Insurance coverage

Wisconsin’s highest court rejects insurance coverage for COVID-related losses

Plastic barriers and signage encouraging mask use and social distancing, as the coronavirus disease (COVID-19) outbreak continues in Madison, Wisconsin, U.S., October 19, 2020. REUTERS/Bing Guan

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  • Wisconsin Supreme Court rules restaurants not entitled to coverage under company policies
  • The highest courts in Massachusetts and Iowa reached similar conclusions.

(Reuters) – Wisconsin’s top court on Wednesday became the third consecutive top court in the state to rule that businesses are not entitled to insurance coverage for losses resulting from the COVID-19 pandemic and government-imposed restrictions on gatherings.

The Supreme Court of Wisconsin ruled that neither indoor dining restrictions nor the presence of the virus at restaurants like Colectivo Coffee Roasters triggered coverage of property insurance policies issued by Society Insurance.

The unanimous decision overturned a February 2021 decision by a Milwaukee judge that had allowed Colectivo to pursue a proposed class action lawsuit on behalf of companies insured by the company seeking to cover financial losses under multiple terms of the policies, including included for interruption of business income.

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But Judge Rebecca Frank Dallet, writing for the 7-0 court, said Milwaukee-based Colectivo, which operates a chain of coffee shops, did not allege the presence of COVID-19 particles or the loss of the use of its properties had created “tangible harm” necessary to trigger coverage.

Citing the “overwhelming majority” of courts that have ruled in similar cases, Dallet said the presence of COVID-19 cannot constitute physical loss of or damage to property because the virus does not alter the appearance or structure of a property.

She said emergency orders issued by the Wisconsin Department of Health Services from March 2020 at the start of the pandemic that prohibited in-person dining to slow the spread of the coronavirus were also not the policy of the society as a physical loss of property.

“The business income provision can be thought of as indirect coverage for loss of use, but that doesn’t change the fact that a condition precedent to this provision is always direct physical loss or damage,” he said. writes Dallet.

Heidi Vogt, corporate counsel at von Briesen & Roper, said in a statement that “the well-reasoned decision should be a further step towards the end of this litigation.”

Jay Urban, Colectivo attorney at Urban & Taylor, did not respond to a request for comment.

The decision follows a series of similar rulings by courts nationwide rejecting efforts by companies to force insurers to cover the billions of dollars in losses they have suffered as a result of shutdowns and other restrictions caused by the pandemic.

Most of the rulings came from federal courts interpreting state insurance laws, and attorneys for the companies urged state supreme courts to reverse the trend and rule for them.

But in April, the highest courts in Massachusetts and Iowa reached the same conclusion as the Wisconsin Supreme Court in interpreting other insurers’ property insurance policies.

The case is Colectivo Coffee Roasters et al. v. Tandem Restaurant et al., Wisconsin Supreme Court, No. 2021AP000463.

For Colectivo et al. : Jay Urban of Urban & Taylor and Richard Schulte of Wright & Schulte

For Company Assurance: Heidi Vogt, Beth Kushner, Janet Cain and Christopher Avallone of von Briesen & Roper; Laura Foggan of Crowell & Moring

Read more:

Society Insurance, restaurants are waging COVID-19 coverage war in Wisc. Supreme Court

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

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

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