Truck Insurance Exchange No Coverage for Covid-19 Losses Class Action

In March 2020, the World Health Organization (WHO) classified the Covid-19 outbreak as a pandemic. That same month, the Centers for Disease Control and Prevention (CDC), the national Coronavirus Task Force, and numerous states undertook measures to stem the spread of the disease, including issuing orders to stay at home and close businesses. The complaint for this class action alleges that Truck Insurance Exchange is refusing to pay claims under all-risk policies for business losses.

The plaintiffs in this case are two businesses, Nora’s Style Salon, in Tappan, New York, and Kingray, Inc., which does business as La Quinta Beer Hunter, a sports bar and grill in Riverside County, California. Both had “standard ‘all-risk’ commercial property polices that cover loss or damage to the covered premises resulting from all risks other than those expressly excluded[,]” the complaint says.

The governors of both California and New York issued orders that curtailed the operations of beauty salons and restaurants. Civil orders in both states specifically stated that the virus was causing physical loss and damage to property (San Francisco Twelfth Supplemental Mayoral Proclamation, Public Order Under Los Angeles Emergency Authority, and New York Emergency Executive Order No. 100).

The plaintiffs’ polices are supposed to provide coverage for Business Income, Extended Business Income, Extra Expense, and Civil Authority losses.

Kingray’s policy had exclusions, including an Exclusion of Loss Due to Virus or Bacteria, a Mold and Microorganism Exclusion, and a Limited Coverage for Fungi, Wet Rot, Dry Rot, and Bacteria provision. But the complaint alleges, “None of the exclusions in Kingray’s Policy apply because the efficient proximate cause of Kingray’s losses were the Covid-19 Civil Authority Orders, not because coronavirus was found on or around insured property.”

Civil authority orders have forced both businesses to alter their physical plans and curtail their businesses to comply with Covid-19 orders. The complaint alleges, “The losses Plaintiffs suffered, including the physical dispossession of their tangible property, caused by the Covid-19 Civil Authority Orders is sufficient to trigger coverage under Plaintiffs’ Policies.”

The complaint defines a class and a subclass:

• The Nationwide Class is all persons and entities who entered into a standard commercial property insurance policy with Truck 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 put in place by a Covid-19 Civil Authority Order.
• The Subclass is all persons and entities who entered into a standard commercial property insurance policy with Truck to insure property in the US, where the policy provides for business income loss and extra expense coverage and contains no exclusion for mold, microorganisms, viruses, bacteria, and/or fungi, and who have suffered losses due to the presence of Covid-19 at the premises and/or measures put in place by a Covid-19 Civil Authority Order.

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