Simpson & McCrady, LLC, continues to monitor developments in various state and federal courts regarding claims by policy holders for business interruption coverage arising out of the disruption caused by the COVID-19 pandemic and how such decisions may potentially impact our clients.
For those clients in Pennsylvania, and especially in Allegheny County, you should be aware that Judge Christine A. Ward of the Allegheny County Court of Common Pleas issued a decision on March 22, 2021, in the matter of Ungarean, et al. v. CNA and Valley Forge Insurance Company (GD No. 20-006544) that found in favor of a policy holder asserting it was entitled to business interruption coverage after its business was essentially closed due to the disruption of COVID-19 and the resulting “stay at home” orders that were issued by Pennsylvania Governor Wolf.
Judge Ward’s ruling departs substantially from other state and federal courts in Pennsylvania and/or other jurisdictions which have held that coverage did not apply in the absence of “direct physical loss or damage” to the business due to COVID-19. To the contrary, Judge Ward held that coverage under policies for a “loss” exists when a business has lost and/or been deprived of the use of its business property even in the absence of physical damage. This ruling potentially broadens the availability of business interruption coverage in a substantial manner in favor of policy holders who may assert such claims for coverage within Allegheny County.
A policy holder who previously decided to not pursue a claim and/or had a claim based upon a determination that they had not sustained “direct physical loss or damage” due to COVID-19 may now want to consult with an attorney regarding options for revived claims for coverage given the potential ramifications of Judge Ward’s decision, especially if located in Allegheny County.
While this is certainly potentially positive news for insureds, it is our understanding that an appeal of Judge Ward’s decision is likely. As this case, as well as several others across the United States, continue to progress – we will make every effort to keep you informed.
As always, please know that we are here to answer any specific questions you may have in regard to the ruling.