Category: Virus exclusions

Author: Tom Baker Date: 12.02.21

The Court of Appeals of Ohio, Eighth Appellate District, County of Cuyahoga affirmed the dismissal of The Nail Nook v. Hiscox Insurance Company.  The trial court had dismissed the case based on the presence of a virus exclusion in The Nail Nook’s policy.  The Ohio Court of Appeals affirmed, holding “we agree with the trial court that, ‘[u]nder the policy’s clear and unambiguous virus exclusion, Nail Nook’s alleged losses are excluded from coverage.'”  Notably, the court went further than necessary, concluding that The Nail Nook “could not prove, ‘direct physical loss of or damage to Covered Property.'”  The court concluded by quoting the 6th’s Circuit’s recitation of the classic “responsibility to future claimants” claims story:

Efforts to push coverage beyond [the policy’s] terms creates a mismatch, an insurance product that covers something no one paid for and, worse, runs the risk of leaving insufficient funds to pay for perils that insured’s did pay for.

Santo’s Italian Cafe LLC, 2021 U.S. App. LEXIS, at 22-23.  See Tom Baker, Constructing the Insurance Relationship: Sales Stories, Claims Stories, and Insurance Contract Damages, 72 Tex. L. Rev. 1395, 1410 (1994).

Author: Tom Baker Date: 10.27.20

A second shoe dropped yesterday on The Hartford’s unique virus exclusion.  Last month, a Florida Federal Court ruled that the exclusion was ambiguous in Urogynecology Specialist of Fla. LLC v. Sentinel Ins. Co., Ltd., 6:20-cv-1174-Orl-22EJK, 2020 WL 5939172, at *3 (M.D. Fla. Sept. 24, 2020).  Yesterday, a California Federal Court granted Capital Insurance Company’s motion to dismiss based on the following pathogenic organism exclusion, which the court referred to in the Covid-19 context as a “virus exclusion”:

We do not insure for loss or damage caused by, resulting from, contributing to or made worse by the actual, alleged or threatened presence of any pathogenic organism, all whether direct or indirect, proximate or remote, or in whole or in part caused by, contributed to or aggravated by any physical damage insured by this policy . . . .

Boxed Foods Corp. v. California Capital Ins. Co. , 3:20-cv-04571-CRB (N.D. Cal. Oct. 26, 2020).  In granting the motion to dismiss, Judge Breyer distinguished The Hartford’s virus exclusion, writing, in footnote 8:

The Court’s holding should not be construed to necessarily apply to all virus exclusions. The Virus Exclusion [at issue in this case] casts an exceptionally wide net relative to other virus exclusions because it lacks relevant limitations and ambiguous language. Compare Policy at 47 with Urogynecology Specialist of Fla. LLC v. Sentinel Ins. Co., Ltd., 6:20-cv-1174-Orl-22EJK, 2020 WL 5939172, at *3 (M.D. Fla. Sept. 24, 2020) (involving a virus exclusion that contained ambiguous language and potentially permitted the plaintiff’s claim).