GW asks appeals court whether COVID droplets can cause building damage

Media Credit: Krishna Rajpara I Assistant Photo Editor

GW sued Factory Mutual last year to require the insurance company to cover hundreds of millions of dollars in COVID-related losses.

The University filed a motion last Friday asking the D.C. Court of Appeals to rule that the presence of COVID-19 droplets can cause “physical loss or damage” after a judge dismissed a lawsuit GW filed last year seeking insurance compensation for pandemic losses.

GW sued Factory Mutual last year to require the insurance company to cover hundreds of millions of dollars in coronavirus-related losses, saying COVID-19 droplets “damaged” buildings, making them unusable and falling under the physical damages insurance policy GW bought from the company. In September, District Court Judge Dabney Friedrich dismissed the lawsuit, saying the COVID droplets did not constitute enough damage to be considered “tangible alterations” to GW property for insurance purposes because virus droplets can be cleaned off of surfaces, delivering a win to Factory Mutual.

GW’s motion asks the Court of Appeals to hear arguments on whether the COVID droplets could be considered damage under insurance definitions. A win for GW in this motion, which would allow the Court of Appeals to determine whether the droplets could be considered physical damage, could give University officials an opportunity to save the case from being dismissed.

In last year’s lawsuit, officials said financial strains caused by the pandemic cost the University “hundreds of millions” of dollars and officials separately said the pandemic led to a $180 million budget gap during the 2021 fiscal year.

The motion states there is undetermined D.C. law on the question of whether or not COVID droplets present “physical loss and damages,” referencing similar cases being considered in other state courts like Maryland and Vermont, some of which have decided the issue in the insured’s favor.

“This Court should likewise certify the question above to the D.C. Court of Appeals rather than attempt to predict District of Columbia law on this important question,” the document states.

Friedrich said in September’s dismissal that while D.C. courts have not considered whether COVID-19 can cause physical loss and damages to property, the “overwhelming majority” of other courts – like those in Maryland, New Jersey and Washington state – that have examined the question have ruled that the virus does not meet the definition.

Officials said Friedrich, in his dismissal, limited the company’s all-risks policy to cover only broken property, rather than any property rendered unsafe or unusable by a “noxious substance” like COVID-19,  which they said should be covered. Friedrich said the COVID-19 droplets did not present a tangible alteration of property in the dismissal, calling the argument “unpersuasive.”

“GW’s allegations are consistent with decades of case law holding that physical risks such as carbon monoxide, wildfire smoke, asbestos, and foul odors may cause ‘physical loss or damage’ that triggers insurance coverage because they prevent an insured from using their property as intended,” the motion states.

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