A federal district court has refused to dismiss COVID-19 business interruption litigation filed by an Ann Arbor, Michigan, hair salon, despite its policy exclusion of viruses, due to its contagious disease coverage.
Salon XL Color & Design Group LLC, which was forced to close due to Michigan Gov. Gretchen Whitmer's executive order, had a commercial real estate policy with West Bend, Wisconsin-based West Bend Mutual Insurance Co., according to Thursday's decision by the U.S. District Court in Detroit Salon XL Color & Design Group, LLC against West Bend Mutual Insurance Co.
"Salon XL has probably claimed that the COVID-19 particles have infected their property, exposed their staff and protectors, and therefore Salon XL" has not been able to use its property for its intended purpose ", the decision said with reference to the salon's amended complaint.
"This is sufficient to survive a proposal to be rejected when the policy states that it will cover" direct physical loss or damage "that does not define" loss "or" damage "to exclude loss of use. "The terms" damage "and" loss "in this agreement are ambiguous and ambiguities in an insurance agreement are interpreted in favor of the insured," it said.
"West Bend's arguments over the interpretations of these common words are intended to make additional demands on the appeal or to raise issues that are more appropriately resolved in the summary judgment stage.
The salon's amended complaint states that West Bend's policy "expressly provides cover for business losses due to temporary suspension by the government order due to a" contagious disease. ""
The court agreed with West Bend that the coverage's exclusion of viruses excluded coverage , [citingthecommunicablediseaseprovision
"Virus and bacterial exclusion and thus losses Exclusion excludes coverage under business income, extra costs and coverage from civilian authorities. Salon XL's claims under the coverage for communicable diseases survive this proposal to dismiss," 1
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