A suit by owners of Missouri hair salons and restaurants against Cincinnati Insurance Co. for losses during the COVID-19 pandemic may proceed, a federal judge has ruled, Reuters reported.
It’s apparently the first case of a judge ruling in favor of policyholders over insurance carriers in a case over COVID-19 claims, the story said. Carriers had favorable rulings in similar cases in Michigan and Washington, D.C., the news agency reported
But U.S. District Judge Stephen Bough in Kansas City refused to dismiss cases in Missouri, ruling the business owners “plausibly alleged that [COVID-19] particles were a ‘physical substance” that attached to and damaged their property, rendering them unsafe and unusable,” Reuters said.
“We respect the legal process,” Betsy Ertel, a spokeswoman for Cincinnati told the St. Louis Record. “As this case continues, we believe that the Court will ultimately enforce the language of our policy contract.”
The plaintiffs purchased “all risk” business insurance, the judge said in his ruling.
“All-risk policies cover all risks of loss except for risks that are expressly and specifically excluded,” he ruled.
The policies '“do not include" exclusions for losses caused by viruses or communicable diseases, the judge said.
The policies covered lost business income caused by the suspension of operations during the ‘"period of restoration,” the judge said.
“Plaintiffs allege that in complying with the closure orders and by suspending operations, they ‘incurred expenses in connection with reasonable steps to protect covered property’” the judge said. “Defendant’s motion to dismiss will be denied in its entirety.”
The judge emphasized that his ruling allows the case to enter the discovery process.
“Discovery will shed light on the merits of Plaintiffs’ allegations, including the nature and extent of COVID-19 on their premises,” he ruled.
He also said future court rulings on COVID-19 could affect the case.
“Subsequent case law in the COVID-19 context, construing similar insurance provisions, and under similar facts, may be persuasive,” he wrote.