A federal district court has refused to dismiss a COVID-19 business interruption lawsuit filed by a beauty salon against a Farmers Insurance Group Inc. entity, stating that the business may have incurred a direct physical loss covered by the terms of its
Tappan, New York-based Nora & # 39 ;s Salon Inc., had filed a suspected class action lawsuit against the Farmers Insurance Group unit Truck Insurance Exchange in September, following Thursday's decision by the U.S. District Court in Riverside, California, Kingray Inc. v. Farmers Group Inc., et al.
The trial joined one filed in May by Kingray, a LaQuinta, California-based sports bar and grill, which was dismissed by the court on Thursday in the same ruling.
The central clause in Nora's policy, which does not include virus exclusion, was "direct physical loss of or damage to property", it was mentioned. "At various times during the pandemic, Nora & # 39 ;s was forced to close, making its property unusable for its sole purpose ̵
"The next question is whether the loss – removal – constitutes a" direct physical loss ", the judgment is mentioned. "The appellant convincingly claims that under both California and New York law, physical alteration of property is not necessary to constitute a physical loss," it said.
It gave as an example a case in California where an insured home was driven by a landslide from a cliff but was undamaged. "The California Court of Appeals found that 'common sense' required coverage because the house had been rendered unusable by its owner, even though its color was intact and its walls still adhered to each other," the decision said.
"If the Agreement between Nora and the defendant stated only that" direct physical damage "to property justified coverage, it would be without claim", it is said.
"However, it is probable that" direct physical loss of "property includes physical delay. Due to dangerous conditions (a virus in the air) or a civil authority order requiring Nora to close," it said. in the case did not respond to a request for comment.
Last month, a federal district court refused to dismiss COVID-19 business interruption litigation filed by a hair salon in Ann Arbor, Michigan, despite its virus exclusion policy, due to its contagious disease coverage.