Insurance Companies Refusal to Cover Covid-19 Business Losses Class Action

The defendants in this class action are a long list of insurance companies, including Certain Underwriters at Lloyd’s, London, Westchester Surplus Lines Insurance Company, HDI Global Insurance Company, and others. These companies insured businesses for Business Income, Extra Expense, and Civil Authority coverage which the complaint alleges should cover losses to a group called the Hospitality Risk Management Association (HRMA) which were caused by the Covid-19 pandemic. However, the insurance companies are refusing to pay.

The Nationwide Class for this action is all named insureds to the policy, including Hospitality Risk Management Association and all owned, controlled, subsidiary, affiliated, and associated companies or corporations.

The plaintiff in this case, Icona Opportunity Partners 1, LLC, owns or operates three hotel properties in New Jersey, including the Icona Diamond Beach Hotel, the Icona Avalon Hotel, and the Icona Cape May Hotel. Icona is a member of HRMA, which purchased commercial property insurance issued collectively by the defendants in this case, with payouts to be made by them proportionately.

The policy, the complaint says, provides “coverage for all risks of loss except those specifically and unambiguously excluded.”

Icona’s policy included several additional coverage besides for losses of Business Income: Extra Expense, Civil Authority, Ingress/Egress (for losses when entrance or exit is impaired), Contagious Disease (for losses associated with the actual or suspected presence of a contagious disease), and Attraction Properties (for loss of third-party properties in the vicinity that attract customers to the insured business).

In March 2020, the complaint alleges, Covid-19 was reported at being present in every state in the US, spread via “community spread” and via droplets that could be deposited on surfaces or objects. To combat the disease, the complaint alleges, government authorities issued emergency orders requiring businesses to limit or discontinue their operations for a period of time.

Under an order from the governor of New Jersey, Icona was forced to suspend operations at all of its New Jersey properties. At the same time, New Jersey residents were required to stay at home “except for necessary travel … until further notice.” The order was later extended.

In June 2020, businesses were required to limit capacity to 25% of the capacity of the room in which business was taking place. As a result of these and similar orders from civil authorities, Icona was forced to curtail its business and suffered business losses.

However, the complaint alleges that the defendants in this case have reneged on their obligations to pay Icona’s business losses under the policy’s various coverages.

The counts ask for declaratory judgment for various coverages and claim breach of contract.

Article Type: Lawsuit
Topic: Insurance
Tags: Business Insurance, Business Losses, Covid-19 Related, Denial of Benefits, Insurance