By Jeannie O'Sullivan

Law360 (May 6, 2021, 3:05 PM EDT) -- Fleming.Ruvoldt PLLC filed a New Jersey state court lawsuit against a Hartford insurance unit over the denial of its claim for losses related to the COVID-19 pandemic, accusing the insurer of sneaking a virus exclusion into a policy that has been faithfully renewed for the past eight years.

In complaint filed Tuesday, the law firm says there was no virus exclusion in the policy it first obtained from Sentinel Insurance Co. in 2013, but that the insurer unilaterally inserted virus exclusions into renewed versions of the policy in response to the MERS outbreak and, more recently, at the start of the current coronavirus pandemic.

The insurance agent represented with each renewal that all coverage of the "all risk" policy in place since 2013 was continued, the law firm claimed. Meanwhile, the law firm says, it incurred more than $3 million in losses following government-mandated nonessential business shutdown orders last year, but the insurer has refused to pay up.

"Annually representations were made, and public advertisements and solicitations sent by defendants to plaintiff representing the coverages to be continued unaltered as an 'all risk' coverage. Those representations were material and if the claims were denied they were false," the complaint said.

The firm wants a declaration that it's entitled to coverage, along with compensatory and punitive damages. The defendants are Sentinel, The Hartford Financial Services Group and insurance consultant Owens Group Ltd. Inc.

The policy at the heart of the denial insured the firm's offices in Englewood, New Jersey, and New York City and was in effect between December 2019 and December 2020, according to the complaint.

New Jersey Gov. Phil Murphy ordered all nonessential business to close on March 18, 2020, the complaint said. The firm filed a claim on April 6, 2020, and was denied the next day, without a proper investigation that is required by state law, according to the complaint.

The insurer denied the firm's claim for business income loss because there was "no physical loss or damage" to property, the complaint said. However, the firm said the fact that its premises were rendered uninhabitable satisfies the "physical loss" requirement.

The insurer also denied the firm's claim under the civil authority coverage in its policy, saying it was unaware that any civil order was issued as result of a covered loss. But the firm calls that reasoning false and says the policy covers losses stemming from "acts or decisions" by, among other entities, a "government body."

The firm also says the "limited virus exclusion" in the 2019 policy, which refers to the "presence, growth, proliferation or spread or any activity of" a virus or bacteria "simply does not apply" to pandemics.

The complaint attacks the "confusing, contradicting and incomprehensible" language of the policy. The "fraudulent inclusion" of the virus exclusion — which the firm says wasn't part of the declaration it received for the 2019 policy — and the "convoluted interpretation" of it was solely to enrich the insurer and had no benefit to the firm, the complaint said.

"The failure to inform plaintiff of the new position insurers were taking regarding pandemics and falsely categorizing as a 'virus' under the policy was fraudulent and a breach of defendants' duties to plaintiff," said the complaint, which also accuses the insurer of negligence.

A representative for Owens declined to comment Thursday. Representatives for the other parties didn't immediately respond to request for comment.

The firm is represented in-house by Harold J. Ruvoldt and Cathy Fleming.

Counsel information for the defendants wasn't immediately available Thursday.

The case is Fleming.Ruvoldt PLLC v. Sentinel Insurance Co. et al., case number BER-L-002938-21, in the Superior Court of New Jersey, Bergen County.

--Editing by Stephen Berg.

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