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Mar.15.2021
Courts Dismiss COVID-19 Business Interruption Claims
On March 8, 2021, the district court for the Southern District of California granted Travelers Property Casualty Company of America’s motion to dismiss a flower importer and distributor’s COVID-19 extra expense claim. The court found that the policy’s Acts or Decisions Exclusion which “bars coverage for property damage, loss, and expense that is caused by or results from any decision, act or failure to act or decide, by…any ‘governmental body,’” unambiguously excluded coverage.
See Order at 13. Because Travelers based its denial of coverage on the applicable exclusion, the court similarly dismissed the plaintiff’s breach of implied covenant of good faith and fair dealing claim.
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It has been almost a year since federal, state, and local orders dramatically impacted many businesses’ ability to host customers and created a number of other related issues. Not long after these restrictions took effect, businesses that were impacted began making claims with insurers for first-party coverage related to the loss of business income. Consequently, these cases were heard by both the New Jersey Superior Court and the United States District Court for the District of New Jersey.
Most of these cases remain at the trial level. As such, there has been a limited opportunity for the courts to rule on the substance of these types of claims. However, in some instances, the parties have sought early dismissal through motions to dismiss. These early orders and opinions have revealed that New Jersey federal and state courts are willing to enforce virus exclusions when applicable. However, the courts have been un