Owners of the Philadelphia Union Major League Soccer team have sued a Chubb unit, alleging the insurer refused to honor its $192 million policy to cover COVID-19-related losses after their athletes caught the virus that physically infested its properties. According to the suit, the Union was scheduled to host 18 home games with full fan support last season, but hosted less than 10,000 fans in all nine games played. As a result, they allege they suffered a direct physical loss because their properties lost their function of generating business income due to the pandemic and COVID-19.

Federal Insurance Co., the Chubb unit, denied coverage in June 2020, asserting there was no physical damage, a precondition for coverage. The soccer team and stadium operators seek a declaration that the policy covers their losses and that no exclusion in the policy applies to bar coverage, and are demanding damages to be determined in a jury trial.

Already, many similar suits have been filed and been largely unsuccessful. A Florida federal judge tossed a Miami catering company's lawsuit seeking to force Scottsdale Insurance Co. to pay for COVID-19-related losses, while another Florida judge rejected a Miami restaurant chain's lawsuit seeking to compel Aspen Specialty Insurance Co. to cover its losses. A Texas federal judge shot down a dentist's suit seeking coverage from Aspen.

More recently, however, a California state judge ruled that "direct physical loss" does not require physical, tangible alteration of the property, in denying a motion to dismiss. Such a ruling opens the door for the Philadelphia Union, and similarly situated plaintiffs, to recover millions of dollars in losses due to COVID-19.

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