Risk Management

N.Y. federal appeals court issues fourth pro-insurer COVID BI decision

Judy Greenwald

March 01, 2022 Reprints

Catastrophes Coronavirus Emerging Risks P/C Insurers Property More + Less -

The 2nd U.S. Circuit Court of Appeals in New York issued its fourth decision against a policyholder in a COVID-19 business interruption case Tuesday, ruling against a New York country inn and restaurant.

The 2nd Circuit upheld a lower court ruling by the U.S. District Court in Albany, New York that held Greenwich, Connecticut-based Deer Mountain Inn LLC, which operates a country inn and restaurant in Tannersville, New York, is not entitled to business interruption coverage under its policy with Employers Mutual Casualty Co. unit Union Insurance Co., according to the ruling in Deer Mountain Inn LLC et al. v. Union Insurance Co.

Deer Mountain argued that its policy language “does not require the insured’s property to have suffered some actual physical change or physical damage” to trigger coverage, the four-page ruling said.

Citing its three other rulings on the issue, however, a three-judge panel affirmed the lower court and concluded that “Deer Mountain does not plausibly allege that its insured property sustained any physical damage; it merely alleges loss of use of that property.”

The court most recently ruled against a policyholder in litigation filed against a Tokio Marine unit in its Jan. 28 ruling in Kim-Chee LLC, Yup Chagi Inc., DBA Master Gorino’s Pil-Sung Tae-Kwon-Do v. Philadelphia Indemnity Insurance.

Attorneys in the case did not respond to requests for comment.

Last week, the 6th U.S. Circuit Court of Appeals in Cincinnati on Wednesday issued its sixth ruling holding that insurers were not obligated to indemnify policyholders for COVID-19-related business interruption losses.