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Hotel group, day care center sue for COVID-19 cover

Nola Group

The range of businesses taking insurers to court for coronavirus-related losses continued to expand last week with a New Orleans-based hotel group and a day care center in New York suing their insurers.

In Nola Group Hotel LLC v. Starr Surplus Lines Insurance Co., the policyholder, which runs six hotels in New Orleans, outlines in a suit filed May 4 in federal court in New Orleans how government-imposed restrictions intended to limit the spread of COVID-19 have hit businesses in Louisiana.

Nola contends that it has suffered direct physical damage and that it has an all-risk policy that “provides coverage for all risks unless the risk is specifically and clearly excluded or limited in the Policy.”

A spokesman for Starr said the New York-based insurer does not comment on individual claims matters or active litigation.

In Slate Hill Daycare Center Inc. v Utica National Insurance Group, a Slate Hill, New York-based children’s day care center says in a suit filed in federal court in New York on May 7 that since a statewide lockdown was imposed in March, it can only operate to take care of children of essential workers. The center’s policy does not contain a virus exclusion, COVID-19 has caused physical damage, and coverage for its lost income is triggered under the civil authority section of its policy, the lawsuit states.

Utica National did not respond to a request for comment.

Dozens of commercial policyholders have sued insurers seeking business interruption coverage for enforced business closures during the COVID-19 pandemic. Many of the suits have been filed by restaurants and other service industry companies, but the categories of businesses filing suits have broadened over the past several weeks.

Insurers and insurance groups have stated in position papers and on results conference calls over the past several weeks that most business interruption policies will not cover coronavirus-related losses because most policies contain virus exclusions and where they don’t, physical loss or damage has not occurred, therefore, coverage is not triggered. Travelers Cos. Inc. last month countersued one of its policyholders arguing that it is not covered for COVID-19 claims. And last week a Lloyd’s of London syndicate filed a motion to dismiss a suit brought by a Tampa, Florida-based sports bar.

More insurance and risk management news on the coronavirus crisis here.