Though the COVID-19 pandemic may now be the new normal to many of us, courts are continuing to address new questions stemming from ongoing issues related to the pandemic. As businesses struggled to remain unharmed by the pandemic and protect their employees from illness, some insurers have made the task even more difficult through denials of coverage relating to COVID. A Federal Court in Virginia recently dealt with one such issue in Carilion Clinic v. American Guarantee and Liability Insurance Company.
The Plaintiff in this case, Carilion Clinic, brought suit against their insurer alleging damages for the insurer’s denial of coverage under the Plaintiff’s $1.3 billion property damage and business interruption policy, for which they paid approximately $1 million in premiums. The insurer failed to honor the terms of the policy and provide coverage after more than 10% of the Plaintiff’s employees became ill with COVID. The Plaintiffs alleged that this failure manifested in two ways, first that the insurer failed to provide coverage for property damage sustained through the spread of COVID on company property, and second for denial of coverage relating to business interruption.
Though many courts have held that damages related to COVID do not require coverage, the Court in this case stepped away from that line of thought and stated that the Plaintiff’s claims relating to business interruption warranted extended discovery, as the filing deadline resulted in a hasty discovery process and issues relating to business interruption had not been fully presented to the Court.