Western Union offers money transfer and payment services, generating most of its revenue from consumer-to-consumer transfers, according to the complaint. Western Union purchased an "all-risk" policy from Chubb that covered property damage or loss and business interruptions between October 2019 and October 2020, it says.
Notably, the policy covered "interruptions where access to Western Union's property or the property of Western Union's suppliers or customers is impaired by order of civil authority," Western Union said. Chubb chose not to include a virus exclusion in the policy, Western Union says.
When COVID-19 began its spread across the globe, a number of Western Union locations shut down. As a result of the closures, Western Union incurred losses in its consumer-to-consumer money transfer service as well as in education-related payments services, it says.
Western Union adds that because there is no test for the presence of COVID-19 on property, it is "statistically certain that the virus that causes COVID-19 was in and on the locations and was in and on the surrounding properties."
"[P]hysical loss of or damage to property is thus presumed," Western Union said.
And Chubb's policy neither expressly nor otherwise excludes pandemics, communicable diseases or COVID-19 as a covered cause of loss, it says. But Chubb is nonetheless refusing to recognize coverage under the policy, Western Union says.
In the midst of the pandemic, insurers have faced an avalanche of coverage litigation — more than 1,500 suits, according to a database maintained by the University of Pennsylvania. But policyholders haven't fared well in a majority of the cases. By late December, courts had issued more than 100 rulings on motions seeking dismissal or summary judgment, with about three-quarters of those resulting in dismissal.
At the heart of many of the suits has been courts' interpretation of "direct physical loss or damage." Courts that have dismissed policyholders' cases have tended to hold that direct physical loss or damage requires a showing of a visible, tangible "physical alteration" to property. Those jurists have found that the novel coronavirus — even if it is found to have been present on a policyholder's property — is incapable of causing such damage.
Earlier in the week, Zurich American Insurance Co. asked a Rhode Island federal judge to toss hotelier Procaccianti Cos.' coverage claims for COVID-19-related losses, arguing its policy expressly excludes viruses as a covered cause of loss and that a raft of similar suits around the country have already been thrown out.
A Florida federal judge on Jan. 11 tossed a Miami catering company's suit seeking to force its insurer to pay for COVID-19-related losses, ruling its commercial property policy's virus exclusion doesn't cover physical loss or damage.
Similarly, a California federal judge ruled in November that the "mere threat of coronavirus" doesn't constitute physical damage, while an Arizona federal judge found a business' pollution policy doesn't cover its virus claims.
Western Union and Chubb representatives declined to comment.
Western Union is represented by Kevin McAdam of Holland & Hart LLP and John W. Schryber and Andrew M. Weiner of Reed Smith LLP.
Counsel information for Chubb wasn't immediately available Friday.
The case is The Western Union Co. v. Ace American Insurance Co., case number 1:21-cv-00127, in the U.S. District Court for the District of Colorado.
--Additional reporting by Jeff Sistrunk and Joyce Hanson. Editing by Orlando Lorenzo.
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