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N.C. restaurants prevail in COVID-19 business breaks



A judge in North Carolina has ruled in favor of a group of restaurants in pandemic-related business interruption disputes. Keeping the state's order to close the restaurants was a covered physical loss according to their policy.

Sixteen restaurants in Buncombe, Chatham, Durham, Orange and Wake counties in North Carolina had sued Cincinnati Insurance Co. in the state court of Durham and requested an explanatory judgment that the insurer must reimburse its lost business income and additional expenses during their under the judgment of October 9 in North State Deli, LLC et al. v. Cincinnati Insurance Co., et.

Morris Insurance Agency Inc. of Washington, North Carolina, was also named as the defendant in the disputes.

The appellants' primary contention is that the government's forced closure of the restaurant was a non-excluded "direct physical loss", the decision said.

Under the "ordinary sense" of the policy, the plaintiffs suffered a direct physical loss. when they were "expressly prohibited by government decrees" from gaining access to their property, the decision said.

Cincinnati argued that "the policy does not cover pure financial damage in the absence of direct physical loss of property, which requires some form of physical alteration of property."

"The usual meaning given above is also reasonable, which makes the policy at least ambiguous," and any ambiguity should be interpreted against insurers. ] Cincinnati Insurance said in a statement, "We continue to believe that business interruption coverage under our property policy in this case does not apply because there was no structural change in the property. The prevailing view from courts around the country has been that a financial loss in itself does not can be considered as direct physical damage or loss of property, which is the trigger for business interruption t coverage.

The restaurant's attorney, Gagan Gupta, with Paynter Law in Hillsborough, North Carolina, said in a statement that the decision "confirms that insurance companies such as Cincinnati are avoiding their obligation to provide this coverage."

The broker's lawyer did not respond to a request for comment.

All but a handful of decisions ̵

1; most of the state courts have gone against plaintiffs in pandemic – related business interruptions.

More insurance and risk management news about the coronavirus crisis here .


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