Last federal appeals court rules for insurers in COVID case

The District of Columbia Court of Appeals on Thursday became the latest – and last – federal appeals court to rule against policyholders trying to recover COVID-19-related business interruption losses.

A group of restaurants and bars had filed suit against the Erie Insurance Exchange, a unit of the Erie, Pennsylvania-based Erie Insurance Group, seeking coverage under their Erie Ultrapack Plus Policy insurance package, according to the ruling in Rose’s 1, LLC et al., v. Erie Insurance Exchange.

A three-judge panel affirmed a ruling by the Washington, D.C., Superior Court in denying the plaintiffs coverage. “Like other courts, we are tasked with determining whether appellants have alleged a ‘direct physical loss of or damage to Covered Property. We determine they have not,” the ruling said.

“Taking the Policy at face value…we conclude that the loss of covered property must be tangible and material. It must be perceptible, a physical alteration or change,” it said, citing earlier rulings.

“Appellants have not alleged a tangible change or alteration to their properties, and thus, they have not shown ‘physical loss of or damage to Covered Property’ as required by the Policy,” it said in affirming the lower court.

The previous most recent federal appeals court to rule against policyholders was the 3rd U.S. Circuit  Court of Appeals in Philadelphia, in January.

In January, the Connecticut high court joined state supreme courts in Delaware,  Iowa, Maryland, Massachusetts, Ohio, Oklahoma, South Carolina, Washington and Wisconsin in also ruling in insurers’ favor in comparable cases, with only Vermont’s high court ruling in policyholder’s favor to date.


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