Monday, October 21, 2024

Pennsylvania Supreme Court Reverses and Rules in Favor of Insurance Carrier in Covid-19 Business Interruption Coverage Case


In the case of Ungarean v. CNA, No. 12 WAP 2023 (Pa. Sept. 26, 2024) (Op. by Brobson, J.), the court addressed issues regarding business interruption coverage in the context of the COVID-19 pandemic.

This case involved a class action that was led by a dental practice which had purchased a commercial property insurance policy from an insurance company, which policy was intended to cover business-related losses.

After the court mandated closures as a result of the COVID-19 pandemic, the insured filed a claim under the policy, which was denied by the insurance company on the grounds that there was no physical damage to the property.

The trial court had granted summary judgment in favor of the insureds. The trial court had interpreted the policy language to include loss of use of the property as a form of “direct physical loss.”

That trial court decision was affirmed by the Superior Court who also found the policy language at issue was ambiguous and should be construed in favor of the insured.

However, the Pennsylvania Supreme Court reversed the Superior Court’s decision.

The Pennsylvania Supreme Court held that the policy language was unambiguous and required a physical alteration to the insured’s property for the coverage to apply.

The court ruled that the economic losses sustained by the insured due to the government shutdown did not meet this requirement.

As such, the Supreme Court ruled that the insured was not entitled to coverage under the policy. The case was remanded to the Superior Court with instructions for summary judgment to be entered in favor of the insurance company.

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


I send thanks to Attorney Scott B. Cooper of the Harrisburg, PA law firm of Schmidt Kramer for bringing this case to my attention.

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