Many businesses are hoping to gain some coverage for pandemic-related business interruption. The decisions are starting to reach the jury pool.
Baylor College of Medicine secured a victory late this month when a Texas jury handed the college a $12 million verdict, finding Baylor’s losses due to the COVID-19 pandemic are covered by its commercial property insurance policies.
Baylor filed a lawsuit in September 2020 against several Lloyd’s of London syndicates seeking coverage for the losses and the jury awarded Baylor roughly one fourth of the $48.5 million damage incurred.
This was likely the first jury trial in the United States on the issue of whether a commercial property insurance policy covered business interruption losses due to the pandemic and the first to result in a plaintiff’s verdict.
Risk & Insurance® spoke with Robin Cohen, chair of Cohen Ziffer Frenchman & McKenna LLP, to find out more about this groundbreaking case and the implications of the verdict for insurers and policyholders alike.
Risk & Insurance: What is the background story to the case?
Robin Cohen: Baylor College of Medicine is a health sciences university in Texas that earns income through providing medical services, professional education and research laboratories.
Like many businesses, Baylor had a property and business interruption (BI) insurance policy during 2020 that covered “all risks” of loss, including “loss resulting from [the] necessary interruption of business … caused by direct physical loss, damage, or destruction … to real or personal property.”
As opposed to named perils policies, the express purpose of “all risks” policies is to cover all risks of loss unless specifically excluded by the policy.
Baylor paid more than $1.2 million in premiums for up to $100 million in such coverage during 2020.
When the college filed a claim against its insurers, though, for its massive property and BI losses due to the presence of SARS-CoV-2 or people infected with the disease COVID-19 on its properties, Baylor’s insurers denied coverage, so Baylor filed the lawsuit.
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