COVID Does Not Fall Under Insurance Policy Exclusion

In Tina Turner Musical LLC v Chubb Ins. Co. of Europe SE, 2021 NY Slip Op 51143(U), a decision dated December 6, 2021, Justice Borrok denied Chubb’s motion to dismiss an action to recover losses for cancellation of the Broadway show due to COVID. The Court explained:

In relevant part, the Insurance Policy excludes:

7.21 — any communicable disease or threat or fear of communicable disease (whether actual or perceived) which leads to:

7.21.1 — the imposition of quarantine or restriction in movement of people or animals by any national or international body or agency

7.21.2 — any travel advisory or warning being issued by a national or international [*2]body or agency

(NYSCEF Doc. No. 8, § 7 [emphasis added]).

TTM's losses do not fall within the communicable disease exclusion as stated in the subject Insurance Policy (Metalios v Tower Ins. Co. of NY, 77 AD3d 471, 473 [1st Dept 2010]). They stem from former New York State Governor Andrew Cuomo's March 12, 2020 Executive Order 202.1 mandating that "any theater seating five hundred or more attendees for a live performance . . . shall not hold any further performances after 5pm on March 12, 2020" (State of New York Executive Order No. 202.1). TTM's claim for consequential damages was sufficiently pled and do not require allegations of bad faith (Panasia Estates, Inc. v Hudson Ins. Co., 68 AD3d 530, 530 [1st Dept 2009]). Therefore, the motion to dismiss pursuant to CPLR 3211(a)(1) and (a)(7) must be denied in its entirety.

The attorneys at Schlam Stone & Dolan regularly litigate denial of coverage claims. Please contact the Commercial Division Blog editors at commercialdivisionblog@schlamstone.com if you or a client have questions concerning insurance coverage.