Court declines to entirely dismiss Italian hotel owner’s COVID case

The U.S. District Court in Chicago refused to entirely dismiss a COVID-19-related lawsuit filed by an Italian luxury hotel owner against a Zurich Insurance Group Ltd. unit based on its “cancellation of bookings” claims.

The court, in Tuesday’s ruling, agreed to dismiss most of the COVID-19-related claims filed by Rome-based Q Excelsior Italia SRL against Zurich American Insurance Co., according to the decision in Q Excelsior Italia SRL v. Zurich American Insurance Co.

The court noted the 7th U.S. Circuit Court of Appeals has repeatedly held that the “mere loss of use due to COVID-related closures does not constitute ‘direct physical loss’ when unaccompanied by any physical alteration in property.’”
The ruling said the parties agree that a cancellation of bookings provision in Q Excelsior’s policy covers losses resulting from cancellations attributable to, among other things, contagious disease outbreaks and travel restriction advisories issued by authorities.

But Zurich contended Q Excelsior was not entitled to damages from the insurer’s refusal to pay under the cancellation of bookings provision because it had exhausted its coverage under that provision. 

This “goes to the merits of the claim,” the district court said, in refusing to dismiss the case.

The decision said, however, that Zurich may move at any time for summary judgment on that claim if it can show indisputably that Q Excelsior has not suffered any damages.

Attorneys in the case did not respond to requests for comment.