By Gavin Scouter

A coronavirus business interruption suit filed against Berkshire Hathaway Inc. alleges that virus exclusions that have been used by insurers since 2006 should be ruled invalid because the policy wordings organizations that devised them made misrepresentations to regulators.

In the proposed class action 1 S.A.N.T. Inc. d/b/a Town & Country and d/b/a Gatherings Banquet & Event Center v. Berkshire Hathaway Inc., a New Castle, Pennsylvania, restaurant and tavern argues that Berkshire Hathaway wrongly denied its claim for business interruption coverage for income lost during the COVID-19 lockdown.

Like many similar suits filed by policyholders against insurers nationwide, the 1 S.A.N.T. suit, which was filed in federal court in Pittsburgh on June 11, alleges that the coronavirus pandemic caused direct physical damage to the plaintiff’s property, which it argues triggers business interruption coverage under its commercial insurance policy.

In addition, the suit argues that the virus exclusion in the policy does not apply because the groups that drew up the wordings 14 years ago — Insurance Services Office Inc. and the American Association of Insurance Services — told regulators that existing property polices did not cover “disease-causing agents” and the exclusions were intended to “clarify” coverage.

However, courts had previously ruled that property policies covered claims involving disease-causing agents, court papers say. The suit does not cite specific past rulings on the issue.

“The foregoing assertions by the insurance industry (including Defendant), made to obtain regulatory approval of the Virus Exclusion, were in fact misrepresentations and for this reason, among other public policy concerns, insurers should now be estopped from enforcing the Virus Exclusion to avoid coverage of claims related to the COVID-19 pandemic,” court papers say.

Berkshire Hathaway, ISO and AAIS did not immediately respond to requests for comment.