Mark’s Engine Co. No. 28 and Restaurant 10E, two southern California eateries, filed COVID-19 business interruption lawsuits last year in Federal Court in the Central District of California. The restaurants argued that the virus exclusions on their Travelers insurance policies’ were not applicable to the restaurants’ claims, because the restaurants never detected any COVID-19 at the restaurants.
Travelers responded that their policies cover only “direct physical loss of or damage to property”, such as when a fire or plumbing leak damages the insured property, resulting in an interruption of business operations. Travelers further argued that there was not even an actual interruption in the eateries’ business operations because they were able to provide delivery and carry-out services during the pandemic. Both cases were dismissed in August and October of 2020 and the restaurants appealed.
Travelers’ written documents to the Ninth Circuit Court of Appeal argued that the appellate court should follow the overwhelming consensus of other courts throughout the country that have dismissed COVID-19 business interruption claims. We will keep an eye on this case and report to you later.