Bucking Trend, Courts Find Potential Coverage For COVID-Related Business Interruption Loss

Since June 2022, policyholders have grown cautiously optimistic as two state appellate courts have ruled in favor of policyholders seeking coverage for business interruption loss stemming from COVID-19. As has been well documented since the pandemic began, courts have largely declined to find coverage for such loss, often based on the assumption that COVID-related closures do not satisfy the "physical loss or damage" requirement found in most policies.

In mid-June, however, a Louisiana appellate court found the presence of coronavirus on an insured's premises caused covered "physical loss or damage" to property. And recently, a New York appellate court unanimously affirmed a ruling allowing a policyholder to pursue a business interruption claim for income lost during a government-ordered shutdown. The disputed policy, held by the New York Botanical Garden, covers business interruption loss but does condition coverage on physical damage to property. Hence, the First