Shipbuilder’s COVID Insurance Lawsuit Revived by Vermont High Court

The Vermont Supreme Court revived a military shipbuilder’s lawsuit for insurance coverage of lost income and extra expenses incurred in dealing with the virus that causes COVID-19, becoming the first state high court to rule for the policyholder in such cases.

In a 3-2 split Friday, the majority said Huntington Ingalls Industries (HII) had cleared the state’s ‘extremely low bar’ for initial pleadings by alleging that the virus adheres to surfaces, turning them into vectors for disease that must be counteracted with barriers and other physical modifications.

‘To be clear, this opinion does not state that what occurred in insured’s shipyards is ‘direct physical loss or damage to property’ under the policy,’ and HII must still prove its case on remand, Associate Justice Harold Eaton Jr wrote. He was joined by Chief Justice Paul Reiber and retired Associate Justice Denise Johnson.

The dissenters said Covid harms people, not property.

HII spokesman Danny Hernandez said the company was ‘very pleased’ with the decision and looks forward to litigating in Franklin County Superior Court, where HII filed suit in September 2020.