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In a rare policyholder win, a New York state appeals court on Tuesday upheld a lower court decision and held that the New York Botanical Garden is entitled to COVID-19-related business interruption coverage from an Allied World Assurance Co. Holdings Ltd. unit.
The litigation was filed by the 250-acre New York Botanical Garden in the Bronx against Allied World Assurance Corp., which had issued it a “pollution legal liability” policy, according to the ruling by the New York Supreme Court, appellate division, first judicial department in New York in New York Botanical Garden v. Allied World Assurance Co. (U.S.) Inc.
Under the policy, contingent business interruption is defined as “the necessary suspension of your business operations at a location owned or leased to you as a result of an order by a government body or authority denying access to the location,” the three-page ruling said.
Allied World denied the botanical garden’s claim that it was entitled to coverage in response to the government-ordered, COVID-19-related shutdown, although it acknowledged that the pandemic constituted a “pollution incident” as defined in the policy, the ruling said.
The botanical gardens then filed suit, seeking a declaration it was entitled to coverage for its business interruption losses.
The trial court in the Bronx ruled in the botanical garden’s favor in October, and was affirmed by three-judge state appeals court panel.
“Defendant failed to establish that, under the terms of the insurance policy it issued to plaintiff, contingent business interruption coverage was available only if plaintiff was completely denied access to its property,” the ruling said.
“The policy contemplates coverage for periods when plaintiff would have some temporary access to the property, including periods involving potential partial resumption of operations to mitigate damages which for plaintiff included maintaining its extensive plantings,” it said.
“The cases relied upon by defendant, which involve civil authority coverage in property liability policies and periods of complete denial of access due to physical damage are inapposite,” the ruling said.
The insurer also “failed to establish that the executive orders denying access were not solely and directly the result of a pollutant at an ‘independent location,’ within the meaning of that term of the policy,” the decision said, in affirming the lower court’s ruling.
The insurer’s and botanical garden’s attorneys had no comment.
Last week, a Connecticut state judge dismissed COVID-19-related business interruption coverage litigation filed by a Native American tribal gaming authority against Factory Mutual Insurance Co.