Wilson v. USI Insurance Services LLC, No. 20-3124 (3d Cir. 2023)Annotate this Case
The plaintiffs are food service, medical, health and wellness, art, music, and legal businesses in Pennsylvania, New Jersey, New York, Maryland, and Delaware. In March 2020, to curb the spread of COVID-19, the governors of those states issued executive orders closing or restricting the activities of nonessential businesses and urging people to stay home whenever possible. The businesses were forced to close or significantly limit their operations.
The businesses filed claims under their commercial property insurance policies. Their insurers universally denied coverage, reasoning that the businesses did not suffer a “physical loss of or damage to” property necessary to trigger coverage or that a “virus exclusion” barred coverage. The businesses argued that their loss of the ability to use their properties for their intended business purposes was a “physical loss of” property and that either the exclusions did not apply or the insurers were estopped from arguing that they do. The district courts all ruled in favor of the insurers. The Third Circuit affirmed, concluding that the loss of use of a property’s intended business purpose is not a physical loss of property covered by the businesses’ insurance policies. The court did not reach the issue of whether the virus exclusions or any other exclusions apply.