Judge a man by his questions
Rather than by his answers.
-Voltaire
A fundamental coverage question is whether covid-19 can be considered a “physical loss or damage” to insured property. As discussed in an earlier blog, usually business interruption insurance is not triggered unless there’s “physical loss or damage” to insured property.
Courts throughout the nation have reached these conclusions about containments:
- Asbestos can cause physical loss or damage to insured property if it actively presents a health hazard. Sentinel Mgmt. Co. v. Aetna Cas. & Sur. Co. Nos. C2-98-2304, CX 98-2372 (Minn. App. July 27, 1999);
- Bacteria can cause physical loss or damage to insured property. Pillsbury Co. v. Underwriters at Lloyd’s, London, 705 F.Supp. 1396 (D. Minn. 1989);
- Fumes can cause physical loss or damage to insured property. Western Fire Insurance Co. v. First Presbyterian Church, 437 P.2d 52 (Colo. 1968); and
- Lead can cause physical loss or damage to insured property. Pirie v. Federal Insurance Co. 696 N.E.2d 553 (Mass. App. 1998).
One takeaway is that less-tangible containments like asbestos and bacteria can cause physical loss or damage to property. Because covid-19 is akin to bacteria, an argument could be made that it caused physical loss or damage to property. Another takeaway is that these containments rendered the insured property uninhabitable which, to the courts, meant the property sustained physical loss.
If, however, the physical loss or damage requirement is not met, possibly there are other avenues for coverage. That’s discussed here.
Have questions? Contact Me for a free consultation.