The Issue of Physical Loss in COVID-19 Business Interruption Lawsuits
Cincinnati Financial Corp. is facing a number of business interruption coverage lawsuits due to the coronavirus pandemic. According to Biz Journals, the insurer, like many others across the country, has been sued by companies that have purchased policies and have been diligently paying premiums over the years. They claim they suffered business losses when the pandemic led to forced business shutdowns. Insurance companies have argued that their policies cover physical damage to businesses and that COVID-19 has not resulted in physical damage.
Viruses are ‘Physical Substances’
However, in August, a group of hair salons and restaurant owners in Kansas and Missouri won a ruling in federal court where a judge declined to dismiss the case. U.S. District Judge Stephen Bough said that the virus “allegedly attached to and deprived plaintiffs of their property, making it unsafe and unusable, resulting in direct physical loss to the premises and property.”
The judge allowed the case to move forward. Bough said the insurance company, in that case, Cincinnati Financial, did not specifically define “physical loss” in its policies. The plaintiffs plausibly argued that viruses are a “physical substance” that attached to and damaged their property, making it unusable, he said. Some other judges and courts around the country, however, have ruled in insurers’ favor. A key issue for Cincinnati Financial is that its policies also do not specifically exclude virus-related damages.
A Matter of Justice
Our consumer rights lawyers have been handling these cases on behalf of businesses, and we absolutely agree with the judge in Missouri that the loss experienced by businesses as a result of COVID-19 shutdowns is as real as it gets. Businesses have been denied physical use of their buildings and their properties because of the virus and this has cost them large amounts of money in losses. Locally and nationally, our economy has been devastated.
If you are a business whose business interruption claim has been denied, there is still plenty of hope to file a COVID-19 business interruption lawsuit. It is important to remember that the verbiage of many insurance policies is ambiguous. Most policies are open to an interpretation that should allow businesses to be compensated for losses incurred as a result of interruption due to the pandemic. Our consumer rights lawyers at Bisnar Chase are committed to fighting for the rights of our businesses.