As the insurance industry grapples with questions over coverage for COVID-19-related claims, Goldberg Segalla’s Ashlyn M. Capote and Richard A. Galbo point to two common but less-discussed insurance policy provisions—the “acts or decisions” and “loss of market” exclusions—that could prove pivotal in future litigation.
In an article for DRI’s In-House Defense Quarterly, Ashlyn and Rich discuss how the various stay-at-home orders throughout many states and localities have spurred business interruption claims to insurance carriers, resulting in lost profits and other first-party losses.
“Many in the insurance arena are grappling with whether there is coverage for these types of claims,” they write. “Much of the analysis is focused on (1) whether these types of claims allege any direct physical loss or damage to the insured’s property, which is necessary to trigger coverage under most policies’ insuring agreements; and (2) whether these types of claims are excluded under policies’ virus exclusions,” they write. However, they explain, the “acts or decisions” exclusion and “loss of market” exclusion could “apply to bar coverage for losses arising from a government’s acts of decisions and for losses arising from the loss of the insured’s market.”
As members of Goldberg Segalla’s Global Insurance Services practice and Coronavirus Coverage Team—with experience advising insurers on COVID-19-related claims since the beginning of the pandemic—Ashlyn and Rich use their article to prepare carriers and their attorneys to cite the “loss of market” and “acts or decisions” exclusions in COVID-19-related coverage denials where applicable.
“Arguably, the best approach in litigating these cases is to explain that there is no coverage for these losses based on the policy as a whole: that coverage is not triggered under the policy’s insuring agreement because there is no physical loss or damage,” they write. However, in many cases, “even if coverage were triggered, it would be excluded by … the policy’s virus exclusion (which most but not all policies have), the loss of market exclusion, and the acts or decisions exclusion.”
“COVID-19 Business Interruption Claims: The Lesser-Discussed Acts or Decisions and Loss of Market Exclusions,” DRI’s In-House Defense Quarterly, Fall 2020
Ashlyn M. Capote advises insurers on complex coverage matters and handles insurance coverage litigation throughout New York State. She assists with all aspects of coverage litigation, from pleadings and discovery to mediation and settlement negotiation. Ashlyn regularly counsels clients on their obligations to provide coverage to insureds under their policies and their ability to seek additional coverages on behalf of their insureds. She frequently provides advice regarding coverage obligations related to liability policies, including issues related to additional insured coverage, priority of coverage, construction defects, and Coverage B. She also routinely provides guidance regarding first-party coverage issues including those related to COVID-19 and catastrophic coverage claims resulting from natural disasters.
Richard A. Galbo is a trial attorney and advisor to the insurance industry, with over three decades of experience counseling insurers on coverage obligations and policy language and litigating insurance coverage disputes in New York Supreme Court, the appellate divisions, and in the N.Y. Court of Appeals. He regularly provides large national and international insurers with counsel to resolve insurance coverage issues and disputes regarding commercial, personal lines, and excess policies. Rich draws on experience as the former principal of his own firm and as an assistant general counsel, litigation manager, and manager of claims-related services for two major liability insurance companies. His background also includes experience litigating and trying products liability, labor law, and general negligence claims.