In another win for policyholders, the United States District Court for the Middle District of Florida on September 24, 2020 denied Sentinel Insurance Company’s motion to dismiss the policyholder doctor office’s claim for COVID-19 related business interruption coverage. Urogynecology Specialist of Florida LLC v. Sentinel Insurance Company Ltd., Case No.: 6:20-cv-1174-Orl-22EJK (M.D. Fla. Sept. 25, 2020). The court engaged in a true analysis of the policy’s virus exclusion language, finding that the insurer had not met its burden of showing that its proposed reading of the exclusionary language is the only reasonable interpretation.
The policyholder was forced to close its business following Florida’s declaration of emergency due to the COVID-19 pandemic. Sentinel denied the policyholder’s claim for business interruption coverage under its property policy. The policyholder sought a declaration of coverage in Florida state court, and the action was subsequently removed to the Middle District of Florida where Sentinel filed a motion to dismiss on the basis of the policy’s virus exclusion. The court denied the motion to dismiss, declining to decide coverage at the motion to dismiss stage.
Notably, the court stated that aspects of the policy arguably made it ambiguous. The virus exclusion states that the insurer will not pay for loss or damage caused directly or indirectly by the presence, growth, proliferation, spread, or any activity of “fungi, wet rot, dry rot, bacteria or virus.” The court remarked, however, that denying losses stemming from the COVID-19 pandemic “does not logically align with the grouping of the virus exclusion with other pollutants such that the Policy necessarily anticipated and intended to deny coverage for these kinds of business losses.”
Moreover, the court was not persuaded by Sentinel’s citation to cases upholding similar virus exclusions, finding them distinguishable from COVID-19: “Sentinel cites cases dealing with pollution exclusions and sewage backups, damage caused by mold, and claims resulting from illness or disease, all of which fell under policy exclusions. Importantly, none of the cases dealt with the unique circumstances of the effect COVID-19 has had on our society—a distinction this Court considers significant.”
Finally, the court stated that there is no binding case law on the issue of the interplay between the COVID-19 pandemic and the standard virus exclusion to merit dismissal.
This decision rightfully rejects the arguments raised by many insurers, which have attempted to avoid their coverage responsibilities for COVID-19 related claims by reading virus exclusions broadly, contrary to Florida law.
 The court noted that the insurer’s failure to provide the court with the full policy made it impossible to make a decision regarding the plain language of the policy.