Baker Sterchi Obtains Defense Judgment for Excess Insurer on COVID Business Interruption Claim

Baker Sterchi recently secured judgment in favor of a client in a COVID business interruption insurance coverage dispute in the Circuit Court of Jackson County, Missouri. The client was an excess insurer in a group of insurers who provided property insurance through a quota share program to the plaintiffs.  The plaintiffs in the case owned 284 business properties located throughout the United States.  The plaintiffs claimed losses exceeding $150,000,000 due to the COVID pandemic and related governmental shut down orders.  They sought coverage for these losses under the business interruption and other provisions of the insurance program.

The court granted the insurers’ motion for judgment on the pleadings, ruling in favor of Baker Sterchi’s client on all of plaintiffs’ claims. Specifically, the court found that the plaintiffs did not meet the threshold for direct physical loss of or damage to property required by the business interruption coverage provision because plaintiffs failed to identify any specific tangible, physical alteration to any property caused by COVID. Moreover, the court found that the civil or military authority coverage in the insurance policies also required physical damage to some property that the plaintiffs could not allege.  The court also found there was no impending physical loss or damage to insured property as required for protection and preservation of property coverage.

The plaintiffs' attempt to claim loss of attraction coverage against Baker Sterchi's client was also unsuccessful, as the court found the attachment point of its excess insurance was above the sublimit of the loss of attraction coverage. Finally, because there was no coverage under the insurance policy, Baker Sterchi’s client was granted judgment on plaintiffs’ statutory claim for vexatious refusal to pay.