Duty to Defend Under Difficult Fact Situations

Posted 2024-08-18 21:14:44

An Excellence in Claims Handling publication from Barry Zalma for subscribers to the Excellence in Claims Handling publication for subscribers only. You can subscribe at https://https://barryzalma.substack.com/subscribe

When There Is No Loss to Tangible Property, Insured Who Purchased Valueless Property Cannot Collect from Insurer Because he was Defrauded, Loss of Computer Data as Property Damage

This article was adapted from my book, “Zalma on Insurance Claims Part 103 Third Edition” from Amazon.com and Available as a paperback and Available as a Kindle Book.

Tangible Property Losses

Duty to Defend When There Is No Loss to Tangible Property

The Covid-19 Pandemic has resulted in multiple cases dealing with the need for actual tangible damage. For example, in a Class Action attempt failed for lack of direct physical damage.

Caribe Restaurant & Nightclub, Inc. (“Caribe”) initiated a class action against Defendant Topa Insurance Company (“Topa”) alleging breach of contract and seeking declaratory judgment for insurance coverage.

The USDC ruled on a Covid 19 business interruption claim in Caribe Restaurant & Nightclub, Inc., Individually and On Behalf of All Others Similarly Situated v. Topa Insurance Company, Case No. 2:20-cv-03570-ODW (MRWx), United States District Court Central District of California (April 9, 2021) as have almost every court in the country.

Caribe owned and operated La Luz Ultralounge (“La Luz”), a restaurant and nightclub located in Bonita, California. Caribe purchased an insurance policy (“Policy”) from Topa.

In March 2020, due to the COVID-19 pandemic, the State of California and County of San Diego ordered “the closure of bars” and “bann[ed] onsite dining.” In May 2020, San Diego County “permitted the resumption of onsite dining” subject to restrictions. Caribe alleged that, as a result of these civil authority orders, it was forced to “suspend or reduce business” at La Luz. Caribe also alleges that COVID-19 “impaired Caribe’s property by making it unusable in the way that it had been used before.”

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