Businesses across the United States were impacted by closures and losses related to the COVID-19 Pandemic, resulting in loss of income, supply chain interruptions, reduced demand due to social distancing measures, and other potential damages. These considerable losses led many businesses to seek compensation from their insurers. As early as April 2020, businesses began making claims, stating that their losses were covered under the “business interruption” or the “civil authority” provisions.

Regrettably, insurers provided little to no relief on the basis that Business Interruption claims related to COVID-19 were not covered, particularly because many policies expressly excluded coverage for viruses. Likewise, the insurance industry was very reluctant to cover losses under the “Civil Authority” clauses, as the presence of COVID-19 by itself or an order from a civil authority standing by itself does not rise to the level of physical loss or damage.

As businesses faced coverage denials, many filed lawsuits. To date, the majority of the cases have been decided in favor of insurers, due to reliance on policy exclusions or claims that COVID-19 does not cause “physical damage” that triggers business interruption or civil authority. However, a case in Ohio state court determined that a virus exclusion did not apply after analyzing the specific wording of the exclusion. In finding that the exclusion did not apply to the insured’s claims, the court stated: “It is obvious to this Court that a virus is not the same as a pandemic. The insurer, being the one who selects the language in the contract, must be specific in its use; an exclusion from liability must be clear and exact in order to be given effect…” McKinley Dev. Leasing Co. v. Westfield Ins. Co., C.P. No. 2020 CV 00815, 2021 Ohio Misc. LEXIS 17 (Feb. 9, 2021)

Recently, the Ohio Supreme Court has been asked to decide whether exposure to COVID-19 constitutes a physical loss or damage to insured property sufficient to trigger coverage under a business interruption insurance policy, Neuro-Comm. Svcs. Inc. v. The Cincinnati Ins. Co., No. 2021-0130 (Ohio Sup. Ct.). While we wait for the Ohio Supreme Court to decide this pending case, as well as others across America, companies should continue to take proactive measures such as reviewing their policies and looking for appropriate coverages.

If COVID-19 taught us anything, it is that a global pandemic is not a rare event. We have to consider there is potential for more closures during our lifetime. As such, companies may also want to consider having an attorney review their policies to better understand the terms and conditions.

At Lardiere McNair & Stonebrook Ltd., LPA, our experienced attorneys can review your policy or assist if you have been improperly denied coverage. Call (614) 534-1355 and schedule a free consultation.