CAA loses insurance claim due to COVID-19 –

Two years after the decree of total confinement to prevent the spread of COVID-19, jurisprudence in favor of insurers sued for denying claims grows.

On Wednesday, a federal judge in California finally dismissed a creative artists agency’s lawsuit against Affiliated FM Insurance for refusing to cover losses related to business closures caused by the virus. Following a long line of precedent, U.S. District Judge Andre Birot Jr. decided that “direct physical loss or harm” policies do not cover policies related to the pandemic.

As local governments began issuing stay-at-home orders in 2020, billions of dollars in claims, many from companies in the live events and entertainment industry, have sprung up across the country. But instead of paying, insurers looked at the minor issue and rejected it en masse. The industry collectively decided that lost revenue business interruption policies would exclude coverage for pandemic closures, arguing that loss or physical injury was necessary. A legal war has begun: More than 2,300 lawsuits have been filed challenging coverage decisions, according to the COVID-19 Insurance Litigation Tracker created by Penn law professor Tom Baker. Nearly 92%, or 792,862 cases that were considered for dismissal, were deferred.

The fate of the CAA claim, like the others, depended on the existence of “physical damage” to the insured asset. The agency said its losses were a “direct result of physical loss and damage” under the civil authorities’ closing order. He said the physical presence of the virus in the air and on surfaces had rendered his building useless.

Birot rejected the argument, ruling that the CAA was unable to establish how the virus particles caused a “physical change” in its facilities. “For example, some external force must act on the insured property to cause a physical change in the condition of the property,” he wrote.

Inside Posadas del Mar v. California Mutual Insurance Company., the first California appeals court case involving a COVID-19 coverage dispute, found that the Inns also failed to establish any direct physical damage to property that caused the disruption of operations, even though the virus was present in their homes. installations.

A nearly identical lawsuit by United Talent Agency against its insurer, Vigilant Insurance, ended like this. “In light of the COVID-19 pandemic, many policyholders have presented arguments similar to those of the UTA, and most courts have rejected them,” said an April order by a state appeals court affirming the dismissal of the case. “It is now widely established that the temporary loss of use of property due to pandemic-related closure orders, without further ado, does not constitute direct physical loss or injury.”

The judge also denied that there was coverage under a CAA policy clause that would have covered business interruption losses caused by civil authorities. Birot found that the orders were issued to prevent the spread of COVID-19, not as a result of physical damage to property.

However, the CAA had a provision in its policy that excluded “recovery of any costs arising from the contamination, including the inability to use or occupy the property, or make the property safe or fit for use.”

The CAA cannot deny that civil government shutdown orders were issued in response to COVID-19 and that the virus is an “immediate effective” cause of the losses incurred, Birot found. “Several courts in this circuit have held that similar pollution exclusion clauses preclude coverage even though plaintiffs can show they have suffered ‘physical damage or loss’ to their facilities,” the order reads.

The agency was not given the opportunity to amend its claims because it did not identify additional claims that could be included in a healthy amendment, “particularly when considering binding precedents that deny its claims.”

According to the COVID-19 Insurance Litigation Tracker, there have been 73 lawsuits filed by companies in the live sports and arts industry.

The CAA declined to comment. The affiliate and its attorneys did not respond to requests for comment.

CAA, the affiliate and their attorneys did not respond to requests for comment.