Zebra Technologies Sues Insurer For Coverage of Virus Losses

Zebra Technologies Corp. is taking its insurer to court with the hope of securing coverage for “tens of millions” of dollars in losses stemming from the coronavirus pandemic.

The Chicago-area device manufacturer, in a complaint filed Tuesday in Illinois federal court, said Factory Mutual Insurance Co. is wrongfully refusing to honor claims under an “all risks” commercial policy.

Disruptions from the virus and mandatory closures of non-essential businesses created “extensive losses and expenses” for the company, including cleaning costs, lost sales, and increased shipping costs, Zebra alleges.

According to the complaint, employees at certain Zebra facilities have tested positive for Covid-19, forcing the company to incur expenses to respond to those positive tests. In addition, “government orders have restricted access to Zebra locations and required Zebra to re-configure and otherwise modify its facilities to permit greater social distancing and increased sanitation measures, resulting in both lost sales and extra expenses.”

The company also pins recent losses on its need to source more expensive materials from suppliers and increased transportation costs.

Zebra notified the insurer of its losses, “but Factory Mutual has failed and refused to acknowledge that Zebra has any coverage whatsoever for any of the losses and extra expenses it has incurred,” the complaint said.

Zebra brought the lawsuit—one of hundreds, if not thousands, of pandemic-related business interruption cases—in the U.S. District Court for the Northern District of Illinois.

“FM Global values the long-term relationships we have with our policyholders and we are proud in leading the industry for claims service. It is unfortunate when legal matters arise because we strongly believe our insurance policies are clear on the coverage provided,” Steve Zenofsky, a spokesperson for FM Global wrote in an email.

Cause of Action: Declaratory judgment; breach of contract.

Relief: Declaration that Zebra is entitled to coverage under its policy; “actual damages” resulting from alleged breach of contract; attorneys’ fees and other expenses.

Attorneys: Reed Smith LLP is representing Zebra.

The case is Zebra Tech. Corp. v. Factory Mut. Ins. Co., N.D. Ill., No. 1:20-cv-05147, complaint filed 9/1/20.