The New York Supreme Court has ruled that restaurants’ business losses from the coronavirus are not covered
Consolidated Restaurant Operations, a company that owns and operates dozens of restaurants, has acquired a commercial property policy from Westport Insurance Company. Subject to certain exclusions, the policy covers “all risks of direct physical loss or damage to the insured property” and business interruption losses “resulting directly from direct physical loss or damage” to the insured property. The insurer sued Westport for coverage of loss of revenue from SARS-Co-V2, the virus that causes COVID-19, present in its restaurants and as a result of personal dining services and related business interruption. loss The New York Court of Appeals affirmed the lower court’s dismissal of the insured’s complaint because it did not allege “direct material loss or damage,” which the court found required “general alteration or complete and continuous neglect of the insured property.” ” The court concluded as follows: “We do not take lightly the serious economic losses that restaurants and other businesses serving the public have suffered as a result of the COVID-19 pandemic. But our job is to faithfully interpret the terms of an insurance policy, not to ‘rewrite the language of politics’.[y] in the case’ to arrive at a result through ‘judicial appeal’. [Consolidated Rest. Operations, Inc. v. Westport Ins. Corp., 2024 N.Y. Lexis 66 (N.Y. Feb. 15, 2024).]
A New York trial court found that per occurrence limits for multi-year policies apply on a periodic (not annual) basis.
Century Indemnity Company insured Brooklyn Union Gas Company under several multi-year policies with per occurrence limits. After a trial, the jury found that Century was obligated to cover certain costs incurred by Brooklyn Union for the government-mandated cleanup of three sites in Brooklyn, New York, and that the total cleanup was the allocated costs for each year that Century had policies. impact In pre-trial and post-trial motions, the Brooklyn Union argued that any ambiguity against Century should be interpreted as drafting the policies. Contrary to theory And that, in any event, the per occurrence limit must apply on an annual basis for each year of a multi-year policy. The Supreme Court, New York County, rejected the argument and affirmed Contrary to theory The policies of the century did not apply because the Brooklyn Union was a sophisticated policyholder. In turn, the Court stated that “the most reasonable way to interpret a policy limit is that it does not specify a period of applicability and that the limit applies for the period the policy is in effect – whether it is one year, two. years or five years.” [Century Indem. Co. v. Brooklyn Union Gas Co., 2024 N.Y. Misc. LEXIS 98 (Sup. Ct., N.Y. Cnty. Jan. 5, 2024).]
The Second Department held that SUM coverage was not triggered because the tortfeasor’s liability policy had the same limits.
Claimants were in an automobile accident with a vehicle insured under a liability policy issued by Allstate. Allstate tendered a policy limit of $50,000 per accident on behalf of its insured (the alleged tortfeasor) in settlement of the claim. In turn, the claimants sought supplemental uninsured motorist (SUM) coverage under their own policy with State Farm that had a limit of $50,000 per accident. The New York Appellate Division, Second Department held that claimants were not entitled to SUM coverage because “[u]Under New York law, SUM coverage is triggered only when the bodily injury liability insurance limit of the policy covering the tortfeasor’s vehicle is less than the liability policy under which the party is seeking SUM benefits.” [Matter of State Farm Mut. Auto Ins. Co. v. Diaz, 2024 N.Y. App. Div. LEXIS 66 (2d Dep’t Jan. 10, 2024).]