Ill. Ford Seller Says 'All-Risk' Policy Must Include COVID-19

By Daphne Zhang
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Law360 (January 13, 2021, 8:29 PM EST) -- An Illinois-based Ford dealership has hit Pennsylvania-based Erie Insurance Exchange with a proposed class action, alleging Wednesday that the carrier wrongfully denied coverage after the dealership suffered revenue loss from being forced to cut 75% of its capacity amid the pandemic.

In a suit filed in Pennsylvania federal court, Highland Park Ford Lincoln Inc. said it had to cease normal sales operations and shut down its showroom in March due to state-mandated closures and the ongoing COVID-19 pandemic.

Highland, which operates a Ford dealership in Cook County, Illinois, said it was allowed to reopen at 50% capacity in May, only to be ordered to reduce occupancy to a maximum of 25% in November.

In the complaint, Highland said its "all-risk" commercial property policy broadly provides coverage to loss of business income. The dealership is seeking to represent a nationwide class of all Erie policyholders who have been denied coverage regarding their COVID-19 related losses.

Most states have issued similar compulsory shut-down orders and small businesses across the country have experienced property damage and revenue loss covered by commercial property policies similar to its own, the Ford dealership said.

Highland alleged that it has incurred significant revenue loss due to COVID-19 and government closure orders. The car seller said its property suffered direct physical loss or damage because its covered facilities were rendered unusable and lost their intended function after being forced to operate on a limited basis.

The suit referenced a New York City executive order issued in March that stated that COVID-19 "physically is causing property loss and damage," arguing that coverage is triggered since the virus presented on and damaged its property.

The dealership is seeking a declaration that its business interruption losses are covered by its policy with Erie, alleging breach of the insurance contract, and demanding damages to be determined in a jury trial plus attorney fees.

Erie is one of two carriers currently facing multidistrict litigation over its denial of policyholders' claims for pandemic-related losses, and Highland's suit could be bound for the MDL.

Representatives for the parties could not be immediately reached for comment on Wednesday.

Highland is represented by Gary F. Lynch, R. Bruce Carlson and Kelly K. Iverson of Carlson Lynch LLP.

Counsel information for Erie is not immediately available. 

The case is  Highland Park Ford Lincoln, Inc el al. v. Erie Insurance Exchange, case number not available, in the U.S. District for the Western District of Pennsylvania.  

--Editing by Michael Watanabe.

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Pennsylvania Western

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January 04, 2021

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