(Article from Insurance Law Alert, January 2023)
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Our December 2021 Alert reported on a New York trial court decision denying an insurer’s motion to dismiss a COVID-19-related coverage suit based on its finding that a communicable disease exclusion did not bar coverage. Tina Turner Musical LLC v. Chubb Ins. Co. of Europe SE, 2021 WL 5818352 (N.Y. Sup. Ct. Dec. 6, 2021). Last month, an appellate court affirmed the decision. Tina Turner Musical LLC v. Chubb Ins. Co. of Europe SE, 2022 WL 17419269 (N.Y. App. Div. 1st Dep’t Dec. 6, 2022).
The sole issue before the appellate court was whether coverage was barred by an exclusion that applied to “any loss directly or indirectly arising out of, contributed to by, or resulting from… any communicable disease or threat or fear of communicable disease” which leads to : . . . “the imposition of quarantine or restriction in movement of people or animals by any national or international body or agency” [or] . . . “any travel advisory or warning being issued by a national or international body or agency.” The trial court ruled that this provision did not apply because the policyholder’s losses stemmed from an order issued by the New York Governor rather than a national or international authority.
Affirming the decision, the appellate court rejected the insurer’s contention that the exclusion encompassed losses caused by communicable diseases “that were of such a systemic nature as to lead to quarantine or travel advisory orders by a national or international body or agency” in general, even where, as here, the specific losses at issue arose from an order issued by a governor. Rather, giving the exclusion “a strict and narrow construction” and resolving any ambiguities against the insurer, the appellate court explained that the exclusion was limited to losses resulting from orders issued by a national or international body or agency.