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A Los Angeles trial lawyer and several businesses he represents sued Travelers Cos. Inc. last week for business interruption coverage related to the coronavirus pandemic.
Mark J. Geragos, managing partner at Geragos & Geragos APC, a well-known criminal defense and civil litigation lawyer, sued Travelers personally as a commercial property owner and on behalf of his law firm in two separate suits, and represents commercial property managers and 10E, a Los Angeles restaurant, in other suits filed in California state court on April 9.
The five suits make similar allegations. In the suit Geragos & Geragos APC v. The Travelers Indemnity Co. of Connecticut, the law firm seeks a declaratory ruling that its business interruption policy with Travelers covers business income losses related to government-ordered closures that began last month aimed at stemming the spread of COVID-19.
The firm alleges that COVID-19 has “impacted both public and private property and physical spaces around the world” and that the virus can stay on surfaces for up to 28 days.
The virus constitutes physical damage under the civil authority section of the law firm’s business interruption policy, court papers say.
Travelers said in a statement on the lawsuits: "In our standard commercial property policies that include business interruption coverage, we have very specific exclusions stating that losses resulting from a virus or bacteria, including physical damage or income, are not covered."
The insurer will "will continue to engage with policymakers and regulators to help them find effective solutions to support businesses in managing through this unprecedented crisis," the statement said.
Meanwhile, a firm operating River Twice Restaurant in Philadelphia on Friday sued a surplus lines unit of W.R. Berkley Corp. in federal court seeking business interruption coverage for its shuttered operations.
In the suit, LH Dining LLC v. Admiral Indemnity Co., the restaurant argues that “the scientific community, and those personally affected by the virus, recognize the coronavirus as a cause of real physical loss and damage,” court papers say.
The lawsuit, which seeks a declaratory ruling that coverage applies, states that the policy’s exclusion for “loss due to virus or bacteria does not apply to the business losses incurred.”
A spokeswoman for W.R. Berkley declined to comment on the lawsuit.
The latest suits are part of a wave of litigation in state and federal courts across the country, including some seeking class action status, in which policyholders argue that business interruption policies should cover coronavirus-related losses.
Arguments vary but most assert that coverage is triggered because virus contamination and government-ordered shutdowns constitute physical damage. Insurer groups have argued that physical damage has not occurred as a result of the virus and that many policies contain exclusions barring coverage for communicable diseases.
President Trump weighed in on the issue on Friday, stating that insurers should “pay if they need to pay” on policies in which virus losses are not excluded.
More insurance and risk management news on the coronavirus crisis here.