Insurance coverage

Latest Iowa court tossed out insurance coverage for COVID-related business losses

  • Iowa Supreme Court rules against companies seeking to cover pandemic-related losses
  • Comes a day after Massachusetts’ highest court ruled for the insurer

(Reuters) – Iowa’s highest court on Friday became the state’s second highest court to rule on whether companies can recoup losses they have suffered from the COVID-19 pandemic through legal proceedings. insurance by deciding that a country club and a steakhouse couldn’t.

The Iowa Supreme Court ruled that the inability of the Wakonda Club and Jesse’s Embers to make full use of their premises after the state restricted social gatherings and in-person dining in 2020 did not trigger coverage on their property insurance policies.

These policies were issued by a unit of Selective Insurance Group Inc in the case of Wakonda Club and Farm Bureau Financial Services in the case of Jesse’s Embers.

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The rulings marked the latest in a long string of defeats for businesses nationwide who have filed hundreds of lawsuits to secure billions of dollars in cover after states imposed shutdowns and social gathering restrictions. to slow the spread of the virus.

Most of these decisions were made by federal courts interpreting state law. Some companies have urged state supreme courts, which have the final say in interpreting state laws, to “right a ship that has gone adrift,” as the Wakonda Club said in a brief.

Both companies sought coverage after Iowa Governor Kim Reynolds issued a proclamation in March 2020 closing all bars and restaurants in the food service or in-person. It then resumed limited and restricted in-person operations in May 2020.

Wakonda Club argued that it was entitled to coverage due to the governor’s proclamation under an all-risk commercial property insurance policy, as it amounted to “direct physical loss or damage to property “, but Selective denied his claim.

But Judge Dana Oxley, writing for the 7-0 court, agreed Selective was off the hook, saying Iowa law requires there to be a “physical aspect” to the loss of use of property to meet the requirement of club policy.

“Proclamations like the one issued by Governor Reynolds were triggered by attempts to stop the spread of the COVID-19 virus, not because facilities like the Wakonda Club were in imminent danger of physical damage that would result in the loss of the property,” she wrote.

Similar reasoning applied in the case of Jesse’s Embers. Douglas Haag, an attorney for Selective at the Patterson Law Firm, said in an email that the decision will result in the dismissal of many similar cases in state and federal courts in Iowa.

James Carney, corporate attorney at the law firm Carney & Appleby, did not respond to a request for comment.

The decision came a day after the Massachusetts Supreme Court in a similar case ruled that the losses of three restaurants were also not property losses requiring coverage.

State Supreme Courts in Ohio, Vermont and Wisconsin, as well as the District of Columbia Court of Appeals, have heard arguments in COVID-19 insurance cases, but have yet to rule.

The case is Wakonda Club v. Selective Insurance Company of America, Iowa Supreme Court, No. 21-0374.

For Wakonda Club and Jesse’s Embers: James Carney of Carney & Appleby Law Firm

For selective: Douglas Haag of the law firm Patterson

For Western Agricultural Insurance Company: Karl Olson of Parker & Geadelmann

Read more:

In a first, Massachusetts’ highest court rejects insurance for COVID-related business losses

Ohio Superior Court Skeptical of Insurance Coverage for COVID-Related Business Losses

Society Insurance, restaurants are waging Covid-19 cover war in Wisc. Supreme Court

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