Court: Broker not liable for COVID-19 business interruption claim denial
The case is one of the first to consider insurance producer liability in COVID-19 lawsuits.
After an insurance carrier denied a lawyer and her law firm’s claim for lost business income due to the COVID-19-related shutdown, she sued both her carrier and the insurance producer that procured the policy. In one of the first cases to consider producer liability in COVID-19 cases, Judge Eduardo Robreno of the Eastern District of Pennsylvania dismissed the lawsuit against the producer and the carrier.
USI Insurance Services procured the insurance policy from The Hartford for Rhonda Hill Wilson and her law firm. The policy included coverage for lost business income and extra expense caused by direct physical loss of, or damage to property. Similarly, the policy covered lost business income if a nearby property experienced a direct physical loss that caused a civil authority to issue an order that prohibited access to the law firm’s property. The policy also included a virus exclusion “for loss or damage caused directly or indirectly by . . . [p]resence, growth, proliferation, spread or any activity of . . . virus.”
Judge Robreno did not decide whether the policy afforded any coverage to Wilson and her law firm for their COVID-19 losses. Rather, he found that even if they could, the virus exclusion unambiguously barred any coverage they could possibly claim. For that reason, Judge Robreno dismissed the claims against Hartford.
As for USI, Wilson and her law firm alleged that it acted as The Hartford’s agent. Judge Robreno found that this argument would “stand agency theory on its head” since they seek to hold the agent, USI, liable for the coverage denial made by the principal, The Hartford. Nonetheless, even if Wilson made a viable agency argument, USI would still not be liable because Hartford’s coverage determination was correct.
Judge Robreno also recognized that while USI helped procure the policy, it was not a party to the policy. Beyond Wilson’s agency argument, she and her law firm alleged no independent basis to establish liability against USI. For these reasons, Judge Robreno dismissed the claims pleaded against USI.
The case is Wilson v. Hartford Casualty Company, No. 20-3384 (E.D.Pa. Sep. 30, 2020).
Christopher Leise (leisec@whiteandwilliams.com) is senior counsel, and Marc Penchansky (penchanskym@whiteandwilliams.com) is counsel at White & Williams LLP. They represented USI in the case.
This article first appeared on the White & Williams website and is republished here with consent.
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