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Judge sides with Insurers

D.C. Judge sides with Insurers on COVID-19 Business Interruption

The insurance industry has marked a victory in the case against several restaurant owners. The case was brought by the owners of restaurant owners against its insurer, Erie Insurance Exchange. They were claiming that commercial insurance policies cover business interruption due to the pandemic COVID-19 outbreak.    

A District of Columbia Superior Court Associate Judge Kelly Higashi favored the insurer’s side. It stated that the shutdown did not make any direct physical losses to the restaurants. Also, this judgment came when plaintiff restaurants failed to prove any physical loss.

Looking deep into the matter, the lead plaintiff Rose 1 that runs various restaurants including Rose’s Luxury, Little Pearl, Elaine’s One, Pineapple, and Pearl’s with other several plaintiffs that included Karma Modern Indian, El Cucho, Le Vie, and many others. They had to shut down in March when D.C. Mayor Muriel Bower had banned indoor dining. It was when the closing of all non-essential stores during the outbreak happened.

The Rose 1 that owned Erie’s Ultrapack Plus Commercial Property Coverage claimed the closure of restaurants as a direct physical loss. This is because the orders were given without any negotiating step and Coronavirus is ‘material’ and not ‘abstract’. But the judge stated that the shutdown orders were not a physical intrusion and the virus had not impacted any physical changes to their property.

The entire argument was rejected by the judge stating that loss is not damage. She said that if they are unable to use their property that does not count in any sort of physical damages. This case was followed by a Michigan state court ruling in July. The Michigan Court’s judge Joyce Draganchuk had also favored the insurers. They described the fact that some tangible changes in a property are required to claim coverage.

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