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Erie Insurance Exchange Refusal to Pay for Covid-19-Related Losses Class Action

Three businesses in Pennsylvania and Virginia are suing Erie Insurance Exchange, because of losses incurred due to measures taken to prevent the spread of Covid-19. The three, High Tech Hair, LLC, Capucinno [sic] Pizzeria Ristorante La Villa, and Rose Glam Hair Studio, LLC, were all insured under Erie’s Ultrapack Plus Commercial Property Coverage form.

The complaint explains the coverages under the policy this way:

  • Income Protection Coverage: For “loss of income sustained due to partial or total interruption of business resulting directly from loss or damage to property on the insured premises.”
  • Extra Expense Coverage: For “necessary expenses incurred due to partial or total interruption of business resulting directly from loss or damage to property on the insured premises.”
  • Civil Authority Coverage: For “loss of income sustained, and extra expense incurred, as a result of an action of a civil authority that prohibits access to the insured premises, when the civil authority action is taken in response to damage to property other than the insured premises but within one mile of the insured premises.”
  • The “Sue and Labor” provision: Requires that insureds “[p]rotect the property from further damage” and “make reasonable repairs…”

The complaint points out that Erie’s forms “[do] not include, and [are] not subject to, any exclusion for losses caused by the spread of viruses or communicable diseases.

At issue in this case, the complaint alleges, is the meaning of “direct physical loss of or physical damage to” covered properties. The complaint contends that the three business owners “were forced to suspend or reduce their business operations at all of their respective premises due to Covid-19 and the resultant closure and stay at home orders issued by civil authorities…”

Covid-19 damages property, the complaint says, because it “makes it unsafe. It causes sickness.”

The complaint alleges that the businesses are asking Erie “to pay for their loss of business income occasioned directly by losing the use and functionality of their Covered Property for business purposes…”

Eight classes have been defined for this action:

  • The Income Protection Breach Class is all persons or entities that (a) had Income Protection Coverage” under and Ultrapack Property Coverage Form issued by Erie, (b) suffered a suspension of business related to Covid-19 at the covered premises, (c) made a claim under the insurance, and (d) were denied Income Protection Coverage by Erie for the suspension of business resulting from the presence or threat of Covid-19.
  • The other classes include three other Breach Classes for Civil Authority, Extra Expense, and “Sue and Labor,” and four Declaratory Judgment Classes for Income Protection, Civil Authority, Extra Expense, and “Sue and Damage.” For detailed definitions of each of these classes, see pages 15-16 of the complaint linked below.
Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Erie Insurance Exchange Refusal to Pay for Covid-19-Related Losses Complaint

December 3, 2020

Three businesses in Pennsylvania and Virginia are suing Erie Insurance Exchange, because of losses incurred due to measures taken to prevent the spread of Covid-19. The three, High Tech Hair, LLC, Capucinno [sic] Pizzeria Ristorante La Villa, and Rose Glam Hair Studio, LLC, were all insured under Erie’s Ultrapack Plus Commercial Property Coverage form.

Erie Insurance Exchange Refusal to Pay for Covid-19-Related Losses Complaint

Case Event History

Erie Insurance Exchange Refusal to Pay for Covid-19-Related Losses Complaint

December 3, 2020

Three businesses in Pennsylvania and Virginia are suing Erie Insurance Exchange, because of losses incurred due to measures taken to prevent the spread of Covid-19. The three, High Tech Hair, LLC, Capucinno [sic] Pizzeria Ristorante La Villa, and Rose Glam Hair Studio, LLC, were all insured under Erie’s Ultrapack Plus Commercial Property Coverage form.

Erie Insurance Exchange Refusal to Pay for Covid-19-Related Losses Complaint
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance