North Carolina Appeals Court Overturns COVID Coverage Ruling Against Insurer

A North Carolina appellate court has overturned a rare win by businesses seeking to compel insurance coverage for their COVID-19 shutdown losses.

In North State Deli et al vs. The Cincinnati Insurance Co., a three-judge panel of the state Court of Appeals found that the trial court erred in 2020 when it granted a group of restaurants partial summary judgment. The eateries had argued that their business interruption policies should cover the lost income when the state’s governor ordered a shut down of businesses in the early days of the pandemic.

All 16 of the restaurants ended up closing down or going out of business within months of the shutdown.

As in most COVID-19 business interruption court rulings, the case turned on the policy language, which specified that coverage is provided only for losses due to physical damage to the premises.

“According to the plain language of the policies, only direct, accidental, physical loss or damage to the property is covered. Therefore, the trial court erred in granting partial summary judgment to plaintiffs…” the appeals panel wrote in the July 5 decision.

The 2020 trial court ruling in Durham County had given COVID-affected businesses around the country some hope. The vast majority of lawsuits against insurance companies, seeking to compel payment under the policies, have been dismissed.

A closely watched federal lawsuit in North Carolina, brought by health-clinic giant Novant Health Inc. against American Guarantee and Liability Insurance, is continuing.

Topics Carriers North Carolina COVID-19