COVID-19 Sparks Coverage Litigation

April 2, 2020

In a lawsuit filed in state court in New Orleans, Oceana Grill, a 500-seat restaurant in the city’s French Quarter filed suit Monday seeking a declaratory judgment that its insurer should cover related business interruption losses. The Complaint alleges that the all risk property policy issued by unspecified syndicates at Lloyd’s of London, affords coverage for civil authority-ordered shutdowns, noting that the policy does not have an exclusion for viruses or pandemics.

The suit claims that the insured suffered a direct physical loss caused by the coronavirus, which causes the disease COVID-19, “physically infects and stays on the surface of objects or materials, ‘fomites,’ for up to twenty-eight days, particularly in humid areas.” The fact that the coronavirus attaches to surfaces and equipment located on the premises underpins the basis for physical loss since the complaint contends that “contamination of the insured premises by the coronavirus would be a direct physical loss needing remediation to clean the surfaces of the establishment.”

The suit seeks an Order that the Lloyd’s policy does not exclude coverage for a viral pandemic and that it covers civil authority shutdowns due to the coronavirus. The suit also seeks business income coverage “in the event that the coronavirus has contaminated the insured premises.”

The suit is Cajun Conti LLC, Cajun Cuisine 1 LLC and Cajun Cuisine LLC d/b/a Oceana Grill v. Certain Underwriters at Lloyd’s of London and Governor John B. Edwards.

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