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Policyholder wins COVID-19 coverage dispute with CNA

Posted On: Mar. 26, 2021 11:54 AM CST


A dental office is owed coverage under its business interruption policy with CNA Financial Corp., a Pennsylvania state court judge ruled earlier this week.

Ruling in Timothy A. Ungarean d/b/a Smile Savers Dentistry P.C. v. CNA and Valley Forge Insurance Co., Judge Christine Ward in the Court of Common Pleas of Allegheny County in Pittsburgh granted summary judgment to the dental practice, which was forced to close most of its business due to government lockdown orders in March 2020.

According to the CNA policy, business interruption coverage was triggered “by direct physical loss of or damage to property at the described premises,” court papers said.

While the insurer argued that the policy required there be some physical altercation or harm to a property before business interruption coverage was triggered, the wording allows for a wider interpretation of the policy, the judge ruled.

According to the ruling, “in the context of this insurance contract, the concepts of ‘loss’ and ‘damage’ are separated by the disjunctive ‘or,’ and, therefore, the terms must mean something different from each other. Accordingly, in this instance, the most reasonable definition of ‘loss’ is one that focuses on the act of losing possession and/or deprivation of property instead of one that encompasses various forms of damage to property.”

The lockdown orders and the spread of COVID-19 did not simply impose economic limitations on the business, the ruling states.

“Any economic losses were secondary to the businesses’ physical losses,” the judge ruled.

CNA declined to comment on the ruling.

The case is one of more than 1,500 COVID-19 coverage suits filed against insurers. So far, most courts have ruled in favor of insurers, but policyholders have won several rulings. Most cases have involved small businesses, but in recent weeks several large organizations have sued their insurers. Earlier this month, Caesars Entertainment Inc. sued various Lloyd’s of London syndicates for $2 billion in lost income,  the Philadelphia Eagles and the Sacramento Kings sued FM Global and the Los Angeles Lakers sued Chubb Ltd.

More insurance and risk management news on the coronavirus crisis here