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Berkshire Hathaway fires back in COVID-19 coverage dispute

Berkshire Hathaway

Berkshire Hathaway Inc. asked a federal court on Monday to dismiss a lawsuit filed by a policyholder of one of its insurance units that sought business interruption coverage for losses related to the coronavirus.

In a motion to dismiss, Berkshire Hathaway said the National Fire & Marine Insurance Co. policy included a virus exclusion barring coverage, and other terms of the policy included a requirement for direct physical loss or damage to trigger business interruption coverage.

In the original proposed class-action suit filed last month in federal court in Pittsburgh, 1 S.A.N.T. Inc. d/b/a Town & Country and d/b/a Gatherings Banquet & Event Center v. Berkshire Hathaway Inc., a New Castle, Pennsylvania, restaurant and tavern argued that Berkshire Hathaway wrongly denied its claim for business interruption coverage for income lost during the COVID-19 lockdown.

Among other things, the policyholder argued that virus exclusions that have been used by insurers since 2006 should be ruled invalid because the policy wordings organizations that devised them made misrepresentations to regulators.

In its motion to dismiss brief, Berkshire Hathaway says that National Fire & Marine had never changed its position that the virus exclusion was needed to resolve concerns that insurers may face efforts to expand coverage for virus-related losses.

“There is zero controlling legal authority that Plaintiff may allege a false statement in lieu of alleging a change in position. Never mind that the statements in 2006 were demonstrably not false. Never mind that Plaintiff alleges only in conclusory terms that they were purportedly false. The fact is that a purportedly false original statement is irrelevant. A change in position is the element,” the filing said.

The lawsuit should also be dismissed because the restaurant lost revenue due to government-enforced lockdowns rather than direct physical loss or damage required by the policy, Berkshire Hathaway argues.

The case involves one of scores of COVID-19 lawsuits filed against insurers in state and federal courts across the United States since the pandemic began. Most of the cases are pending, but in a Michigan state court ruling earlier this month a judge ruled that a restaurant owner was not due compensation under his policy because there was no direct physical loss or damage to his property from the virus.

In a ruling in May in New York, a judge ruled in favor of an insurer in a COVID-19 insurance suit filed by a magazine publisher.

More insurance and risk management news on the coronavirus crisis here