Louisiana And New York Courts Becomes First To Confirm Liability For COVID-19 Shutdowns

There is a hole in the dam. Prior to June 14, every one of the 77 federal and 44 state court appellate decisions interpreting the meaning of ‘direct physical loss or damage’ in a standard-form commercial property insurance policy had ruled against the policyholder.

Federal courts had dismissed 96.4% of the 637 COVID-19 coverage lawsuits filed, and state courts have done the same to 73.2% of suits filed in state courts. That has all changed.

On June 14, 2022, a New York appeals court allowed New York Botanical Garden to go forward with a lawsuit filed against Allied World Assurance Company (U.S.), Inc. seeking recovery of first-party business interruption losses after it was forced to close its doors following government shut-down orders.

The court found that coverage was owed under a pollution legal liability policy purchased by the New York Botanical Garden. However, that policy did not contain the usual policy language requiring a ‘direct physical loss or damage.’