Business Losses Due to Covid-19 Pandemic Not Covered

In the case of Chester County Sports Arena v. Cincinnati Specialty Underwriters Ins. Co., No.: 20-CV-02021-MMB (E.D. Pa. March 30, 2021, Baylson, J.), the court addressed a number of declaratory judgment complaints filed against a carrier asserting that the carrier had wrongfully denied coverage for the Plaintiff’s business losses related to the Covid 19 pandemic.  

The court found that dismissal was appropriate given the policies’ requirement of a “direct physical loss" before coverage would be implicated.  Court found that government orders in response to a virus simply do not fit this physicality requirement. 

The court more specifically noted that, under Pennsylvania law, clear and unambiguous terms like “direct physical loss”  must be given their plain meaning and, when there is no alteration to physical structure, Third Circuit precedent points in the direction of the finding of no physical loss sufficient to trigger coverage.  The Court found that to rule otherwise would be to expand the policy language beyond its plan meaning to encompass purely economic losses. 

As such, the court found that the Plaintiffs contention that they had suffered a covered loss in light of the Covid-19 pandemic failed.

Anyone wishing to review a copy of this decision may click this LINK.

I send thanks to Attorney Lawrence M. Silverman of the Philadelphia Pennsylvania Law Firm of Litchfield Cavo for bring this case to my attention.