Turf Paradise Operating Group Suing Insurance Company For COVID-Related Losses [horse racing track]

TP Racing LLP, which operates Turf Paradise in Phoenix, Ariz., filed a civil lawsuit against American Home Assurance Company last week for what the racing group says is a failure to pay for COVID-related losses covered under the group's insurance policy. The complaint, filed in the U.S. District Court for the District of Arizona, seeks a jury trial for the racing group's claim on its American Home policy, which the company denied in July 2020.

According to TP Racing, the organization maintained a policy with American Home which promised to pay for business income losses, losses caused by loss of property or restriction of access to properties, and interruption of business due to orders of a civil authority. TP Racing's complaint states that the insurance policy does not specifically contain an exemption for viruses or bacteria.

An insurance specialist in my close circle of business associates has said many times since last March that very few business or property/casualty insurance policies would cover COVID-related losses like this. Interestingly, he also advises his clients to file claims for COVID-related losses anyway. His rationale is that having an insurance claim rejected might be a precondition for future government assistance programs aimed at offsetting these losses for businesses.

Yes - this has already started to be an issue, and will only continue to grow in terms of claims, litigation and legislation.

There are a number of issues at hand with regards to what commercial policies will cover in terms of business interruption and closure due to civil authorities. Every policy may be interpreted a little differently based on wording, any riders or endorsements the insured may have and case law in the jurisdiction.

A similar thing was seen during Hurricane Katrina with homeowner's policies insuring against, "windblown," rain but excluding flooding. One thing I think we will see with COVID is that many policies will cover loss of business due to property damage. The question is does the presence (or suspected presence) of COVID pre-empting use of the business property constitute property damage, or possibly contamination/spoilage? Likewise, some policies will cover business loss due to closures enforced by civil authorities and others will not.

This is going to be a mess in terms of commercial insurance policies - to say nothing of the worker's comp issues if the workplace is shown to have been a hotspot.

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