A federal district court in Minneapolis has rejected a hair salon and a hairdresser's attempt to collect business interruption coverage from its insurance company and granted an action to dismiss the case, but urged the plaintiff to change its complaint.
"It is possible" A policyholder would have "the right to cover lost business income" if his claim "was properly asserted", said Friday's decision by the American District Court in Minneapolis Kenneth Seifert d / b / a The Hair Place and HarMar Barbers Inc. v. IMT Insurance Co. The decision was made by the Court's Chief Justice, John R. Tunheim.
Defense and policyholder attorneys disagree on the significance of the case.
West Des Moines, Iowa-based IMT Insurance Co. had filed a motion to dismiss Seifert's business interruption disputes in connection with its Albert Lea, Minnesota, salon and St. Paul barbershop.
When granting the termination motion, Judge Tunheim said, business activity due to "direct physical loss of property damage in the premises described" … Minnesota's facts do not require any presentation of structural damage in order to be covered. "Direct physical loss" can also be found when business premises are contaminated with asbestos … or smoke. "
However, the decision states that" Seifert has not adduced any evidence to show that his company was similarly contaminated by the new coronavirus. [1
The decision also states that he does not invoke any facts showing that a civilian authority "prohibited him from entering his insured property due to any such contamination."
When Seifert says he can file an amended complaint, the decision has a footnote referring to the judgment of September 8 in Suite 417 Inc. v. The Cincinnati Insurance Co. ., in which the U.S. District Court in Kansas City, Missouri, argued that the appellants "had adequately made a claim of direct physical loss. "o, which governed the insurer's benefit Mudpie Inc. v. Travelers Casualty Insurance Co. of America.
The footnote quotes a sentence in the decision stating that the court acknowledges that" the law on business interruption coverage linked to the COVID-19 pandemic is much under development ”, giving plaintiffs the right to change their complaint.
The appellant did not do so and the case was dismissed with prejudice on 23 September  Mr. Seifert's lawyer said he did not comment on ongoing disputes, while the insurer's lawyer did not respond to a request for comment.
Policyholder's Attorney Richard Shore, a partner with Gilbert LLP in Washington, who is not a party to the case, said policyholders who in particular do not have virus exceptions in their coverage – as the plaintiff did in this case – can successfully argue for business breakdown coverage on the basis that the virus contaminated their properties.
Courts have done so in other cases involving pollution of smoke and groundwater, none of which change the structure of the building, he said.
"The problem in many of these cases is that policyholders do not make the right argument," he said. "This case, in my opinion, is a win-win for the policyholder world."
Insurance attorney Scott Seaman, a partner with Hinshaw & Culbertson LLP in Chicago, who is not involved in the case, said
to appeal the presence of the virus on property is insufficient to overcome a proposal for dismissal in many jurisdictions. "The trait does not change or is damaged by the virus," Seaman said.
In addition, it is difficult to say whether and when the virus was present "in good faith." He said even if the virus was present, it will not live longer than 48 or 72 hours if not washed or cleaned before, and most business interruptions do not cover until more than 72 hours have passed.
More insurance and risk management news about the coronavirus crisis here .