Berkshire Hathaway files motion to dismiss virus-related lawsuit
Other insurance companies may follow in Berkshire Hathaway's footsteps in the near future.
As the COVID-19 pandemic rages on, insurers continue to be the target of business interruption lawsuits.
In one ongoing case, a restaurant filed a class-action suit accusing its insurer, Berkshire Hathaway, and its subdivision, National Fire & Marine Insurance Co., of wrongly denying its claim for business interruption coverage for lost income during the COVID-19 shutdown.
In the latest development of this case, Berkshire Hathaway has asked the U.S. District Court for the Western District of Pennsylvania to dismiss the suit filed by the policyholder.
Like other similar suits filed against insurers, this suit argued that the pandemic caused direct physical damage to the plaintiff’s property and that triggers business interruption coverage under the commercial insurance policy.
This suit also argued that the virus exclusion in the policy did not apply because Insurance Services Office, Inc. (ISO) and the American Association of Insurance Services (AAIS) made misrepresentations to regulators, saying that the existing property policies did not cover “disease-causing agents” and the exclusions were intended to “clarify” coverage.
The suit claimed that courts had previously ruled that the property policies covered claims that involve disease-causing agents, but failed to cite specific rulings.
Berkshire Hathaway responds
Berkshire Hathaway responded by filing a motion to dismiss brief, where it stated that National Fire & Marine, had never changed its stance that the virus exclusion was necessary for clarification because insurers have begun to face efforts to expand coverage for virus-related losses.
Berkshire Hathaway also argued that the suit should be dismissed because the restaurant and tavern lost revenue due directly to the government-enforced shutdown, rather than direct physical loss or damage as is required in order to trigger coverage under the policy.
Editors Note: Berkshire Hathaway will definitely not be the last company to file a motion to dismiss a business interruption losses case brought by an insured, and I look forward to reading what the court does with the case. There have been over 600 COVID-19 insurance lawsuits filed since the beginning of this pandemic. Although most are still pending, one case earlier this month was decided in favor of the insurer. Read more about that case here.
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