Summary Judgement Granted in COVID-19 Coverage Case

(New Jersey) - Senior partner Anthony W Guidice has obtained a Summary Judgment for a corporate insurance carrier facing a property damage lawsuit for high six-figure revenue losses associated with the closure of the plaintiff's hair salon during the pandemic. Plaintiff alleged that COVID-19 caused property loss and physical harm to the premises, that the virus exclusion was inapplicable, and that New Jersey Governor Murphy's Closure Order on March 16, 2020, was the proximate cause of the shutdown.
Guidice argued that to trigger coverage, there must be physical harm or property damage and that it must be a material alteration or "actual" physical damage to the property. Further, even if coverage were to be triggered, the virus exclusion contained in the policy was clear and unambiguous and must be read as written. Finally, Guidice argued that the proximate cause of the shutdown was due to the virus, rather than Governor Murphy's Closure Order.
The Court’s dismissal of the lawsuit was a major victory for our client, as this was the first case faced by this carrier. Hundreds of lawsuits have been filed by policyholders seeking damages for breach of contract and business interruption associated with the pandemic. We anticipate that continued litigation will address the impact of the pandemic on businesses and insurers as this emerging area of the law develops.