A recent decision by a federal judge in Newark, New Jersey, brings a notable clarification for insurers regarding business-interruption suits tied to the COVID-19 pandemic. U.S. District Judge Jamel Semper ruled that the pandemic should be considered a single occurrence under communicable disease business income insurance coverage. This ruling came as a relief to Zurich American Insurance Co., the defendant in the suit brought by the Count Basie Theater, a nonprofit organization based in Red Bank, New Jersey.
The theater had argued that multiple executive orders issued by New Jersey Governor Phil Murphy, which mandated the shutdown of entertainment facilities, should each be treated as distinct events under their insurance policy. According to plaintiffs’ attorney Michael Canning, “Under the clear language of the policy itself, it’s the order of a governmental authority, which prohibits access to the premises, which triggers the coverage. Because there were several different executive orders which were issued, in our view, each order triggered coverage under the policy.” However, Judge Semper rejected this interpretation, limiting the possible payout to $100,000 per occurrence.
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