Melinda Kollross and Clausen Miller Part of Defense Team Scoring Major Win for Insurers in New Hampshire Supreme Court COVID-19 Property Coverage Case
On May 11, 2023, the New Hampshire Supreme Court issued an opinion in Schleicher and Stebbins Hotels, LLC v. Star Surplus Lines Ins. Co., and joined the state high courts in Connecticut, Delaware, District of Columbia, Iowa, Maryland, Massachusetts, Ohio, Oklahoma, South Carolina, Virginia, Washington, and Wisconsin in holding that there is no commercial property coverage for pandemic related business income losses in the absence of direct physical loss or damage to insured property.
In so ruling, the Court made the following significant points:
–Coverage under the business interruption provisions of the policy are triggered only by showing that the insured sustained physical loss or damage to property.
–The presence of COVID-19 on property, whether by aerosolized particles suspended in the air, or by fomites that come to rest on surfaces, did not cause “direct physical loss of or damage to property” because the virus’ presence on the surface of property cannot be said to have changed the property in a distinct and demonstrable way”
–The New Hampshire Supreme Court’s conclusion that the presence of Covid-19 in the air or on surfaces at a premises would not satisfy a requirement under a property insurance policy of “direct physical loss of or damage to property” was consistent with the conclusions of an “overwhelming majority of federal and state courts” construing similar language.
Melinda S. Kollross