A federal court in Texas extended a new punch against commercial policyholders seeking coverage for coronavirus-related business interruption losses on Thursday and ruled that pandemic-related lockdowns do not constitute a direct physical loss for a group of barbershops.
While policyholders have won a couple of victories in the few suits that have been ruled out so far, insurance companies have won more of the judgments. Hundreds of lawsuits filed by policyholders in state and federal courts are still pending.
In the case Diesel Barbershop LLC et al. State Farm Lloyds U.S. District Court David A. Ezra of San Antonio granted the insurer's proposal to dismiss a complaint filed by six local barbershops seeking coverage for income lost during government-ordered lockdowns intended to prevent the spread of COVID-1
State Farm Lloyd's policy covered "unintentional direct physical loss" and included the exclusion of viruses, court papers say.
The hairdressers claimed that coverage for lost income did not require "a concrete and complete physical loss" but could include a partial loss, such as loss of use due to restrictive orders.
The judge found that while sympathizing with the policyholders' situation and that some courts have provided coverage for non-intangible losses in pollution or pollution cases, the common language in policy field c is overcrowding for pandemic-related coercive closures.
"Here the guidelines are explicit that there must be an unintentional, direct physical loss to the property in question," the decision states.
In addition, even if there had been direct physical harm, the exclusion of viruses in the policy would prevent coverage, the court rules.
“Although there is no doubt that the COVID-19 crisis severely affected the plaintiffs' business, State Farm cannot be held liable to pay business interruption insurance on these claims because there was no direct physical loss, and even if there was direct physical loss, applies to Virus exclusion for child plaintiff's claims, "the decision said.
Courts in Washington, Michigan and New York have also recently ruled in favor of insurance companies in similar cases.
On Wednesday, however, a federal judge in Missouri rejected an insurance proposal to reject a case brought by a group of hair salons seeking coronavirus-related coverage.
on Wednesday, the U.S. Multi-District Disputes Legal Panel refused to consolidate COVID-19 related business interruption litigation filed by companies against all insurance companies, but said it was considering centralizing litigation filed against individual insurance companies.
More insurance and risk management news about the coronavirus crisis here .