Delaware News

Ohio Court: Insurance Doesn’t Cover COVID-Related Business Losses


COLUMBUS, Ohio (AP) — A business insurance policy does not cover revenue lost by a business when the governor ordered a shutdown at the start of the COVID-19 pandemic, the Ohio Supreme Court ruled Monday in a decision consistent with several nationwide court decisions weighing similar issues.

The state high court found that the temporary presence of COVID-19 in a community or business and the temporary presence of an infected person does not constitute direct physical loss that could be covered.

“Many other state and federal courts reviewing insurance claims for business losses due to COVID and related closure orders have found that the mere loss of use of a premises does not constitute direct physical loss” , the Ohio court said.

A northeast Ohio audiology company, Neuro-Communication Services Inc., had argued that its “all-risks” policy should cover financial losses resulting from the shutdown. It was closed for several weeks in the spring of 2020 and said it suffered “significant loss of revenue”, according to a court filing that does not specify the amount.

“With no virus exclusion, our customers understood they would be covered,” Neuro attorney Nick DiCello said via email Monday. He said they were disappointed but respected the decision.

In closing arguments earlier this year, DiCello likened the virus to something dangerous like mold seeping into a business.

But attorneys for Cincinnati Insurance Co. said the policy only covers accidental physical losses to Neuro-Communication property, not financial setbacks caused by the coronavirus shutdown.

One of his lawyers argued that the flu, although less severe, comes every year but property is not replaced or repaired in response, and that the coronavirus similarly hurts people but does not alter not the buildings.

“It would be absurd, for example, to determine that in law a building suffered direct physical loss or damage because a virus is generally present in the community, just as influenza is generally present in the community for a season, every year,” attorney Daniel Litchfield said.

In an emailed statement Monday, Cincinnati Insurance said it was pleased the Ohio court joined others who made similar rulings.

More than 250 courts nationwide have reviewed and dismissed similar insurance claims for COVID-19 damages, according to the American Property Casualty Insurance Association, which says allowing coronavirus claims could be ruinous for the insurance industry.

But the Restaurant Law Center, which urged the court to side with neuro-communications services, argues that focusing on physical damage ignores “unprecedented losses” that go beyond physical damage.

In February, the 6th U.S. Circuit Court of Appeals rejected equivalent arguments from seven Michigan restaurant companies that were also seeking compensation from Cincinnati Insurance.



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