Insurer Loses Bid To Dismiss COVID Business Interruption Case

A federal district court has refused to dismiss COVID-19-related business interruption coverage litigation filed by a shopping mall owner against an American International Group Inc. unit, concluding that its policy’s pollution and contamination exclusion is ambiguous.

C.J. Segerstrom & Sons, which owns and operates South Coast Plaza, a Costa Mesa, California, mall, filed the suit against AIG unit Lexington Insurance Co. and Starr Surplus Lines Insurance Co., according to Tuesday’s ruling by the U.S. District Court in Los Angles in C.J. Segerstrom and Sons v. Lexington Insurance Co. et al.

Segerstrom’s policies provided up to $5 million in coverage under a ‘Special Time Element-Cancellation Coverage’ provision for losses related to ‘interference with the business of any insured location’ as the result of an occurrence, the definition of which included ‘contagious or infectious disease.’