Recent Decisions in the COVID-19 Business Interruption Coverage Battle
Miller & Martin PLLC Blog | October 07, 2020
Author: Neil Wilcove
If you are a dork like me, you might take some time and monitor the hundreds of COVID-19 insurance coverage lawsuits that have been filed around the country. For those who have a life, however, this topic may not be at the forefront of your mind.
A Little Background
Throughout the country, slews of commercial property policy holders have submitted claims for business interruption, generally claiming loss of income or extra incurred expenses due to closure of the premises because of the presence of the virus or government orders. Insurance companies have mostly denied the claims, stating that the presence or risk of the presence of the virus does not meet the requirement that there be “direct physical loss or damage” at the covered property (or around the covered property, for coverage based on closures as a result of government orders).
Recently, in the case of Studio 417, Inc. et al. v. The Cincinnati Ins. Co., 2020 WL 4692385 (W.D. Mo.), the federal court denied Cincinnati’s Motion to Dismiss. This ruling was based upon the argument that COVID-19 is a “physical substance” that “lives” and is “active” and as a result “renders physical property in the vicinity unsafe and unusable.” Based upon Missouri law, at least in this instance, the Plaintiffs made it through the initial pleading stages because they properly alleged a claim for a direct physical loss as defined in the policy. This case was helpful to another judge who also denied an insurer’s Motion to Dismiss in Blue Springs Dental Care, LLC v. Owners Insurance Company, 2020 WL 5637963 (W.D. Mo.). Who knows where these cases are headed, but the Studio 417 case at least provides a road map for those policyholders that are seeking coverage for losses associated with COVID-19.
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