The Vermont Supreme Court has revived a military shipbuilder’s lawsuit for insurance coverage of lost income and extra expenses incurred during the COVID-19 pandemic.
The majority in a 3-2 split said Huntington Ingalls Industries (HII) had cleared the state’s “extremely low bar” for initial pleadings by alleging that the virus adheres to surfaces, turning them into vectors for a disease that must be counteracted with barriers and other physical modifications.
Vermont Supreme Court became the first state high court to rule for the policyholder in such cases.
This opinion does not state that what occurred in insured’s shipyards is ‘direct physical loss or damage to property’ under the policy, and HII must still prove its case on remand.Associate Justice Harold Eaton Jr
The company was “very pleased” with the decision and looks forward to litigating in Franklin County Superior Court, where HII filed suit in September 2020.
The complaint named Chubb’s Ace American Insurance Co, Zurich American Insurance, and 30 other companies or syndicates that reinsured the $1.5 billion Global Property Insurance Policy that HII purchased from its captive insurance company, Vermont-based HII Risk Management.
Attorneys for Ace and Zurich, who argued the case for all the reinsurers, did not immediately respond to requests for comment.
That according to the complaint, HII is the largest military shipbuilding company in the United States. It remained open during the pandemic, but its shipyards “were not capable of performing their essential functions at their intended capacities.”
Reuters added that HII sought a declaration that the reinsurance policies would cover its business losses. Both sides quickly filed motions for judgment based on the pleadings, and the judge ruled for the insurers last year.
HII’s appeal drew amicus support from United Policyholders, suggests the report, represented pro bono by Marshall Gilinsky of Anderson Kill.
The American Property Casualty Insurance Association also filed an amicus brief supporting the reinsurers.
by Yana Keller