fall Rivers, Massachusetts.
At the start of the COVID-19 pandemic in March 2020, SAS had to suspend its commercial activities in several of its establishments. Subsequent closures, SAS said, have caused the real estate business to suffer losses for its “volume of business and practices”, which have yet to regain their pre-loss capacity over a year or more. late.
In July and August 2020, SAS submitted a claim to its insurance company to request coverage for its losses. SAS had a commercial lines policy through General Star Indemnity Company.
After reviewing the case, however, General Star rejected SAS ‘request.
The insurer noted that the “Building and Personal Property Coverage” clause of the policy only included coverage for “direct physical loss or damage to covered property … caused by or resulting from any cause of loss. covered ”.
He further noted that a covered cause of loss was defined as any “direct physical loss unless the loss is excluded or limited in this policy”.
SAS filed a complaint in November 2020, requesting a declaratory judgment that General Star’s policy is covering its pandemic-related losses and that no exclusion limits apply. General Star decided to lay off in December.
The court considered both arguments. Noting that SAS is not alone in seeking coverage for OVID losses, the court asked SAS to provide proof that a direct physical loss had occurred. But the real estate company could not.
Scorecard: SAS International will not receive insurance coverage from General Star for its COVID-19 related business losses.
To take with: You gain a little, you lose a little. In this case, the wording of the policy was true. But several other COVID lawsuits are still pending, with some winning in court. Insurers need to review what their policies say and what plaintiffs use as leverage in court. &