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All-risks policy doesn’t cover COVID business losses

Where an all-risks policy excluded coverage for “infectious and contagious disease,” it did not provide coverage when a resort was forced to reduce in-person services because of closure orders issued as a result of the COVID-19 pandemic.


Ida Cason Callaway Foundation Inc. has owned and operated a resort located in Georgia, known as Callaway Gardens Resort. Like many resorts, COVID-19-related mandates forced Callaway Gardens to reduce in­person services. In its amended complaint, plaintiff alleges that ACE American Insurance Company wrongfully denied its reimbursement request for $1 million of pandemic-related losses. Defendant has filed a motion to dismiss.


On March 8, 2020, plaintiff entered into a contract with defendant with the intent to have the policy cover all foreseeable and unforeseeable risks except for those which were explicitly excluded. Later in March and April of 2020, the Georgia governor issued various executive orders that allegedly forced plaintiff to close certain portions of Callaway Gardens. Plaintiff later submitted a good faith claim for COVID-19-related losses. The question is whether the mandated closures based on the orders qualify as a “fortuitous loss” to plaintiff’s property.

The court concludes that, based on a plain reading of the policy, § 20(h)(l) explicitly excludes losses caused by COVID-19, such as the alleged losses claimed by plaintiff. Upon reviewing the ordinary meaning of the policy, the court finds that § 20(h)(1)’s COVID-19 exclusion unambiguously addresses and excludes losses resulting from COVID-19, such as the alleged losses at issue in the instant case. As such, the policy does not cover plaintiff’s alleged COVID-19-related losses. If the court were to decide the policy covers such losses, such a conclusion would contradict well-established Virginia law and render the COVID-19 exclusion in §20(h)(1) meaningless.

Plaintiff maintains that § 20(h)(1)’s COVID-19 exclusion for “infectious and contagious disease” does not preclude coverage for COVID-19-related losses under § 20(h)(4) because “hazardous conditions” also encompass COVID-19-related losses. This argument fails. A plain reading of the policy provides that the parties intended to exclude coverage for COVID-19-related losses like the losses plaintiff allegedly suffered in the immediate case.

Furthermore, plaintiffs attempt to sow ambiguity into the phrase “hazardous conditions,” notwithstanding the clear unavailability of COVID-19-related coverage under § 20(h)(1), would render the COVID-19 exclusion in § 20(h)(1) meaningless. Thus, the court finds that defendant met its burden of making its contract clear and the COVID-19 exclusion applies to the facts of this case. Thus, plaintiff’s claim is explicitly excluded.

Defendant’s motion to dismiss granted.

Ida Cason Callaway Foundation Inc. v. ACE American Insurance Company, Case No. 3:22-cv-406, Feb. 23, 2023. EDVA at Richmond (Hudson). VLW 023-3-086. 20 pp.