Hundreds of Covid Insurance Suits Tossed in Washington State

Travelers Casualty Insurance Co. of America and several other major insurers defeated Covid-19 coverage challenges from hundreds of businesses, after a federal judge in Washington state found that the pandemic didn’t cause the physical property damage required for their policies to apply.

Judge Barbara J. Rothstein’s May 28 dismissal of the 10 consolidated cases is in line with the majority of courts that have issued rulings siding with insurance companies in their refusal to pay claims related to pandemic-spurred shutdowns.

Since March 2020, struggling businesses have filed at least 1,787 similar cases in state or federal court, according to the University of Pennsylvania Covid Coverage Litigation Tracker. Most decisions have found that all-risk policies covering direct physical loss of or damage to property don’t cover economic losses from pandemic restrictions.

Rothstein’s ruling involves hundreds of businesses—ranging from law firms to dentists’ offices to the Seattle Symphony Orchestra—that initially filed individual lawsuits in the U.S. District Court in the Western District of Washington. After a hearing in November 2020, the court consolidated the cases into 10, based on the insurance company named as a defendant.

In her opinion, Rothstein cited “the overwhelming consensus that has formed” that “COVID-19 hurts people, not property.” Therefore, insurers don’t need to cover economic losses from temporary closures or limitations resulting from threat of the virus, she said.

The judge rejected the idea that “loss” includes loss of the use of property, a successful argument in some cases. Instead, “loss” means that “the alleged peril must set in motion events which cause the inability to physically own or manipulate the property, such as theft or total destruction,” Rothstein said.

In addition to Travelers, the insurers involved in the consolidated cases included the Hartford Financial Services Group, Liberty Mutual Holding Co. Inc., CNA Financial Corp., Affiliated FM Insurance Co., Aspen American Insurance Co., Fireman’s Fund Insurance Co., The Hanover Insurance Group Inc., the Dentists Insurance Co. Inc., and the Tri-State Insurance Co. of Minnesota.

Keller Rohrback LLP represented the businesses. Bullivant Houser Bailey represented the insurance companies.

The case is Nguyen v. Travelers Cas. Ins. Co. of Am., 2021 BL 200603, W.D. Wash., 2:20-cv-00597, 5/28/21.

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