Judge Stephen Bough, for the U.S. District Court for the Western District of Missouri has issued his second ruling in favor of policyholders with business interruption claims related to COVID-19, denying Owners Insurance Co.'s motion to dismiss a suit brought by a dental practice group that sought coverage for income lost due to mandatory COVID-19 lockdowns. The case is Blue Springs Dental Care LLC et al v. Owners Insurance Co. No. 20-CV-00383-SRB, 2020 U.S. Dist. LEXIS 172639 (W.D. Mo. Sep. 21, 2020).
The case at hand presented similar facts to most other business interruption class action cases that have been filed since the beginning of the pandemic. The plaintiffs, four dental care clinics in Kansas City, argued that government-ordered closings imposed early in 2020 that were meant to stem the spread of COVID-19, constituted a direct physical loss under the terms of the policies, and thus triggered business interruption coverage. The dental clinic policyholders argued that the presence of the virus on or around the offices caused damage to their properties.
One month prior, Judge Bough issued one of the very first rulings in a pandemic-related case, ruling in favor of a policyholder. Citing that earlier ruling, in Studio 417 Inc. v. Cincinnati Insurance Co., Judge Bough noted that, importantly, the policy failed to define the term "direct physical loss." He noted that the Plaintiffs "plausibly alleged that COVID-19 physically attached itself to their dental clinics thereby depriving them of the possession and use of those insured properties."
Editors Note: Since the beginning of the pandemic, hundreds of policyholders have filed suit against their insurers. Most of the rulings so far have been in favor of the insurers. Rulings in favor of policyholders could potentially open the floodgates for claims the industry has yet to even consider. If the presence, or the alleged or suspected presence, of the COVID-19 virus is deemed by the courts to be covered "physical damage," the presence of other viruses might be considered "physical damage" as well, including the flu and the common cold. This could open up insurers to a bevy of claims for which they never intended to provide coverage.