The insurer was unsuccessful in seeking to dismiss business interruption claims due to COVID-19 under a pollution policy. New York Botanical Garden v. Allied World Assur., 2021 N.Y. Misc. LEXIS 6012 (N.Y. Sup. Ct. Oct.15, 2021).
The insured was forced to cease operations after executive orders by the governor and mayor were issued in March 2020. The insured also had to reduce its in-person workforce by 100%. The insured's claim for business interruption and contingent business interruption were denied by Allied. The insured sued for a declaratory judgment.
Allied moved to dismiss, arguing that the executive orders were issued for prophylactic reasons in an effort to mitigate the spread of the virus. They were not issued solely to address the presence of COVID-19 at any non-insured owned location, but were issued broadly to limit the risk of spreading the COVID-19 virus. The insured responded that its broader pollution liability policy was not a typical civil authority policy that required the physical loss or damage to property.
The policy covered "business interruption costs resulting from business interruption caused solely and directly by a pollution incident." Allied conceded that COVID-10 was a "pollution incident." "Contingent business interruption" was defined as "the necessary suspension of your operations at a location owned by or leased to you as a result of an order by a government body or authority denying access to the location owned by or leased to you . . ." Finally, business interruption costs were those costs "resulting from contingent business interruption only, the date and time the insured is allowed access to the location owned by or leased to you on an other-than-temporary basis."
The business interruption costs allowed the insured temporary access to its premises during the applicable period. Therefore, a complete denial of access to the insured's property was not required to trigger contingent business interruption coverage.
Further, contrary to Allied's arguments, the policy did not require physical damage to the insured's property.
The court also denied Allied's request to dismiss the bad faith count.
