Another federal court in California ruled on Monday that an insurance company does not have to cover business interruption losses for a policyholder who closed its business due to government-ordered COVID-19 locking.
A Travelers Cos Inc. unit is not liable to pay a lost income claim filed by Mudpie Inc., a San Francisco children's clothing and toy store, because the store did not suffer any physical loss under the terms of the policy, the court ruled.
I Mudpie Inc. v. Travelers Casualty Insurance Co. of America which was heard in the U.S. District Court for the Northern District of California, said the store had lost revenue after being forced to close earlier this year to limit the spread of COVID-1
Hundreds of companies across the United States have filed similar complaints.
In his decision for the insurer, the U.S. District Court Judge Jon S. Tigar pointed out that the travel policy states that the insurer “will not pay for loss or damage caused by or as a result of … loss of use or loss of market. "
The separate provision for loss of use suggests" that the clause on "direct physical loss of … property" was not intended to cover a loss where the property was rendered unusable but an intrusive physical force, "the judge decided to grant Travelers
At the end of last month, Traveler made a similar victory in a case heard in a California federal court with a local restaurant and on Friday another federal court in the state ruled in favor of Zurich Insurance Group Ltd.
To date, most COVID-19 business interruption decisions have benefited insurers, but many other state and federal court decisions are expected in the coming months.
However, judges in the UK ruled on Tuesday. that insurers would under certain circumstances cover coronavirus-related losses.
More insurance and risk management news about the coronavirus crisis here .