Since the COVID-19 pandemic began earlier this year, policyholders have filed over a thousand lawsuits against their insurance carriers seeking coverage for business interruption losses caused by the coronavirus or resulting stay-at-home orders. While many courts have dismissed these suits on the ground that there is no “direct physical loss or damage” to property, the tide may be starting to turn. Twice in the past three months policyholders have won partial summary judgment in cases seeking business interruption coverage for losses caused by stay-at-home orders:
- On October 9, 2020, in North State Deli LLC, et al. v. Cincinnati Insurance Company, et al., Case No. 20-CVS-02569, the State of North Carolina General Court of Justice, Superior Court Division, County of Durham, granted plaintiff’s motion for partial summary judgment that its policies provide coverage for Business Income and Extra Expenses for plaintiff’s loss of use and access to its property due to government orders. The court held that the policy’s undefined terms “physical loss” and “physical damage” have distinct and separate meanings, and that the phrase “direct physical loss” includes the inability to utilize or possess something.
- On November 23, 2020, in Perry Street Brewing Company LLC v. Mutual of Enumclaw Insurance Company, Case No. 20-2-02212-32, the Superior Court of the State of Washington for Spokane County granted PSBC’s motion for partial summary judgment. The court held that the interruption of PSBC’s business operations as a result of the Governor’s COVID-19-related proclamations “was a direct physical loss of PSBC’s property because PSBC’s property could not physically be used for its intended purpose, i.e., PSBC suffered a loss of its property because it was deprived from using it.” Like the court in North State Deli, the PSBC court reasoned that the policy’s undefined terms “loss of” property and “damage to” property are distinct from one another, that “physical loss means something other than damage,” and that the dictionary definition of “loss” includes “deprivation.”
In addition, policyholders seeking business interruption coverage for COVID-19-related losses have defeated insurer motions to dismiss over a dozen times since August:
| Case Name | Court | Case Number | Date of Order |
| Elegant Massage, LLC v. State Farm Mutual Automobile Insurance Company | United States District Court for the Eastern District of Virginia | 2:20-cv-00265-RAJ-LRL | December 9, 2020 |
| JGB Vegas Retail Lessee, LLC v. Starr Surplus Lines Insurance Company | District Court, Clark County, Nevada | A-20-816628-B | November 30, 2020 |
| Dino Palmieri Salons, Inc. v. State Automobile Mutual Insurance Company | Ohio Court of Common Pleas, Cuyahoga County | CV-20-932117 | November 17, 2020 |
| Hill and Stout PLLC v. Mutual of Enumclaw Insurance Company | Superior Court of the State of Washington, King County | 20-2-07925-1 SEA | November 13, 2020 |
| Independence Barbershop LLC v. Twin City Fire Ins. Co. | United States District Court, Western District of Texas | 1:20-cv-00555-JRN | November 4, 2020 |
| Taps & Bourbon on Terrace, LLC v. Underwriters at Lloyds, London and Main Line Insurance Offices, Inc. | In the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania, Civil Trial Division | 20093025 | October 26, 2020 |
| Chapparells Inc. v. Cincinnati Insurance Company | Ohio Court of Common Pleas, Summit County | CV-2020-06-1704 | October 21, 2020 |
| Lombardi’s, Inc. et al v. Indemnity Insurance Company of North America | In the District Court of Dallas County, Texas, 14th Judicial District | DC-20-05751 | October 15, 2020 |
| Francois Inc. v. Cincinnati Insurance Company | In the Court of Common Pleas, Lorain County, Ohio | 20CV201416 | September 29, 2020 |
| Urogynecology Specialist of Florida LLC v Sentinel Insurance Company, Ltd. | United States District Court, Middle District of Florida | 6:20-cv-01174-ACC-EJK | September 24, 2020 |
| Johnston Jewelers, Inc. v. Jewelers Mutual Insurance Company, S.I. | In the Sixth Judicial Circuit in and For Pinellas County, Florida, Circuit Civil Division | 20-002221-CI | September 22, 2020 |
| Blue Springs Dental Care, LLC v. Owners Ins. Co. | United States District Court, Western District of Missouri | 20-CV-00383-SRB | September 21, 2020 |
| Ridley Park Fitness, LLC v. Philadelphia Indemnity Insurance Company | In the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania, Civil Trial Division | 200880358 | August 31, 2020 |
| Optical Services USA/JC1 et al v Franklin Mutual Insurance Company | Superior Court of New Jersey, Law Division, Bergen County | BER-L-3681-20 | August 13, 2020 |
| K.C. Hopps, Ltd. v. Cincinnati Insurance Company | United States District Court, Western District of Missouri | 20-CV-00437-SRB | August 12, 2020 |
| Studio 417, Inc. v. Cincinnati Insurance Company | United States District Court, Western District of Missouri | 20-CV-03127-SRB | August 12, 2020 |
While court rulings will vary case-by-case based on applicable state law, the precise language of the policy at issue, and the factual circumstances surrounding the loss, these above decisions demonstrate that no policyholder should assume or accept that “there is no coverage” without a thorough review by coverage counsel.
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