A federal district court in California has refused to dismiss COVID-19-related coverage litigation filed by a preschool against a Markel Corp. unit, based on a communicable disease confirmation in its coverage.
Saturday 14 March at a parent of one of the students at Baldwin Academy in San Diego informed the staff that she and the student's grandparent had tested positive for COVID-19, according to the Monday decision of the U.S. District Court in Los Angeles Baldwin Academy, Inc. et al v. Markel Insurance Co. et al.
The parent had repeatedly visited Baldwin's campus during the previous week to drop off and pick up a student, the school said, according to the decision. After receiving the parents' e-mail, Baldwin's staff notified parents on Sunday, March 1
On March 16, the mayor of San Diego issued an executive order in response to COVID-19 followed by the California Government's executive order Gavin Newsom on March 19 directing all Californians to stay at home.
Baldwin filed a business loss claim with Markel Inc., Markel Insurance, which the insurer denied. The school brought an action against the insurer for breach of the agreement, and breach of the implied agreement on good faith and fair trade, and sought explanatory relief.
The ruling said that this case is unique compared to other COVID-19 related disputes, which courts have "uniformly rejected" because Baldwin does not seek coverage for losses under a "traditional" business income or civil authority provision.
Rather, the school based its complaint on a "California Business Income Changes – Communicable Disease and Food Contamination" "Confirmation in its coverage.
"There does not appear to be any dispute between the parties that COVID-19 is considered a 'contagious disease' as defined by the policy," the decision said.
It was stated that Markel's denial of the claim is based on three conditions which are alleged to be met in order for the claim to be covered: an outbreak of the disease; closure or closure of the business based on an authority order; and the government-ordered shutdown was the result of an outbreak.
Markel claimed that there was no outbreak in Baldwin; the closure of the school was voluntary and occurred before the issued government and was therefore not the result of a government order. and the government – ordered that closure was not the result of anything that happened in Baldwin.
The court disagreed. The parents' report "gives rise to a probable conclusion that an outbreak of COVID-19 occurred in Baldwin", it is said.
The plaintiffs have also "probably claimed" that the suspension was the result of orders from the San Diego mayor and governor, it said, adding that the school's closure took effect on the same day the San Diego order was issued.
In addition, while Markel claims that the approval requires the government-ordered suspension to be caused by an outbreak on the premises, "the court does not agree that the approval necessarily requires this causal link", was mentioned in the decision to refuse Markel's proposal to reject the case.  Markel's lawyer had no comment, while Baldwin's lawyer did not respond to a request for comment.
Last week, a federal appeals court upheld a lower court ruling in favor of a Markel Corp. unit, stating that restaurant owners were not entitled to coverage for a fire at their Seattle restaurant because of false statements they had made in their policy application.
More insurance and risk management news about the coronavirus crisis  here .