Erie Insurance Exchange No Coverage for Covid-19 Closures Class Action

Due to state-mandated closures to prevent the spread of Covid-19, many small businesses have lost money. Some of these businesses are looking to their insurance policies to cover these losses. The complaint for this class action alleges Erie Insurance Exchange should be covering business income losses to its insureds. Erie has refused to pay for such claims because the businesses “did not suffer damage to its property.”

Plaintiff Sulimay’s Hair Design, Inc. operates two locations in Philadelphia, Pennsylvania. Sulimay’s has a business insurance policy with Erie. The policy has coverages for income protection, business personal property, civil authority, and extended business income.

Sulimay’s locations were forced to close under the March 16, 2020 order from Pennsylvania’s governor requiring all non-life-sustaining businesses in the state to stop operating and close all physical locations. Other orders place limitations on what citizens of the state were permitted to do. While some businesses have recently been allowed to reopen, hair salons are not among them.

Sulimay’s filed a claim under the policy for a date of loss of March 16, 2020. Erie declined to cover it because of the lack of damage to the property.

The complaint says, “Upon information and belief, Erie will assert its insurance policies do not provide coverage for business interruption closures … because of the exclusion in its policies ‘by or resulting from any virus, bacterium, or other microorganism’ (the ‘Virus Exclusion’).”

However, the complaint argues, “The terms of the Policy explicitly provide the insured with insurance coverage for income protection, along with any necessary extra expenses incurred, when access to the Insured’s properties is specifically prohibited by Civil Authority Orders.”

It claims, “The Policy’s Virus Exclusion does not apply to the closure of [Sulimay’s] businesses as a result of the orders issued by a Civil Authority due to the Covid-19 pandemic.” It argues that the business has suffered property damage and physical loss. “The global Coronavirus pandemic is exacerbated by the fact that the deadly virus physically infects and stays on surfaces of objects or materials … for up to twenty-eight (28) days.”

The complaint alleges that because people come into and out of a business like Sulimay’s, such properties “are contaminated and would continue to be contaminated.”

The class for this action is all restaurants that have suffered business interruption and lost income as a result of Civil Authority Orders issued in response to the Covid-19 pandemic. (It is unclear why the class is limited to restaurants in a claim filed by a hair salon, or why Erie is not mentioned. Perhaps the complaint was adapted from an earlier one pertaining to restaurants and other insurers.)

Article Type:
Topic: Insurance

Most Recent Case Event

Erie Insurance Exchange No Coverage for Covid-19 Closures Complaint

June 10, 2020

Due to state-mandated closures to prevent the spread of Covid-19, many small businesses have lost money. Some of these businesses are looking to their insurance policies to cover these losses. The complaint for this class action alleges Erie Insurance Exchange should be covering business income losses to its insureds. Erie has refused to pay for such claims because the businesses “did not suffer damage to its property.”

Erie Insurance Exchange No Coverage for Covid-19 Closures Complaint

Case Event History

Erie Insurance Exchange No Coverage for Covid-19 Closures Complaint

June 10, 2020

Due to state-mandated closures to prevent the spread of Covid-19, many small businesses have lost money. Some of these businesses are looking to their insurance policies to cover these losses. The complaint for this class action alleges Erie Insurance Exchange should be covering business income losses to its insureds. Erie has refused to pay for such claims because the businesses “did not suffer damage to its property.”

Erie Insurance Exchange No Coverage for Covid-19 Closures Complaint
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance