• Capell Insurance

Does COVID-19 aka Coronavirus = Property Damage

Friends of Danny DeVito v Wolf may very well strip insurers of their biggest trump card in the denial of COVID claims.

The Pennsylvania Supreme Court ruled in support of Governor Wolf's action to 'close down' businesses and in doing so created a new hurdle for insurance companies to deny business interruption claims on the basis that the Coronavirus does not constitute physical damage.

In denying the plaintiff's request to vacate or strike the order, it is recognized that " the Governor is granted broad powers under the State’s Emergency Code to protect the public from “ damage, injury and loss of life and property resulting from disasters ” which includes the ability to order the shutdown of certain business and other operations" ... and next ruled the COVID-19 to be a disaster.

The PA Emergency Code defines a natural disaster to include " substantial damage to property, hardship, suffering or possible loss of life " - - focal language is emphasized. Here the court found " because the virus is spread from person-to-person contact, has an incubation period of up to fourteen days and can live on surfaces for up to four days , any location, including an individual business, is within a disaster area and is thus damaged. Additionally, the Court rejected the argument that the actual presence of the disease at a specific location was required before it could be shutdown, thus holding that all properties were damaged because of the manner in which the disease spreads ".

This ruling will undoubtedly be referenced in upcoming claims litigation.


PA Law Weekly

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