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Court won’t dismiss business interruption case against Hartford

business interruption

A U.S. district court refused to dismiss a COVID-19 business interruption case filed by a medical group against a Hartford Insurance Group unit Thursday, holding that a virus exclusion in the policy is ambiguous.

The ruling by the U.S. District Court in Orlando in Urogynecology Specialist of Florida LLC v. Sentinel Insurance Co. Ltd. is apparently only the third federal district court ruling in favor of the policyholder in these pandemic-related business interruption cases and the fourth overall.

Hartford unit Sentinel Insurance Co. had argued that “the unambiguous policy terms exclude coverage for any losses caused by a virus, including COVID-19,” the ruling said, while the Orlando based medical group contended its all-risk policy language was ambiguous, which required the Court to construe the policy in its favor, the ruling said. 

The ruling said, “several arguably ambiguous aspects of the Policy make determination of coverage inappropriate at this stage. Notably, the Policy provided does not exist as an independent document,” it said.

For instance, the “Limited Fungi, Bacteria or Virus Coverage” of the section of the Policy…starts by stating that it modifies certain coverage forms,” but these are neither provided in the policy itself, nor were they provided to the court.

It is also “not clear that the plain language of the policy unambiguously and necessarily excludes Plaintiff’s losses,” the ruling said. “The virus exclusion states that Sentinel will not pay for loss or damage caused directly or indirectly by the presence, growth, proliferation, spread, or any activity of ‘fungi, wet rot, dry rot bacteria or virus,’” the ruling said. 

“Denying coverage for losses stemming from COVID-19, however, does not logically align with the grouping of the virus exclusion with other pollutants such that the Policy necessarily anticipated and intended to deny coverage for these kinds of business losses.”

The ruling states that while Sentinel cites a number of cases that uphold similar virus exclusions, none of them “dealt with the unique circumstances of the effect COVID-19 has had on our society – a distinction this Court considers significant.

“Thus, without any binding case law the issue of the effects of COVID-19 on insurance contracts virus exclusions, this Court finds that Plaintiff has stated a plausible claim at this juncture,” the ruling said, in denying Sentinel’s motion to dismiss the case.

Attorneys in the case and the Hartford could not be reached for comment.

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




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