26 September 2022Law & regulation

Vermont Supreme Court issues COVID ruling

The Vermont Supreme Court has revived a military shipbuilder’s lawsuit for insurance coverage of lost income and extra expenses incurred in dealing with the virus that causes COVID-19, becoming the first state high court to rule for the policyholder in such cases.

In a 3-2 split on Friday September 23, the majority said Huntington Ingalls Industries (HII) had cleared the state’s “extremely low bar” for initial pleadings by alleging that the virus adheres to surfaces, turning them into vectors for disease that must be counteracted with barriers and other physical modifications.

The dissenters said Covid harms people, not property.

The complaint named Chubb’s Ace American Insurance Co, Zurich American Insurance, and 30 other companies or syndicates that reinsured the $1.5 billion Global Property Insurance Policy that HII purchased from its captive insurance company, Vermont-based HII Risk Management.

According to the complaint, HII is the largest military shipbuilding company in the United States. It remained open during the pandemic, but its shipyards “were not capable of performing their essential functions at their intended capacities.”

The case decided Friday is Huntington Ingalls Industries Inc. et al. v Ace American Insurance Company et al, Vermont Supreme Court, No. 2021-173.