Manufacturer Says $500M Insurance Policy Covers Virus Loss

By Daphne Zhang
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our Insurance newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360 (January 22, 2021, 4:49 PM EST) -- Electronic cable maker Amphenol Corp. has sued Factory Mutual Insurance Co. seeking to compel the insurer to cover its more than $100 million pandemic-related claimed losses under its over $500 million all-risk policy.

In a suit filed in Connecticut federal court on Thursday, the electronics giant alleged Factory has refused to issue a coverage position regarding its losses caused by business interruption and the actual presence of COVID-19 in its global operations.

The company said its $500 million per-occurrence policy expressly covers the threat of a virus event like the pandemic and government closure orders, as well as communicable diseases such as COVID-19. Amphenol said it has paid over $7.2 million in premiums for its 40 global operations insured under the policy, . 

The manufacturer said it notified Factory of its loss in March, but the carrier has failed to render a coverage determination up to the date it filed this suit. It is alleging breach of contract and is seeking a declaration that Factory should pay for its over $100 million losses and that the policy's exclusions do not apply. The company is demanding damages to be determined in a jury trial.

In the complaint, Amphenol stressed that its policy was designed to cover "threat-based" business interruptions as opposed to interruptions caused by the actual presence of a virus. And state-mandated shut-down orders were issued due to the threat of the virus on or near its insured facilities, it added

The policy "specifically addresses the principal economic harm" resulting from "pandemic-caused interruptions to business by providing coverage for losses resulting from the threat that the offsite virus will spread to covered Amphenol locations," the manufacturer said.

Although the policy contains a contamination exclusion, it is not triggered to bar coverage since the exclusion only applies to traditional pollution instead of "natural catastrophes such as disease outbreaks," Amphenol said.

"The Contamination Exclusion is expressly directed solely at any costs incurred to remove the contamination from the covered property, but not to consequential economic losses," it added.

Additionally, the policy language has clearly stated that it does not exclude coverage for physical damage resulting from "communicable disease" and provides over $1 million or more for "response costs" and business interruptions due to the presence of communicable diseases such as COVID-19, Amphenol contended.

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

Amphenol is represented by Marc J. Kurzman and Fatima Lahnin of Carmody Torrance Sandak & Hennessey LLP

Counsel information for Factory was not available Friday. 

The case is Amphenol Corporation v. Factory Mutual Insurance Company, case number 3:21-cv-00102, in the U.S. District Court for the District of Connecticut

--Editing by Michael Watanabe.

For a reprint of this article, please contact reprints@law360.com.

Attached Documents

Useful Tools & Links

Related Sections

Case Information

Case Title

Amphenol Corporation v. Factory Mutual Insurance Company


Case Number

3:21-cv-00102

Court

Connecticut

Nature of Suit

Insurance

Judge

Michael P. Shea

Date Filed

January 21, 2021

Law Firms

Companies

Government Agencies

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!