Insurance Update

We bring you our July Insurance Update.

Perhaps the biggest news this month comes out of Michigan.

At a Zoom hearing on July 1, a Michigan Circuit Court judge became the first to hand down a decision on whether business interruption losses caused by COVID-19 are covered.  In Gavrilides Mgmt. Co. v. Michigan Ins. Co., the court ruled that a claim alleging loss of business due to shutdown orders was not covered because the complaint contained no allegations of “direct, physical loss or damage ” to the insured’s restaurants.  There are hundreds of similar suits pending across the country and we expect to see many more decisions in the upcoming weeks and months.  But this decision adopts one of the insurers’ primary arguments against coverage for pandemic-based losses.  For those interested, the hearing is available on YouTube.

Sticking with Michigan, the state’s high court weighs in on the “faulty workmanship” debate, addressing whether a subcontractor’s faulty work is an “accident.”  The subcontractor exception in the “own work” exclusion factored heavily in the court’s decision.

In Georgia, an appellate court addresses the criminal acts exclusion and considers what effect the insured’s statements made during her Alford guilty plea has on the exclusion’s application.

At the federal level, circuit courts of appeal issued rulings on:

• known claim and intentional injury exclusions (7^th)
• advertising injury coverage for a retailer’s alleged trademark violation (9^th)
• whether an insurer must defend a claim arising from an agency’s environmental abatement order (9^th)
• whether the pollution exclusion bars coverage for a bodily injury claim arising from pesticides exposure (10th Cir.)

Also, a federal district court in North Carolina issued a series of decisions on coverage for Driver’s Privacy Protection Act claims.

We hope you find these cases informative and that everyone is staying well during these challenging times.

Rob Tugander and Greg Mann