Judge rules businesses can sue insurers for coronavirus losses

A Missouri court ruling could open the door for COVID-19-related business interruption insurance claims. (Photo: ALM Archives)

A federal judge in the U.S. District Court for the Western District of Missouri ruled on August 12 that a group of hair salons and restaurants can sue their insurer for business interruption losses caused by the COVID-19 pandemic. The businesses claim the virus caused “direct physical loss” to their premises.

Studio 417 paid premiums to The Cincinnati Insurance Company (Cincinnati) for a policy that included coverage for potential business losses due to a variety of possible causes. The suit indicates that Cincinnati violated the insurance contract when it refused to reimburse the salons for lost business income during the time when Missouri’s stay-at-home orders were in effect. Studio 417 also argued that no virus exclusion existed in the insurance contract, so Cincinnati could not use that exemption.