In both cases, the judges based their rulings on policy language that excluded coverage for losses covered by viruses.

The rulings add to the small but growing body of case law on business interruption insurance claims related to COVID-19, which have been proliferating recently. In another such case, a Bergen County judge denied a motion to dismiss after finding the policy language in that case had no virus-related exclusion, unlike the policies for Cara Mia and The Cake Boutique. That ruling was issued Aug. 13 in a suit by several optical shops in Optical Services USA/JCI v. Franklin Mutual Insurance Co.

Elsewhere, a North Carolina judge's ruling went a step farther. Ruling last month in a suit against Cincinnati Insurance Co. by owners of 16 restaurants, the judge denied the insurance company's motion for summary judgment and granted the plaintiffs' motion for partial summary judgment on a motion seeking a declaratory judgment that the insurance company must reimburse the plaintiffs for lost business income and extra expenses.

In the Cara Mia case, Kugler noted that the insurance company claimed it was not obligated to cover the claim because the insured premises did not experience any direct physical loss or damage. But Kugler said it was not necessary to address that issue because the virus exclusion plainly applies to bar coverage. The lawyer for Cara Mia argued that the virus exclusion did not apply because the cause of its loss was the state's orders to close, rather than the virus. But Kugler called that position "unpersuasive."

"There is no doubt that COVID-19, a virus, caused Gov. Murphy to issue the Executive Order mandating closure of plaintiff's restaurant. Therefore, COVID-19 is still a cause of the closure because the virus exclusion specifically provides for such indirect causation. There is no requirement, as plaintiff suggests, for the virus to have physically caused the loss, such as via contamination of the property," Kugler said.

In the Cake Boutique case, the plaintiff claimed that the business was closed due to a government action and that the order constituted direct physical damage to the policy, which is a covered claim. But Polansky noted that a clause in the policy bars coverage in the event of a virus, even where another cause or event contributes to the loss. New Jersey courts routinely enforce such clauses, Polansky said.

"It therefore does not matter whether the closure of plaintiff's business as the result of government orders to prevent the spread of the coronavirus constitutes direct physical damage to covered property … since the reason for the exercise of that civil authority was the virus," Polansky said.

The Cake Boutique ruling was previously reported on Law360. The lawyer for The Cake Boutique, Robert Williams of Mattleman, Weinroth & Miller in Cherry Hill, did not return a call. Elizabeth Sher and Joseph Scully of Day Pitney, representing Selective Fire and Casualty, also did not return calls.

The lawyers for Cara Mia, Christopher Seeger of Seeger Weiss in Ridgefield Park and Lindsey Taylor and James Cecchi of Carella Byrne in Roseland, also did not return calls.

Eric Harrison of Methfessel & Werbel in Edison, who represented Cumberland Mutual along with the firm's Christian Baillie, said in a statement, "We appreciate Judge Kugler applying the clear policy language to the allegations in the Complaint to decide what was a pure question of law. The losses suffered since March 2020 by Cara Mia and countless other businesses throughout the state highlight the need for a comprehensive governmental response, and both Cumberland and the insurance industry as a whole have always been willing to offer their perspective and to partner with our state and federal legislators on a viable long term plan."