Virus Exclusion Defeats COVID-19 Business Interruption Coverage Claims

In the case of Newchops Rest. Comcast LLC v. Admiral Indem. Co., No. 20-1949 (E.D. Pa. Dec. 17, 2020 Savage, J.), the court addressed insurance coverage issues relative to alleged business losses by the Plaintiff’s restaurants due to COVID-19 closures.

According to the Opinion, the Defendant carrier had issued to the Plaintiff multiple commercial lines insurance policies that provided property, business income, extra expenses, and other coverages.

After the city in which the Plaintiff’s restaurants were located ordered the closure of all non-essential businesses due to the COVID-19 pandemic, the Plaintiff closed their restaurants to comply with the order.

At some point thereafter, the Plaintiffs filed a declaratory judgment action seeking a judicial declaration that their business losses were covered under the insurance policies. The case came to a head when the carrier filed a Motion for Judgment on the Pleadings.

The court ruled that the Plaintiffs had failed to state a claim for coverage under the civil authority or business income provisions of the Defendant carrier’s policy. The court found that the Plaintiff did not allege any losses caused by a “covered cause of loss.”

The court additionally ruled that, even if the Plaintiffs had alleged losses caused by a “covered cause of loss,” the Plaintiff’s claims for coverage were precluded by the virus exclusion contained in the policy. The court stated that the lack of a specific reference to a pandemic in the policy language did not render the policy provision ambiguous.

As such, the court granted the carrier’s Motion for Judgment on the Pleadings.

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Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Jan. 5, 2021).