In an important ruling, U.S. District Judge Stephen Bough allowed a group of hair salons and restaurants to move forward with a class action for business interruption coverage based on COVID-19.
“COVID-19 allegedly attached to and deprived plaintiffs of their property, making it unsafe and unusable, resulting in direct physical loss to the premises and property,” Judge Bough wrote. “Based on these allegations, the amended complaint plausibly alleges a ‘direct physical loss’ based on the plain and ordinary meaning of the phrase.”
This ruling is significant because it marks the first time a business interruption claim based on COVID-19 has survived a motion to dismiss. Notably, the insurance policies at issue did not contain an exclusion related to losses caused by viruses.
If you believe your business may have a business interruption claim related to COVID-19, your in-house or other counsel should carefully analyze your insurance contract and track the latest developments in coronavirus litigation. Rushing McCarl will continue to monitor this case and post about new developments as they arise.
Rushing McCarl provides this information for educational purposes only. It should not be construed as legal advice, and readers should not act on it without seeking advice from an attorney.