According to the suit, New York-based ITT purchased a Factory Mutual policy under which the insurer agreed to cover "all risks" of physical loss or damage to property, as well as time element and extra expense losses stemming from such physical loss or damage. ITT, which manufactures components for the aerospace and energy industries, among others, said in its complaint that it is in the process of moving its headquarters to Connecticut, where several of its subsidiaries are already headquartered.
ITT has properties insured by Factory Mutual on four continents, and civil authority orders across the globe have prohibited or limited access to ITT's insured locations during the pandemic, it said.
The policy from Factory Mutual, which is headquartered in Rhode Island, includes specific coverage for property loss or damage caused by the presence of a communicable disease at a property, ITT told the court. On top of that, the policy goes even further, offering coverage specifically designed to address the economic consequence of pandemics: lockdowns, facility closures and other interruptions triggered by an event like COVID-19, ITT said.
"FMIC's policy thus specifically addresses the principal economic harm arising from the highly unusual event of pandemic-caused interruptions to business, by providing coverage for losses resulting from the threat that the offsite virus will spread to covered ITT locations," ITT said.
As a result of the pandemic, ITT said it has had to replace property that individuals with COVID-19 had touched, shut down various facilities, and shell out for cleaning and the reconfiguring of work spaces, among other expenses.
"Numerous ITT facilities have incurred covered losses from or damage to property, time-element losses due to government or private closures or suspensions of business, loss of ingress or egress, losses due to communicable disease, extra expenses, expediting costs and/or logistics costs," according to the suit.
ITT submitted its initial proof of loss to Factory Mutual in June 2020. But the insurer has claimed that a contamination exclusion precludes much of the coverage under the policy, ITT said.
"FMIC's unreasonable conduct in the investigation of ITT's claim is consistent with a systemic claims handling practice and procedure that FMIC has deployed across all COVID-19 claims," it said.
ITT added that "FMIC has wrongfully failed to accept full coverage for ITT's claim in breach of the policy."
ITT is alleging breach of contract and is seeking a declaratory judgment finding that Factory Mutual must fully cover its COVID-19 losses, unspecified damages, attorney fees and court costs.
Steve Zenofsky, a Factory Mutual spokesperson, told Law360 that the company "values the long-term relationships we have with our policyholders and we are proud in leading the industry for claims service."
"It is unfortunate when legal matters arise because we strongly believe our insurance policies are clear on the coverage provided," Zenofsky said.
An avalanche of companies have gone after insurers for failing to cover losses amid COVID-19. Most suits have not fared well for businesses.
Recently, a California federal judge on Wednesday dismissed a San Diego-area cafe's lawsuit seeking coverage from the Hanover Insurance Group for lost business because of state- and city-mandated restrictions amid the COVID-19 pandemic. The judge held that Wellness Eatery hadn't experienced a direct physical loss that would trigger coverage.
Still, virus insurance suits continue to pour in. In mid-January, ViacomCBS filed suit in California federal court, alleging Great Divide Insurance Co. reneged on its coverage agreement by refusing to protect the media giant from losses when it was forced to delay or cancel production for its television shows and live events due to the pandemic.
In December, hotel operator Procaccianti sued insurer Zurich American for failing to cover losses it incurred during state-mandated COVID-19 shutdown orders, while Zurich hit back saying its policy expressly excludes viruses as a covered cause of loss.
A few judges have indeed sided with businesses, including a California state judge last week. In that case, the judge found that Goodwill Industries had plausibly alleged that COVID-19 caused direct physical loss and damages to its property, rejecting Philadelphia Indemnity Insurance Co.'s arguments that the coverage suit should be tossed.
Counsel for ITT didn't immediately return a request for comment late Friday.
ITT is represented by Michael C. D'Agostino, Paul A. Zevnik, Gerald P. Konkel and Teri J. Diaz of Morgan Lewis & Bockius LLP.
Counsel information for Factory Mutual wasn't immediately available Friday.
The case is ITT Inc. v. Factory Mutual Insurance Co., case number 3:21-cv-00156, in the U.S. District Court for the District of Connecticut.
--Additional reporting by Lauren Berg and Dave Simpson. Editing by Michael Watanabe.
Update: This story has been updated to include comment from Factory Mutual.
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