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State high court reverses policyholder’s COVID win

covid litigation

The Nevada Supreme Court last week ruled that a Las Vegas commercial real estate operator could not proceed with its COVID-19 business interruption claim against a Starr Insurance Cos. unit.

The high court directed a lower court, which had ruled in 2020 that the case could proceed, to grant summary judgment to Starr in JGB Vegas Retail Lessee LLC v. Starr Surplus Lines Insurance Co. The policy required “direct physical loss or damage” to trigger a business interruption claim, and it excluded virus-related claims, the high court ruled.

JGB had argued that the presence of the COVID-19 virus on its properties constituted physical damage. The trial court ruled that the issue should be determined at trial.

In its Sept. 14 ruling, the Nevada Supreme Court stated: “The fact that the COVID-19 virus was present in or on the property does not establish that there was any physical harm to the property as required.”

In addition, the policy’s pollution and contamination exclusion applied to viruses, the court ruled.

“While we are sympathetic to the economic woes JGB — and so many other businesses in Nevada — suffered as a result of the COVID-19 pandemic, its claim for coverage under this type of insurance policy falls short,” the court ruled.