FM Global unit loses COVID-19 business interruption cover rulingPosted On: Sep. 7, 2021 2:11 PM CST
A Washington state court on Thursday ruled that the Snoqualmie Indian Tribe is owed business interruption coverage under its policy with an FM Global unit for losses it sustained after being forced to close its casino and events locations due to the COVID-19 pandemic.
Ruling in Snoqualmie Entertainment Authority d/b/a Snoqualmie Casino and Sacred Falls LLC d/b/a Salish Lodge & Spa v. Affiliated FM Insurance Co., Washington Superior Court Judge Catherine Shaffer in Seattle said the tribe’s all-risk policy does not require physical damage to take place for coverage to be triggered.
Like many U.S. businesses, the Snoqualmie Casino and Salish Lodge & Spa closed during government-imposed lockdowns announced following the COVID-19 outbreak last year.
The tribe filed a business interruption claim with Affiliated FM under its $150 million all-risk policy but the insurer said coverage was limited to the $100,000 sublimit within the policy’s communicable disease extension. The insurer argued that because there was no physical loss or damage to the properties, as required for coverage, the loss was not covered under the general policy limit.
In granting the tribe’s motion for summary judgment, the judge said, “Because the phrase ‘all risks of physical loss or damage’ is stated in the disjunctive, the term ‘physical loss’ must mean something other than ‘damage’.”
A reasonable interpretation of the phrase is that the tribe was deprived of the ability to physically use or operate its properties because of the COVID-19-related closures, the judge said.
FM Global did not immediately comment on the ruling.
Over the past several months, numerous federal and state courts have issued business interruption rulings related to COVID-19. Insurers have won most of the cases, especially in federal courts, but policyholders have also scored some victories.