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Law360 (May 8, 2020, 1:15 PM EDT) -- A law firm with offices in Philadelphia and Mercer County, New Jersey, is suing The Hanover Insurance Group in the Philadelphia County Court of Common Pleas, alleging it wrongfully denied coverage for business income losses resulting from state-mandated shutdowns during the COVID-19 pandemic.
Greg Prosmushkin of Greg Prosmushkin PC, representing his own firm, told Law360 on Friday that while Hanover denied coverage by saying it falls under his policy's virus exclusion, the closure was not directly caused by the coronavirus, but by orders from the governor.
"I didn't close because of the virus, not one of my employees have the virus, and I had no virus on my premises," he said. "I was closed because the governors of Pennsylvania and New Jersey shut down my two locations — that's civil authority, which I do have coverage for."
In the suit, filed Wednesday, Prosmushkin says his firm entered into the policies in January for business income loss, and they were in full effect in March when state and local authorities issued orders to shut down non-essential and non-life-sustaining businesses.
As a result of those orders and social distancing guidelines, Prosmushkin said he had to close both of his offices, resulting in a loss of income that is covered under the policies, but Hanover nevertheless denied coverage.
The loss of access to his offices constitutes a physical loss resulting from civil authority, not from the presence of COVID-19, and should be covered under the policy, he said.
By denying coverage, the insurance company is avoiding its responsibilities, while it continues to pull in premium payments from businesses that it refuses to cover, he alleged.
"It's a question of fairness," he said. "I see businesses are going to go down because the insurance companies are not honoring the promises they made when the contracts were written."
Prosmushkin added he plans to file another lawsuit next week in Mercer County over the insurance policy covering his Trenton office, making the same allegations.
Representatives for Hanover Insurance could not immediately be reached for comment Friday.
Prosmushkin joins a growing list of businesses suing insurers over coverage denials relating to the pandemic, including high-profile firm Geragos & Geragos, which sued Travelers in April, alleging the company was wrongfully denying coverage.
Travelers, in turn, sued Geragos a week later, seeking a declaration that it had no duty to cover the firm's losses during the pandemic.
Greg Prosmushkin PC is represented in-house by Greg Prosmushkin and Kia N. House.
Counsel information for The Hanover Insurance Group was not available.
The case is Greg Prosmushkin PC et al. v. The Hanover Insurance Group, case number 200500342, in the Court of Common Pleas, Philadelphia County.
--Additional reporting by Hailey Konnath. Editing by Marygrace Murphy.
For a reprint of this article, please contact reprints@law360.com.
