Travelers Counters 2 LA Restaurants virus coverage calls



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Law360 (June 10, 2021, 6:54 p.m. EDT) – A pair of Travelers units have asked the Ninth Circuit to reject offers from two luxury Los Angeles restaurants to revive their COVID-19 business disruption lawsuits, arguing that virus exclusions from policies and their property insurance does not cover losses related to the pandemic.

Travelers Indemnity Co. of Connecticut and Travelers Property Casualty Co. of America on Wednesday asked the appeals court to uphold the lower court’s ruling against efforts by two downtown Los Angeles restaurants to seek coverage for related losses to COVID-19.

“Property insurance insures property; if the property is not lost (eg by theft) or damaged (eg by fire), there can be no covered claim,” the carriers said.

Travelers said the policies only cover “direct physical loss or property damage,” such as when a fire damages insured property, resulting in a suspension of operations. But the two luxury restaurants fail to show that anything “direct” or “physical” happened to their properties but only alleged financial losses, the insurer said.

Additionally, the government shutdown orders did not damage or destroy restaurant properties, Travelers said, and under California law, “direct physical loss” means “distinct and demonstrable physical alteration of property.” . Restaurants did not have to repair or replace any installation or equipment, insurers mentionned.

Last month, the two Californian restaurants urged the Ninth Circuit to relaunch their lawsuits against the travelers in two separate briefs. Mark’s Engine Co. No. 28 restaurant, which serves American comfort food, and 10th restaurant, a Mediterranean restaurant, said virus exclusions from their Travelers policies are not triggered because they “never have virus detected on property “.

The virus exclusion, which was not designed to prevent losses from civilian shutdown orders, only excludes coverage when a loss results from “on-site outbreaks or contamination where a virus is detected, ”the two restaurants said in May. The costumes for the two restaurants were rejected by the Central District of California last August and October.

The virus exclusion unambiguously excludes coverage for all losses caused by or resulting from viruses, and [the restaurants’] the alleged losses resulted from the coronavirus, ”Travelers said Wednesday.

In addition, contrary to what restaurants claimed, government orders never cut off access to restaurants, which were able to offer delivery and take-out services during the lockdown, the insurer said, they said. are therefore not entitled to coverage from civil authorities.

In briefs, Travelers called on the Ninth Circuit to recognize the “overwhelming consensus” of courts across the country that have dismissed similar requests for COVID-19 business disruption on the grounds that exclusion of the virus prohibits related losses to the pandemic.

Representatives of the parties could not be reached immediately for comment.

Both restaurants are represented by Mark John Geragos from Geragos and Geragos APC.

Travelers is represented by Deborah L. Stein of Gibson Dunn and Crutcher LLP.

The business is Marks Engine Company No. 28 Re v. Travelers Property Casualty Co. et al., Case number 20-56031; and 10E LLC v. The Travelers Indemnity Co. et al., Case Number: 20-56206, both before the United States Court of Appeals for the Ninth Circuit.

–Editing by Rich Mills.

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