Arch Insurance No Payout for Covid-19 Business Losses Class Action

This class action is another in a long line brought by businesses against insurance companies for their denial of payments for business losses related to Covid-19. In this case, the insurer is Arch Insurance Company, which has refused to pay for the losses of Legacy Gymnastics, LLC during pandemic closures.

Legacy Gymnastics has a 70,000 square foot facility in Lexington, Kentucky where it offers gymnastics, cheerleading, and dance programs.

The facility closed its doors in March 2020 due to the Covid-19 pandemic and government restrictions on non-essential businesses. The facility has since reopened on a limited-capacity basis, so that its revenues are significantly reduced. The complaint estimates it has had “hundreds of thousands of dollars of losses” due to the pandemic.

Legacy is insured under an all-risk policy with Arch. When it asked Arch to confirm that it would cover the losses, Arch would not. It claimed that Covid-19 cannot cause physical loss or damage to the property within the meaning of the policy. Even in the case of government shutdown orders, Arch says that they were no issued due to physical loss or damage to the property and therefore do not fall under the policy’s Civil Authority coverage.

The complaint claims otherwise: “Covid-19 was and has been physically present on [Legacy’s] premises, equipment, and surrounding areas since at least March 2020.”

Furthermore, the complaint says, “[S]tudies have shown that Covid-19 spreads through droplets and aerosols. Aerosols in particular are capable of traveling long distances through the air. Due to community spread of the virus, Covid-19 has reached and been physically present on [Legacy’s] facility and equipment after traveling through the air, independent of any individual. Thus, the virus has been present throughout [Legacy’s] insured property and surrounding areas—a dangerous condition by any measure.”

According to the complaint, then, “[t]he imminent risk of the presence of Covid-19 on property and in the air at the property effectively eliminates the utility and habitability of such property sufficient to constitute direct physical loss of or damage to property…” The property was therefore “rendered unsuitable for its intended use…”

The complaint also claims, “The Insurance Services Office (‘ISO’), an organization that provides policy writing services to insurers, has recognized for years that a virus can constitute physical damage to property.”

Two classes and a subclass have been defined for this action.

The Nationwide Declaratory Judgment Class and the Nationwide Breach Class are the same: all entities covered by one of Arch’s policies in effect during the Covid-19 pandemic.

The Kentucky Subclass is all entities in Kentucky that are covered by one of Arch’s policies in effect during the Covid-19 pandemic.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Arch Insurance No Payout for Covid-19 Business Losses Complaint

November 2, 2020

This class action is another in a long line brought by businesses against insurance companies for their denial of payments for business losses related to Covid-19. In this case, the insurer is Arch Insurance Company, which has refused to pay for the losses of Legacy Gymnastics, LLC during pandemic closures.

Arch Insurance No Payout for Covid-19 Business Losses Complaint

Case Event History

Arch Insurance No Payout for Covid-19 Business Losses Complaint

November 2, 2020

This class action is another in a long line brought by businesses against insurance companies for their denial of payments for business losses related to Covid-19. In this case, the insurer is Arch Insurance Company, which has refused to pay for the losses of Legacy Gymnastics, LLC during pandemic closures.

Arch Insurance No Payout for Covid-19 Business Losses Complaint
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance