Watch the full video at https://rumble.com/vpynys-a-video-explaining-pandemic-and-direct-physical-damage.html and at https: // youtu. be / G8deTukr-XA
The Covid-19 pandemic has resulted in several cases involving the need for actual tangible damage. For example, in a class action lawsuit, the attempt failed due to lack of direct physical harm.
Caribe Restaurant & Nightclub, Inc. ("Caribe") filed a class action lawsuit against defendant Topa Insurance Company ("Topa") alleging breach of contract and requests declaratory judgment for insurance coverage.
USDC settled a claim for Covid 19 business interruption in Caribe Restaurant & Nightclub, Inc., Individually and On Behalf of All Others Similarly Situated v. Topa Insurance Company, Case No. 2:20 -cv- 03570-ODW (MRWx), United States District Court Central District of California (April 9, 2021) as well as almost every court in the country.
Caribe owned and operated La Luz Ultralounge ("La Luz"), a restaurant and nightclub in Bonita , California. Caribe Purchased Topa Insurance ("Policy")
In March 2020, due to the covid-19 pandemic, the State of California and the County of San Diego ordered "bar closures" and "bans [ed] food on the spot. . " In May 2020, San Diego County allowed "resumption of on-site dinners" subject to restrictions. Caribe claimed that, as a result of the orders of these civilian authorities, it was forced to "stop or reduce operations" at La Luz. Caribe also claims that covid-19 "degraded Caribe's property by making it unusable in the way it had been used in the past."
Caribe claimed that its losses were covered by the insurance and identified four specific provisions: "Business income"; "Extra cost"; "Civil authority"; and the "Debt in the event of loss" (called the "Steems and Work" provision). Caribe submitted coverage requirements under these regulations, which Topa denied. Consequently, Caribe Topa sued, claiming that the refusal to cover was a breach of contract and sought a declaratory judgment.
Therefore, the court granted Topa's motion for dismissal without amendment.
As sad as the Covid 19 losses are, a court has no right to, nor will it change the wording of the policy. The damage inflicted on the Caribbean and those similarly caused was done by the State of California. If one fails to obtain insurance benefits, perhaps some creative lawyer will find a way to sue the state for its erroneous and allegedly unconstitutional orders that deprive the Caribe of the right to do business.
The Supreme Court of California, in Kazi v. State Farm Fire & Cas. Co. 24 Cal. 4th 871, 15 P. 3d 223, 103 Cal. Rptr. 2d 1, 15 P. 3d 223 (2001) found that a CGL insurer is only liable to compensate if there is damage to property. The court stated:
An ordinary liability insurer has an obligation to defend and compensate only for damage to property. The section on property loss in these policies provides coverage for physical damage, loss or destruction of property, and the focus of the damage protection is the property itself. (Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 17 (1995) (Waller).
For our purposes, it is important to note that the policies are not intended to cover losses of intangible property, including loss of an investment, loss of goodwill or loss of intangible property use (Id. at pp. 17-18; Gunderson, supra, 37 Cal. App. 4th at p. 1109.)  The Court found that an easement is intangible, so there was no obligation to defend or compensate an insured for such intangible losses.The Kazists had bought land (parcel A) in connection with parcel B, which was bought by the spouses Tollakson. a common driveway 20 feet wide bordering the boundary line.The Tollakson family assumed the existence of an implied easement.The Kazis family then graded an access road on parcel A near the boundary line.The Tollakson couple sued and claimed that the Kazier's access road obstructed Tol lakson's implied easement over Parcel A.
In Mraz v. Canadian Universal Insurance Co. 804 F. 2d 1325 (4th Cir. 11/04/1986) the Court of Appeal for the fourth district, with regard to defense costs as a result of state orders to decontaminate hazardous waste, concluded that:
Reaction costs are not in themselves property damage. An examination of CERCLA's provisions defining responses, § 9601 (23) – (25), and giving the President the right to take response measures, § 9604, makes it clear that property damage and response are independent; for example, the government can take response measures in the event of a significant threat to the release of hazardous substances before any damage ever occurs. Instead, litigation costs are an economic loss.
Since the court concluded that litigation costs were not "property damage" to tangible property, the insurer had no obligation to defend or indemnify.
Although Covid-19 has caused most of the dispute about the claim for damage to property, this video explains that it has been a problem for many years and has been upheld as a claim by the courts that have tried the issue. Of course, an insurer, if it so wished, could take out compensation for damage to intangible property, but if it did, it would be next to impossible to settle claims because the calculation of losses on intangible assets is necessarily speculative and difficult to determine with certainty.
] © 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.
He also acts as a mediator for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.
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He is available at http://www.zalma.com and firstname.lastname@example.org. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claimants to become professionals in insurance claims.
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