The Road to Insurance Recovery

Baylor College of Medicine fought the good fight and won. After a three-day trial in Harris County, Texas, the jury returned a verdict against certain Underwriters at Lloyd’s, London, finding that SARS-CoV-2, the virus that causes COVID-19, caused physical loss or damage to Baylor College’s property, and that the insured had coverage for more than $48 million in business interruption, extra expense and research losses. Key to the college’s successful case was the expert testimony of virologist Dr. Peter Hotez, who testified that the SARS-CoV-2 virus physically attaches to and changes property at the molecular level, thus reducing functionality and value. And, because Baylor College had to stay open during the pandemic to treat patients with COVID-19, it proved that the virus was physically present in its facilities. This is a huge victory for Baylor College and a notable case for all policyholders. It’s yet another example of policyholders faring better in state court rather than federal court on this heavily litigated issue. And, it’s an outcome that contradicts the Fifth Circuit Court of Appeal’s assumption, under Texas law, that the virus does not physically damage property. Contrast Ferrer & Poirot, GP v. Cincinnati Ins. Co., 36 F.4th 656, 658 (5th Cir. 2022) (“While COVID-19 has wrought great physical harm to people, it does not physically damage property within the plain meaning of “physical.””) (citing, in part, Terry Black's Barbecue, L.L.C. v. State Auto. Mut. Ins. Co., 22 F.4th 450, 456–57 (5th Cir. 2022)).