New Jersey Supreme Court docket to rule on pandemic-related insurance coverage exclusions

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New Jersey’s Supreme Court docket is contemplating whether or not an Atlantic Metropolis on line casino can get payouts from enterprise interruption insurance coverage for losses in the course of the COVID-19 outbreak, probably offering steerage for policyholders nationwide relating to the scope of protection for pandemic-related losses.

The state’s excessive courtroom heard arguments Wednesday in a case introduced by the house owners of the Ocean On line casino Resort, which had $50 million in enterprise interruption insurance coverage earlier than the 2020 virus outbreak.

Three insurers — AIG Specialty Insurance coverage Co., American Assure & Legal responsibility Insurance coverage Co. and Interstate Fireplace & Casualty Co. — largely denied payouts to the on line casino, saying it didn’t endure direct bodily loss or injury due to the virus.

The on line casino sued and defeated an try by the insurers to dismiss the case. However that call was reversed by an appellate courtroom.

The problem has arisen in state and federal courts across the nation, together with instances the place payouts have been denied involving a sequence of California film theaters; a Los Angeles actual property agency; a gaggle of motels in Pennsylvania, and a gaggle of motels and a regulation agency in New Jersey.

“This case presents a generational authorized dispute that this courtroom ought to resolve with a purpose to present wanted readability to tons of of 1000’s of affected New Jersey policyholders and their insurers relating to the scope of protection for losses arising from the pandemic,” Ocean wrote in courtroom papers.

Attorneys for the insurance coverage corporations argued that their insurance policies clearly included viruses among the many record of issues that could possibly be excluded from protection. They added the on line casino didn’t define steps it was compelled to take to restore or take away the virus, saying the only real explanation for the closure was an order by New Jersey Gov. Phil Murphy on March 16, 2020, closing the casinos till July 2 of that 12 months.

Stephen Orlofsky, a lawyer for Ocean, mentioned the on line casino took a number of steps to answer the virus, together with using air filtration methods and utilizing “industrial-strength” cleansing provides.

However David Roth, a lawyer for American Assure, mentioned the insurance policies require there to be bodily injury to the property, which he mentioned didn’t happen on the on line casino. He mentioned 14 state Supreme Courts across the nation have held that the mere interruption of enterprise exercise in the course of the pandemic doesn’t represent bodily losses.

Ocean maintains that along with the governor’s order closing the casinos, it additionally shut down attributable to “the priority that the virus was having on the bodily surfaces and the air” contained in the on line casino, Orlofsky mentioned.

Final 12 months, the Supreme Court docket agreed to resolve some questions relating to the case.

They embody whether or not a declare that the coronavirus bodily broken insured property is sufficient to allege “direct bodily lack of or injury to” it, and whether or not insurers can legally prohibit protection for pandemic-related losses by mentioning viruses typically air pollution or “contamination” exclusions.

The on line casino sought payouts for losses incurred throughout that point underneath insurance policies from the three insurers. Though its important claims have been denied, the on line casino did obtain $850,000 underneath a separate coverage provision governing communicable illnesses.

“The precise and/or threatened presence of coronavirus particles on the Ocean On line casino Resort rendered bodily property throughout the premises broken, unusable, uninhabitable, unfit for its supposed perform, harmful, and unsafe,” the on line casino wrote in courtroom papers.

United Policyholders, an advocacy group for insurance coverage prospects, urges the justices in a friend-of-the-court temporary to rule in favor of the on line casino.

“The ruling sought by the (insurers) right here would curtail protection for hundreds of thousands of New Jersey policyholders,” it wrote. “The insurance coverage business at giant understood, previous to the COVID-19 pandemic, that the presence of a virus or any harmful substance, or the approaching threat of its presence at (an) insured property was able to satisfying their very own understood that means of ‘bodily loss or injury’ to property.”

The justices didn’t difficulty a ruling on Wednesday and didn’t point out after they would possibly accomplish that.


Observe Wayne Parry on X, previously Twitter, at

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