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A legal services firm sued its broker in addition to its insurer last week in a claims dispute over coronavirus-related losses.
The suit filed by Magna Legal Services in state court in Philadelphia on Thursday says the firm engaged Nottingham Agency Inc. in Hamilton, New Jersey, to secure “all appropriate insurance coverage” for its business, including coverage against losses related to viruses and pandemics.
“But for the negligence and misrepresentations” of the broker, Magna Legal Services would have bought business income and contingent business income protection that was “as broad as possible,” court papers say.
According to the complaint in Magna Legal Services LLC v. Hartford Fire Insurance Co. and Nottingham Agency Inc. et al, Magna closed its operations to comply with state lockdown orders but its claim for business interruption coverage was denied by Hartford, which stated that Magna had not suffered any direct physical loss and, therefore, business interruption coverage had not been triggered.
Hartford owes coverage “for the losses incurred due to direct physical damage and direct physical loss caused by COVID-19 and the Closure Orders, as well as under the ‘ “Fungus,” Wet Rot, Dry Rot, Bacteria and Virus — Limited Coverage,’” court papers say.
A spokesman for Hartford said in an email that the insurer is in the business of paying claims but “viruses are generally outside the scope of business interruption coverage. These policies do not cover this exposure and, accordingly, premiums were never collected for it.”
Nottingham did not respond to a request for comment.
The suit is one of dozens of cases filed by commercial policyholders seeking coverage for coronavirus-related losses over the past two months. In most of the cases, only insurers have been sued but in at least one other case brokers were also named as defendants.
More insurance and risk management news on the coronavirus crisis here.