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A federal district court in California has refused to dismiss COVID-19 business interruption coverage filed by a concert promoter against Factory Mutual Insurance Co.
The U.S. District Court in Los Angeles held in Thursday’s ruling in Live Nation Entertainment Inc. v. Factory Mutual Insurance Co. that it was swayed by the position that COVID-19’s presence “can cause physical intrusion that affects the integrity of a property.”
Beverly Hills-based Live Nation, which sought coverage under its all-risk policy with Factory Mutual, said that in 2020 it had canceled more than 5,000 concerts and postponed nearly 6,000 shows until 2021 because of the pandemic.
Live Nation’s coverage included “communicable disease response” coverage and coverage for “interruption by communicable disease.” Coverage under each of the communicable disease provisions is limited to $1 million.
“The Complaint sufficiently alleges that infectious respiratory droplets, which transmit COVID-19, are physical objects that may alter the property on which they land and remain,” the ruling said.
“Accepting the allegations in the Complaint as true it cannot be determined as a matter of law that the presence of COVID-19 in Plaintiff’s property could not cause ‘physical loss or damage to property,’” it said.
Last month, two state courts refused to dismiss COVID-19-related business interruption coverage litigation filed by a university against Factory Mutual Insurance Co.
FM Global said in a statement that it “values the long-term relationships we have with our policyholders and we are proud to be leading the industry for claims service. It is unfortunate when legal matters arise because we strongly believe our insurance policies are clear on the coverage provided.”
Plaintiff attorneys did not respond to requests for comment.
The 10th U.S. Circuit Court of Appeals in Denver joined five other federal appeals courts Tuesday in holding there is no COVID-19-related business interruption coverage.