Facts: A business owner suspends operations due to the COVID-19 pandemic lockdown, incurring a loss of income. The business owner has an insurance policy providing coverage for income losses during suspended operations due to a virus caused by volcanic action, windstorm or other limited causes. The owner makes a demand on the insurer to cover the lost income, which the insurer denies.
Claim: The business owner claims the limitation on coverage was unenforceable since the specified causes are not capable of causing or spreading viruses.
Counterclaim: The insurer claims they are not liable for the owner’s loss of business income since the COVID-19 virus was not spread by a specified cause listed in the insurance policy.
Holding: The California Supreme Court holds the insurer is not liable for loss of business income the owner incurred due to the COVID-19 pandemic lockdown since the COVID-19 virus was not spread by a cause specified in the coverage and the causes covered are capable of spreading viruses. [John’s Grill v. Hartford Financial Services Group, Inc. (2024) 16 C5th 1003]
John’s Grill v. The Hartford Financial Services Group, Inc.
Editor’s note — Prior to this case reaching the Supreme Court of the State of California, the insurer settled with the business owner. The courts declined to dismiss the case after settlement because it raised issues “… of continuing public interest which are likely to recur”.
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