New Class Action Against Zurich Seeks Recovery for Colleges and Universities Denied Coverage for COVID-19 Losses


Stueve Siegel Hanson LLP has filed a new class action lawsuit challenging Zurich’s denial of coverage for COVID-19 losses.

On October 16, the firm filed a complaint in the U.S. District Court for the Eastern District of Missouri on behalf of Lindenwood University, a private liberal arts university in Saint Charles, Mo. Lindenwood University is insured by a $100 million commercial property insurance policy referred to as the Zurich EDGE Global Policy. The lawsuit is brought individually and on behalf of a nationwide class of other similarly situated institutions of higher education, along with sub-classes that specifically cover member institutions of the Midwestern Higher Education Compact (MHEC) as well as institutions located in Missouri. The lawsuit brings claims for declaratory judgment and breach of contract arising from Zurich’s denial of coverage and refusal to pay claims for COVID-19 losses.

Like other institutions of higher education, Lindenwood University ceased normal operations and effectively closed its campus in mid-March 2020 and has not yet been able to resume normal operations and use of its insured property in the same manner as it had prior to the COVID-19 pandemic. Lindenwood University provided room-and-board reimbursements in excess of $5 million, and has suffered and continues to suffer significant losses in the form of lost revenue and added expense associated with COVID-19.

According to the lawsuit, Zurich has taken the position that (1) COVID-19 cannot under any set of circumstances cause physical loss or damage to property within the meaning of the Policy; and (2) the Policy includes a “Contamination” exclusion that applies and defeats any COVID-19 related coverage claim. Lindenwood University intends to prove that Zurich’s position on coverage under the Policy is wrong.

Lindenwood University counters that the presence and imminent risk of presence of COVID-19 on property and in the air at property effectively eliminates the utility and habitability of such property sufficient to constitute direct physical loss or damage to property within the meaning of the Policy. As to the “Contamination” exclusion, Lindenwood University cites an Amendatory Endorsement to the Policy under which Zurich explicitly removed viruses – such as COVID-19 – from the scope of the exclusion. The decision by Zurich to remove the word “virus” from the Contamination exclusion evinces a clear intent by Zurich to provide coverage for viruses, like COVID-19, under the Policy, and an admission by Zurich that viruses, like COVID-19, are a non-excluded cause of direct physical loss of or damage to covered property under the Policy.

This lawsuit follows the firm’s recent success securing two Orders from a Missouri-based federal district court denying motions to dismiss filed by two other insurance companies. Those motions unsuccessfully raised the same argument as Zurich about whether COVID-19 can cause physical loss or damage to property within the meaning of similar commercial property insurance policies. (Information about the Orders is available here and here.)

Stueve Siegel Hanson is working together with a consortium of top-tier plaintiffs’ firms to advocate for small businesses, not-for-profits, educational institutions, and others in the wake of COVID-19. Joining Stueve Siegel Hanson are Langdon & Emison, Miller Schirger and Shaffer Lombardo Shurin. Together, these firms bring more than 100 years of experience in complex litigation against insurance companies and more than $1 billion in recoveries.

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