This article is adapted in part from § 7:20 Virus Exclusions and the Coronavirus Pandemic of Covid-19 in the forthcoming CATASTROPHE CLAIMS: INSURANCE COVERAGE FOR NATURAL AND MAN-MADE DISASTERS (Thomson Reuters November 2022 Edition) ©THOMSON REUTERS.
It is worth considering the facts behind the "disease contamination" claim that the policyholder made in Dental Experts, LLC v. Massachusetts Bay Insurance Co.[1] Dental Experts, the policyholder, operates 73 dental offices along with its affiliates in 9 states and the District of Columbia. All of them were covered by an insurance policy which contained the following "disease contamination provision":
We will pay the actual covered loss of “business income” or “extra expense” you sustain due to the necessary “suspension” or delay of your “operations” during the “period of Restoration”. The “suspension” must be caused by a disease contamination event declared by the National Center for Disease Control, or the applicable city, county or state Department of Health.[2]
The coronavirus pandemic spread to the states in which Dental Experts and its affiliates were located. State and local authorities across the country issued orders "suspending the operations of nonessential businesses."[3] The Dental Experts practices complied and lost business income.
For present purposes, perhaps the most significant aspect of this case is that Dental Experts made a claim after reading their policy. They did not rely on what someone told them about how hard it was and still is to claim Business Income coverage. They did not rely on the headnotes attached to cases involving other kinds of insurance policies. To say again, they read their policy and they made a claim.
Their insurance carrier "concluded that Dental Experts was entitled to coverage under the disease contamination provision" and paid indemnity under the policy.[4] If Dental Experts had not made a claim under the disease contamination provision we would never have seen this case in which Dental Experts and its carrier argued not whether the disease contamination coverage applied, but for how much.
"Nothing has quite tested the principles of insurance law more in recent memory than the COVID-19 pandemic."[5]
[1] Dental Experts, LLC v. Massachusetts Bay Ins. Co., No. 20 C 5887, 2022 WL 2528104 (N.D. Ill. July 7, 2022).
[2] Dental Experts, 2022 WL 2528104, at *1.
[3] Dental Experts, 2022 WL 2528104, at *1.
[4] Dental Experts, 2022 WL 2528104, at *1 (emphasis added).
[5] Sunstone Hotel Investors, Inc. v. Endurance Am. Spec. Ins. Co., No. SACV 20-02185-CJC(KESx), 2022 WL 2206900, at *1 (C.D. Cal. June 15, 2022).
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