April 14, 2021

Rowan University sues insurance company for not covering millions in losses amid COVID crisis

Rowan University has joined the growing list of businesses in New Jersey filing suit against…

Rowan University has joined the growing list of businesses in New Jersey filing suit against insurance companies for not covering losses associated with the coronavirus pandemic.

The university claims in court papers Factory Mutual Insurance Company of Rhode Island has failed to honor an all-risk commercial property policy that ran from July 1, 2019 to July 1, 2020.

The lawsuit, filed last month in state Superior Court in Gloucester County, states the policy promises coverage for business losses and extra expenses due to “interruption by communicable disease.”

The policy, which covered all of Rowan’s 24 locations in the state, should pay costs for decontamination, communicable disease response, protection and preservation of property, and claims preparation, the lawsuit states.

The university employs 2,294 faculty members, 2,425 non-faculty workers and offers bachelors through doctorate programs to nearly 20,000 students through its campuses in Glassboro, Camden and Stratford.

Rowan estimates it lost millions of dollars after Gov. Phil Murphy declared a public health emergency in March 2020.

“Murphy ordered all institutions of higher education to cease in-person instruction effective on March 18, 2020,” the suit states. “Since that time, plaintiff, as well as all other businesses in New Jersey, have been unable to operate in the ordinary course of business.”

The state’s emergency orders “confirmed that the presence or suspected presence of COVID-19 caused damage to property by rendering such businesses too dangerous to operate,” the lawsuit states.

Rowan claims in its suit that Factory Mutual had marketed its policy to the college with a focus “on finding coverage instead of exclusions” along with “fair and prompt payment of losses.”

“There is no exclusion in the policy for lost business income and expenses caused by either emergency orders limiting one’s business or the pandemic causing property damage and restricting plaintiff’s business activities at its properties,” the suit states.

Rowan says it provided students with millions in room-and-board reimbursements, reduced staff to “skeletal” proportions and lost revenue from tuition and on-campus events. The university says it also suffered losses when public allocations were cut.

The lawsuit accuses the insurance company of breach of contract. The university is seeking a jury trial with an award amount “to be determined at trial or appraisal ordered by” the court.

Steve Zenofsky, a spokesman for Factory Mutual, which is based in Johnston, Rhode Island, released this statement when contacted about the lawsuit:

“FM Global values the long-term relationships we have with our policyholders and we are proud to be leading the industry for claims service. It is unfortunate when legal matters arise because we strongly believe our insurance policies are clear on the coverage provided.”

Last month, RWJBarnabas, which is New Jersey’s second-largest private employer, filed suit against Zurich American Insurance Company for refusing to cover $2.5 billion in the health system’s pandemic-related losses.

The suit, filed in Superior Court in Essex County, stated that nine workers had died and thousands were infected with COVID-19.

In Bergen County, six restaurants and one gym filed a lawsuit against six insurance companies for breach of contract, saying financial losses incurred during the coronavirus pandemic were not covered by insurance but should have been.

And in Ocean County, a car dealer sued Zurich American in federal court over the same issue but lost its case when the judge ruled their policy contained a “virus exclusion.”

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Anthony G. Attrino may be reached at [email protected].