COVID business interruption state high court win for insurers

The New Hampshire Supreme Court joined most other state high courts Thursday and ruled against policyholders in COVID-19 business interruption litigation.

The unanimous ruling by the state’s high court in Schleicher and Stebbins Hotels, LLC v. Starr Surplus Lines Insurance Co. et. al, which was filed by 23 hotels against seven insurers, overturned a lower court ruling that had granted plaintiffs partial summary judgment.

As was the case in other pro-insurer rulings on the issue, a three-judge panel of the New Hampshire court held that the COVID-19 virus’ presence on the hotels’ premises did not cause “direct physical loss of or damage to property” under the’ hotels’ coverage.

“The fact that the property could become a vector for transmission of a virus that poses a risk to human health due to the presence of SARS-CoV-2 in the air at the property is not relevant to the question of whether there has been ‘physical loss of or damage to property,’ because the policies insure property, not people,” the ruling said.

“While a ‘distinct and demonstrable’ physical alteration need not necessarily be visible and alterations at microscopic levels might in certain circumstances meet this threshold, the mere adherence of molecules to surfaces does not alter the property in a distinct and demonstrable manner,” the ruling said, in reversing the lower court and remanding the case.

Attorneys in the case did not respond to requests for comment.

In March, the Louisiana Supreme Court overturned a state appeals court ruling in policyholders’ favor and ruled in a divided opinion that policyholders are not entitled to COVID-19-related business interruption coverage.

Vermont’s high court is the only state supreme court to rule in a policyholder’s favor to date.




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