Insurer seeks declaration that COVID-19 claims for closure-related losses are not covered


By Barry Miller

Travelers Insurance Company wants a federal court to declare it has no duty to pay business income loss to a California law firm which claims that COVID-19 closures have caused it to lose revenue.

The ABA Journal reports that Travelers is seeking a declaratory judgment in the Central District of California. The lawsuit addresses claims from the Geragos & Geragos firm in Los Angeles, which says it has lost revenue from its law practice and rent from a tenant because of the closure of its own office, and California courts.

Travelers alleges that attorney Mark Geragos told a claims representative that the COVID-19 virus causes physical damages because other countries affected by the virus have fumigated public spaces. He also stated that scientists have detected the virus in aerosols and on lingering surfaces for some time.

Travelers seeks a declaration the claim does not fall within the policy’s grants of coverage for either “Business Income and Extra Expense” or “Civil Authority.”  Travelers alleges that Geragos’ claims do not trigger the policy’s Business Income and Extra Expense that requires that a loss was “caused by direct physical loss of or damage to property at the described premises.” Likewise, Travelers contends that the Civil Authority coverage requires that any government closure order result from “direct physical loss of or damage to property at locations, other than described premises, that are within 100 miles of the described premises.”

Even if COVID-19 claims triggered either coverage, Travelers says that the Virus and Bacteria Exclusion would apply. It also relies on exclusions for damage caused by Ordinance or Law, Pollution, and acts of a group, organization, or governmental body as bases for the declaratory relief.

FMG has been reporting on lawsuits filed by restaurants, retail outlets, and other businesses making claims for business interruption coverage due to COVID-19 closures. The Travelers action appears to be the first one filed by an insurer.

If you have any questions or would like more information, please contact Barry Miller at