Covered Except if Pollution Exclusion Includes Virus

Plaintiffs own and operate 23 hotels in N.H., Massachusetts, and N.J.  Plaintiffs purchased $600 million of insurance coverage from defendant insurers, whose policies are identical with the exception of certain addenda.  The policies generally extend coverage for direct physical loss or damage to all real and personal property owed or used by plaintiffs.  After the commencement of the COVID-19 pandemic and the various states’ executive orders attempting to limit the spread of the virus, plaintiffs filed an insurance claim requesting an advance payment for COVID-19 related losses covered under the policies and then filed suit.  The parties filed cross-motions for partial summary judgment and the trial court held as follows: (1) AXIS’ motion is granted to the extent that its pollution exclusion specifically excludes coverage for loss or damage caused by the spread of a virus; (2) plaintiffs’ motion is granted against the other insurers because (a) the terms “loss or damage” and “direct physical loss of or damage to the property” encompasses the kind of damage cause by the spread of COVID-19 to plaintiffs’ properties; and (b) the microorganism exclusion is not applicable to COVID-19 because the definition of “microorganism” does not include the word “virus” and a virus is not unambiguously understood to be a microorganism.  Schleicher & Stebbins Hotels, LLC v. Starr Surplus Lines Ins. Companies, No. 217-2020-CV-00309 (Super. Ct. N.H. June 15, 2021).