Liberty Mutual No Payouts for Covid-19 Shutdown Losses Class Action

Businesses buy commercial property insurance to protect themselves from a variety of risks, including temporary shutdowns. The shutdowns to restrict the spread of the coronavirus have caused losses for a large number of businesses, but many insurance companies are refusing to make payouts. The complaint for this class action brings suit against Liberty Mutual Insurance Company for rejecting the claims of their insureds.

The Nationwide Class for this action is all persons and entities who have a standard commercial property insurance policy with a Liberty Mutual carrier to insure property in the US, where the policy provides for business income loss and extra expense coverage and does not exclude coverage for pandemics, and who have suffered losses due to measures required in a Covid-19 civil authority order.

The California Subclass is the same, except that it applies to such policies insuring property in California.

Plaintiff JAJ Group, Inc. does business as Earl of Sandwich in San Diego, California. The business was required to close on March 19, 2020 by civil authority orders related to Covid-19.

In this order, Governor Gavin Newsom required “all individuals living in the State of California to stay home or at their place of residence except as needed” for essential services, and to engage in social distancing. Since the Earl of Sandwich is not considered an essential business, it was required to close its doors.

At this point, the complaint says, forty-nine states have enacted civil authority orders prohibiting or severely limiting the operations of nonessential businesses.

Earl of Sandwich’s insurance policies with Liberty Mutual are all-risk policies that cover loss or damage to the covered premises from all causes other than those specifically excluded.

Among the coverages of the policy, the complaint quotes the Businessowners Coverage Form as saying that Covered Causes of Loss include “[d]irect physical loss unless the loss is excluded or limited under Section I—Property.”

The policy also includes Additional Coverage for Business Income, Extra Expense, and Civil Authority, which the complaint alleges are all relevant here.

The policy does have a Virus or Bacteria exclusion that excludes “loss or damage” “caused by or resulting from” “any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.” However, the complaint asserts that this does not exclude Earl of Sandwich’s losses because “the efficient proximate cause of losses was precautionary measures taken by the state to prevent the spread of Covid-19 in the future, not because coronavirus was found on or around [Earl of Sandwich’s] insured property.”

Similarly, the complaint claims that the Pollution exclusion does not apply either, because the coronavirus does not constitute a pollutant and, again, the cause of the losses were the precautionary measures and not the actual presence of the coronavirus at the property.

Liberty Mutual has refused to make a payout based on Earl of Sandwich’s claims, without any inspection or review of the company’s location or its documents, the complaint alleges.

Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Liberty Mutual No Payouts for Covid-19 Shutdown Losses Complaint

August 20, 2020

Businesses buy commercial property insurance to protect themselves from a variety of risks, including temporary shutdowns. The shutdowns to restrict the spread of the coronavirus have caused losses for a large number of businesses, but many insurance companies are refusing to make payouts. The complaint for this class action brings suit against Liberty Mutual Insurance Company for rejecting the claims of their insureds.

Liberty Mutual No Payouts for Covid-19 Shutdown Losses Complaint

Case Event History

Liberty Mutual No Payouts for Covid-19 Shutdown Losses Complaint

August 20, 2020

Businesses buy commercial property insurance to protect themselves from a variety of risks, including temporary shutdowns. The shutdowns to restrict the spread of the coronavirus have caused losses for a large number of businesses, but many insurance companies are refusing to make payouts. The complaint for this class action brings suit against Liberty Mutual Insurance Company for rejecting the claims of their insureds.

Liberty Mutual No Payouts for Covid-19 Shutdown Losses Complaint
Tags: Business Insurance, Covid-19 Related, Denial of Benefits, Insurance