In an unprecedented legal victory, a Pennsylvania dentist has successfully claimed insurance for business losses incurred due to the COVID-19 pandemic. This landmark case, involving Dr. Timothy A. Ungarean, DMD, D/B/A Smile Savers Dentistry, PC, has set a significant precedent for similar cases in the future. The state Supreme Court’s decision to hear this case, along with another involving a tavern owner, underscores the importance of these disputes in shaping the future of business insurance coverage in the wake of the pandemic.
A Tale of Two Cases
In the wake of the COVID-19 pandemic, businesses across the globe have been grappling with the financial losses incurred due to mandated shutdowns. In Pennsylvania, two such cases involving a tavern owner and a dentist have been the center of attention. The state Supreme Court has decided to hear the appeals from these disputes, which revolve around whether the businesses’ insurance policies should have covered some of the financial losses they suffered during the pandemic business shutdowns.
The Tavern’s Tale
In the case of the tavern, Grant Street Tavern v. Erie Insurance Exchange, the Superior Court ruled in favor of the insurance company. The court concluded that the pandemic mitigation measures didn’t cause physical damage to the tavern, and therefore, the losses weren’t covered. This decision overturned the original ruling by the Allegheny County Common Pleas Court, which had sided with the tavern owner.
The Dentist’s Triumph
In contrast, the case of Timothy A. Ungarean, DMD, D/B/A Smile Savers Dentistry, PC, saw a different outcome. Both the Allegheny and the Superior Court sided with the dentist, Dr. Ungarean. The court found that the business income and extra expense policy purchased by Dr. Ungarean should cover the dentist’s COVID losses. This decision has set a significant precedent for similar cases in the future.
The Insurance Policies
The divergence in the outcomes of these two cases seems to have been due to differences in the businesses’ insurance policies. While the tavern’s losses were not deemed to be covered due to the lack of physical damage, the dentist’s losses were covered due to the specific policy he had purchased.
The Implications of the Dentist’s Case
The dentist’s case has far-reaching implications for other businesses seeking to claim insurance for losses incurred due to the pandemic. The court rejected the insurance company’s argument that the business income and extra expense policy shouldn’t cover the claim because there was an exclusion in the policy for damages caused by “fungi, wet rot, dry rot, and microbes.” The court asserted that the policy’s definition of “microbe” didn’t include viruses.
The Supreme Court’s Role
The Supreme Court’s decision to hear these appeals underscores the importance of these cases. The court will consider several questions in both cases, focusing on whether the insurance policies should cover losses associated with the COVID-19 pandemic. The outcome of these cases could set a precedent for future disputes over insurance coverage for pandemic-related business losses.
The Future of Business Insurance
These cases highlight the need for clarity in business insurance policies, especially in unprecedented situations like a global pandemic. The outcomes could potentially influence how insurance companies draft their policies in the future and how businesses choose their coverage. The landmark victory of the dentist’s case, in particular, could pave the way for other businesses to claim their pandemic-related losses.
The Potential Impact on Business Insurance Costs
The triumph of Smile Savers Dentistry in their insurance dispute could potentially have far-reaching implications on the cost of business insurance, particularly business income interruption insurance.Insurance companies calculate premiums based on the level of risk they are assuming. With this precedent, insurers may now perceive a higher risk in providing business interruption insurance, especially in the context of global crises like a pandemic. This could lead to an increase in the cost of premiums for this type of insurance.Moreover, insurance companies may also revise their policy terms and conditions to clearly define or exclude coverage related to pandemics or similar global events. This could lead to more stringent policy conditions, potentially making it more challenging for businesses to claim insurance in future crises.
However, it’s important to note that these potential changes would largely depend on the regulatory environment and the response of the insurance industry as a whole. The impact could vary significantly across different regions and types of businesses.While this case sets a significant precedent, it’s just one piece of the larger puzzle. The ultimate impact on business insurance costs will be determined by a combination of legal rulings, regulatory decisions, and market dynamics in the insurance industry.
As we navigate the aftermath of the COVID-19 pandemic, these cases serve as a crucial reminder of the legal and financial challenges businesses face. The outcomes will undoubtedly shape the landscape of business insurance and pandemic-related coverage in the future. The victory of the dentist’s case, in particular, serves as a beacon of hope for many businesses seeking to recover their losses. It is a testament to the resilience of businesses in the face of adversity and a reminder that even in the most challenging circumstances, triumph is possible.