COVID – Limitation of Commercial Insurance Coverage

7th Circuit Court of Appeals

Case Name: Stant United States of America Corp. v. Factory Mutual Insurance Company

Case No.: 22-1336

Officials: Rovner, Brennan, and Scudder, Circuit Judges.

Focus: COVID – Limitation of Commercial Insurance Coverage

The plaintiffs, Stant USA Corporation, Stant Foreign Holding Corporation, and Vapor US Holding Corporation (collectively “Stant”), filed suit seeking a declaratory judgment that they were entitled to recover under a commercial insurance policy issued by the defendant Factory Mutual Insurance Company (“FM”). The district court granted a motion to dismiss by FM, and Stant now appeals that dismissal.

Stant is a manufacturer of products for automobile suppliers and for automobile manufacturers such as Fiat Chrysler, Ford Motor Company, and General Motors. The products manufactured by Stant for those customers included vapor management systems, fuel delivery systems, and thermal management systems. The spread of COVID-19 in early 2020 and the ensuing government orders curtailing the operation of non-essential businesses resulted in the suspension or reduction in operations by Stant’s customers, and Stant alleged that it suffered over $5.3 million in derivative financial losses. The policy covers only physical loss or damage that is not indirect or remote. Stant’s claim does not fall within the coverage of the policy for physical property loss or damage, the court does not to address FM’s alternative arguments that the claim would fall within other exclusions in the policy, including the Loss of Use exclusion and the Contamination exclusion.


Decided 03/02/23

Full Text



COVID – Limitation of Commercial Insurance Coverage