Another Way to Lose a COVID Insurance Claim — Twice

Periodically, we check in on the progress of various claims arising out of the COVID epidemic. One line of cases involves university students suing their schools for closing campuses in the Spring of 2020 and offering only partial reimbursements of tuition and fees. Some recent examples can be found here and here. A second line involves business interruption insurance claims, and those mostly don’t succeed, as related here with a link to other cases. A recent exception is discussed here.

Washington State Convention Center Public Facilities District v. Employers Insurance Company of Wassau, decided on appeal in the Ninth Circuit, is pretty typical of how these cases go. The Convention Center was unable to host events in due to government restrictions. It sought coverage under its business interruption insurance policy, which covered losses “sustained . . . during the period of interruption if an order of civil or military authority prohibits access to a covered location provided such order is caused by physical loss or damage of the type insured by this Policy at a covered location.”

There were only two problems. First, like many other courts, the Ninth Circuit concluded that the COVID pandemic did not entail any “physical loss or damage” to its property. Even if there were such loss or damage, the policy also contained an exclusion for “contamination” that makes it impossible to use the property. Contaminants are defined to include “[a]ny . . . virus[ or] disease[-]causing or illness[-]causing agent,” and thus the Ninth Circuit affirmed the District Court’s grant of the insurer’s motion to dismiss.