N.Y. policyholder wins in COVID business interruption case

The court found that some exclusions in the policy were inapplicable to the unprecedented pandemic situation of 2020. (Credit: J. Albert Diaz/ALM)

New York Federal Judge Analisa Nadine Torres, with the U.S. District Court for the Southern District of New York, has denied an insurer’s dismissal of a COVID-19 coverage case, issuing a favorable decision for an insured. In what stands as the first win for policyholders in a New York COVID-19 insurance coverage case, the ruling found that the contamination exclusion was ambiguous and that the Court lacked a sufficiently developed factual record to rule on whether the Loss of Use exclusion encompassed the insured’s losses.

Thor Equities, LLC, a commercial landlord, rents properties across the country to hundreds of tenants for use in various businesses, including office space, retail stores, restaurants, and bars. On March 13, 2020, Thor purchased an insurance policy from Factory Mutual (FM) Insurance Company. The policy provided up to $750 million in coverage for property damage and business interruption losses. Days later, state governments across the country adopted stay-at-home orders in response to the COVID-19 pandemic. As a result, many of Thor’s tenants were forced to close shop and unable to generate revenue, so they requested abatements or other accommodations. Thor alleged that it suffered significant business interruption as a result of the pandemic.