In SJP Inv. Ptrs. LLC v. Cincinnati Ins. Co., No. 2:20-CV-1033-RDP, 2021 WL 3851979 (N.D. Ala. August 27, 2021), a hotel operator claimed insurance coverage under its policy with Cincinnati Insurance Company.
Now, followers of "coverage for COVID" will know that Cincinnati has been fairly successful in its arguments that its coverages tied to physical injury to tangible property do not provide coverage for businesses interrupted by COVID, in basic and simple terms. That is what Cincinnati argued, successfully, in this case with respect to its "Commercial Output Program -- Income Endorsement, which encompasses the loss of income and civil authority claim[.]" SJP, 2021 WL 3819579, at *1.
Federal Judge Proctor took close to three star pages in Westlaw to follow the holdings of other courts in which coverage was rejected because in their view, coverage was tied to physical injury to tangible property which, again in their view, should not include business interruption coverage claims.
Cincinnati was so enamored of this argument, that all insurance coverage for COVID-related claims necessarily depends always on tangible injury to physical property, that it repeated the argument with regard to the other part of the same insurance policy which the hotel operator argued that Cincinnati also breached: "the Commercial Output Program -- Crisis Event Expense Coverage Endorsement, which includes the communicable disease claim." SJP, 2021 WL 3819579, at *1.
Federal Judge Proctor took almost two paragraphs to reject this argument.
It is not clear from the opinion in SJP what the "communicable disease claim" was all about, if anything, but it will be clear to most insurance coverage lawyers that the Commercial Output Program -- Crisis Event Expense Coverage Endorsement contains several coverages. It will be clear from what the Court actually wrote, that all the coverages "within that section are based on the presence of a 'covered crisis event,' not 'direct physical loss or damage.'" SJP, 2021 WL 3819579, at *5 (emphasis added).
The narrow holding here is that the complaint was drafted in such a way that Judge Proctor "cannot say that an amendment to Plaintiff's pleadings related to Crisis Event coverage would be futile." SJP, 2021 WL 3819579, at *5. That is all that is actually stated about it in the opinion.
Coverage for the crisis event covered damages allegedly caused by the COVID crisis. The boldfaced, italicized and partial underlining above drives home that point. That is the holding that can be transferred by other advocates to other cases, to other insurance policies, and to other jurisdictions.
Coverage counsel for policyholders and coverage counsel for carriers alike would do well to follow the Biblical admonition, among all other Biblical admonitions of course: Those who have ears to hear, let them hear.
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