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Insurers win and lose COVID-related business interruption rulings

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The Washington Supreme Court on Thursday became the fifth state Supreme Court to rule in favor of insurance companies in a COVID-related business interruption lawsuit, and unanimously ruled against dental practice.

But on Thursday, a California appeals court overturned the lower court’s ruling, ruling that nail salons are entitled to business interruption compensation under Lloyd’s Policy.

The Washington lawsuit, which upheld the lower court’s ruling, was filed against Washington-based Enumclaw Insurance Co.’s Mutual of Enumclaw by a dentist with offices in Oak Harbor and Anacortes, Washington. Hill and Stout PLLC v. Mutual of Enumclaw Insurance Co.

As with comparable rulings, the Olympia-based Supreme Court ruled that there were no direct physical losses, as called for in its coverage. The ruling said, “It is unreasonable to interpret ‘direct physical loss of property’ in a property insurance contract to include constructive loss of the property’s intended use.”

The dental clinic said, “I could still Physically Please use the property in question. It was the property of the clinic and was “still functioning, available for use, and unobstructed from HS entry into the premises,” it said.

The ruling also ruled that the coverage was precluded by the coverage’s virus exclusion.

The decision follows similar rulings by the Supreme Courts of South Carolina, Wisconsin, Iowa and Massachusetts.

Plaintiff Attorney Mark A. Willner, partner at Gordon, Tilden, Thomas & Cordell LLP in Seattle, said in a statement: But we appreciate the ability of our State Superior Court to speak quickly and decisively on this important issue of state insurance law. Especially when so many federal courts were ruled by guessing what the state supreme courts would do.

“Now they don’t have to. It’s also important to remember what the court decided and what it didn’t decide. The decision does not apply to cases with materially different facts, such as viral cases within facilities, many of which do not even include virus exclusions.”

Lawyers for the insurance company did not respond to requests for comment.

The judgment of the Los Angeles-based state court of appeals, Butter Nails and Waxing Inc. vs Lloyd’s Underwriters in London It focused on the property policies of nail salons in Los Angeles.

While case law governing insurance contracts and COVID-19 is relatively new, it states that “temporary loss of use of assets due to pandemic-related closure orders without further It is already widely established that it does not constitute damages,” the judgment said.

“However, this ‘widely established’ rule has evolved in the context of insured persons seeking coverage under insurance provisions claiming property loss or damage.

“Here, the plaintiff does not seek compensation for any part of the insurance contract that requires property loss or damage of any kind,” but “with little explanation or condition” to the loss caused by the business interruption. For “public security measures” that require evacuation, under the approval of civil authorities that have said they will pay for

The ruling also held that policyholders were entitled to compensation under the mold exclusion policy. A public health order addressing a virus pandemic, especially if the insured person did not allege the virus was present at their place of business.

Butter Nails attorney Robert S. Gerstein of the Robert S. Gerstein Law Firm in Santa Monica, Calif., said the scope of the exclusion in the nail salon’s policy is unusual. “I don’t think there has been another case nationwide involving this language of refuge,” he said.

However, this does not apply to the exclusion of mold, which is “essentially similar to coverage language in other cases and is almost universally found.” of a government order. “This is a very reasonable” ruling, he said, to the contrary.

A lawyer for Lloyd did not respond to a request for comment.