Newton Hotel Company Sues Insurers Over COVID-19 Losses

NEWTON, MA — Service Properties Trust (SVC), a Newton-based real estate investment trust that owns more than 300 hotels in the country, has sued nine insurers for refusing to pay out for its COVID-19 losses since the start of the pandemic.

The lawsuit, filed in Suffolk Superior Court, claims that the COVID-19 virus has damaged the physical property at its hotels, including all the surfaces and air inside the hotels, and that their policies cover such things.

“The physically changed and altered air and surfaces caused by the presence and intrusion of COVID-19 and SARS-CoV-2 onto the Hotel Properties render the properties unfit for their insured use—hospitality properties for guests—and deprive SVC of the full insured use of these properties,” reads the lawsuit.

“This loss of fitness and utility, caused by the intrusion of a dangerous and potentially lethal physical substance, is direct physical loss,” it continues. “his is precisely the impact that ammonia, airborne asbestos fibers, toxic fumes (including carbon monoxide), pervasive odors and/or wildfire smoke have on property—all of which have been found by courts to cause direct physical loss or damage to property.”

Service Properties claims that more than 182 guests and staff members at their hotels have been diagnosed with COVID-19 since March 2020, many of whom were on-site during or immediately after their diagnosis.

Because of this, the company wants $138 million in Covid-19 losses that it says its insurers are refusing to pay, despite Business Interruption, Extra Expense, and Communicable Disease Contamination Clauses.

“The Insurers acted in bad faith by misrepresenting to SVC that the Policy does not cover communicable disease-related losses in whole or in part, when that is precisely the coverage that the Policy provides.”

To read the full lawsuit, click here.