(Reuters) – A federal judge in Missouri said on Wednesday that a group of hair salons and restaurants could sue their insurance company for loss losses caused by the coronavirus pandemic, which they say caused a "direct physical loss" to their premises.
The decision against Cincinnati Insurance Co. by U.S. District Judge Stephen Bough in Kansas City appears to be the first victory for policyholders suing insurance companies for incorrect denial of claims related to suspensions caused by COVID-19.
Insurance companies had won similar previous cases in a Michigan court and a court in Washington DC, successfully arguing that coverage was not justified because the virus travels through the air and does not cause physical harm.
While not ruling on the merits, Judge Bough rejected Cincinnati Insurance's bid to dismiss the Missouri case.
He said that the presence of COVID-1
Cincinnati Insurance is a unit of Cincinnati Financial Corp. Its lawyers did not immediately respond to a request for comment.
The plaintiffs' business is located in Missouri and Kansas. Their lawyers did not immediately respond to requests for comment.
Entrepreneurs have filed hundreds of lawsuits claiming that their insurance cancellation insurance, which usually offers coverage for losses from accidents such as fires or floods, would also cover a pandemic.  Insurance companies have counteracted that the application of such coverage to COVID-19 losses would lead to crippling payments and deplete their capital.
Analysts have said that the industry's coronavirus-related losses so far have been modest.
Judicial Panel on Multidistrict Disputes are considering whether to consolidate hundreds of lawsuits seeking coverage of COVID-19 business interruptions.
The target is Studio 417 Inc. et al. Cincinnati Insurance Co. U.S. District Court, Western District of Missouri.
More insurance and risk management news about the coronavirus crisis here .