A COVID-19-related business interruption lawsuit filed against a Zurich Insurance unit should not be dismissed because the insurer’s policy provides coverage for physical loss or damage caused by microorganisms, including viruses, says a children’s clothing retailer, in arguing against Zurich’s motion to dismiss the case.
New York-based America’s Kids, which operates 18 children’s clothing stores, filed suit against Zurich in June seeking business interruption coverage stemming from the forced closure of its stores because of the pandemic.

It sought coverage from Zurich Insurance Group unit Zurich American Insurance under its $12,750,000 all-risk insurance policy, which included specific business interruption coverages, according to the motion filed last Friday in US District Court in Chicago in America’s Kids vs Zurich American Insurance.

“In Zurich’s telling, this case is comparable to a mélange of others involving policies with standard-form virus exclusions not contained in Zurich’s policy,” the motion says.

“But even a cursory review of the policy and the complaint’s specific allegations show that this case is different” because unlike those cited by Zurich, the coverage specifically refers to “microorganisms,” including viruses as a cause of “direct physical loss or damage property,” the motion states.

Zurich “attempts to simplify the case by invoking a ‘microorganism’ exclusion found on a separate coverage form,” but “entirely ignores at least two other policy provisions that provide coverage specifically for microorganisms,” the brief states.

“These specific grants of microorganism coverage pose a serious problem for Zurich’s position that the ‘microorganism’ exclusion ‘unambiguously excludes coverage for the precise situation pleaded here,’” the motion states, in arguing for coverage.

A Zurich spokeswoman had no comment.

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