No Direct Physical Loss or Damage

In Huntington Ingalls Industries, Inc. v. ACE American Insurance Co., No. 230-9-20 Frcv (Vt. Super. Ct. Franklin Cnty. July 30, 2021), Mound Cotton’s clients were awarded a full dismissal with prejudice on the ground that the presence of the COVID-19 virus did not constitute “direct physical loss or damage” to property where, as here, there was no dispute that the insured remained open at all relevant times.

The plaintiffs, a shipbuilder for the US government and its captive insurer that was reinsured by MCWG’s clients, had argued that they lost their full intended use of their property during the COVID-19 pandemic when they had to move things around, spread things out, and install dividers at work stations. The court rejected the insured’s argument and ruled in favor of MCWG’s clients, establishing the first precedent of its kind out of the State of Vermont on this issue.

Partners Wayne Glaubinger and Jared Markowitz represented the following insurers in this case: Zurich American Insurance Company and American International Group, Inc.

The decision can be read here.

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