Insured’s COVID-19 Claim Survives Motion for Judgment on the Pleadings Based on Loss of Attraction Endorsement
Faced with a motion for judgment on the pleadings filed by several of its insurers, the insured was successful in arguing that the Loss of Attraction endorsement in one insurer's policy allowed the insured to pursue losses suffered by its businesses due to COVID-19. BBX Capital Corp. v. Scottsdale Ins. Co., et al., 2025 Mo. App. LEXIS 212 (Mo. Ct. App. April 1, 2025).
The insured, BBX Capital Corporation, had 284 business properties located throughout the United States, including in Missouri. BBX's business properties included vacation resorts and timeshare properties, and retail stores selling chocolate and other confectionery products
BBX purchased "all-risk" property insurance polices from several insurance companies for primary or excess coverage. Each policy was constructed around a master form, consisting of fifty=two pages of common provisions and twelve endorsements (Master Policy). Each insurer then separately added declarations pages and endorsements modifying the provisions of the Master Policy to create their own individual policies.
BBX sought to receive coverage under the policies for COVID-19 pandemic-related losses. After timely notice, the insurers either denied BBX's claim or sent reservation of rights letters. BBX fiied suit alleging direct physical loss due to the presence of SARS-CoV-2 and shut-down orders.
The insurers moved for judgment on the pleadings in a joint motion seeking dismissal of the complaint. The trial court granted the insurers' motion and BBX appealed.
The appellate court affirmed with one exception: the Loss of Attraction Endorsement did not require physical loss or damage to property. The endorsement provided,
This policy is extended to cover the actual loss sustained and Extra Expense incurred by the insured resulting from cancellation of or inability to accept bookings for accommodation and/or cessation or diminution of trade due to a loss of potential customers, as a direct result of;
. . .
2) Infectious, communicable or contagious disease.
. . .
4) closing of whole or part of the premises of the insured by order of a Public Authority consequent upon the existence or threat of hazardous conditions . . .
The court focused on the Loss of Attraction Endorsement found in Interstate Fire & Casualty Company's policy. The Interstate policy also included a Communicable Disease Exclusion. However, the Communicable Disease Exclusion was not properly referred to in its Declarations Page. Therefore, the exclusion was superseded by the terms and conditions of the Master Policy and did not apply to bar coverage for BBX's alleged losses under the Loss of Attraction Endorsement. Consequently, the trial court erred in holding BBX's claimed losses were unambiguously excused under Interstate's Communicable Disease Exclusion.
The judgment of the trial court was reversed and remanded for further proceedings as to BBX's claims for Loss of Attraction coverage under Interstate's Policy.
