As previously reported, a state court in Oklahoma recently granted a summary judgment to the Cherokee Nation for its COVID-19 business interruption. The court has now issued a more substantive opinion setting out the benefits of Cherokee Nation & # 39 ;s claim and providing yet another plan for policyholders seeking to recover COVID-19 related losses under commercial property insurance.
Most of the Court's opinion focuses on whether COVID-19 causes direct physical loss or damage. In formulating the question, the Court noted that, despite the meaning of the phrase "direct physical loss or damage", insurers did not define the important phrase "in the policy. Weighing the policyholders' competing insurance interpretations of policyholders and insurers in the light of basic insurance principles, such as the interpretation of ambiguous insurance language vis-à-vis the policyholder and in favor of the policyholder, the court found that the central question could have been over fifty years, even though courts have "begged" insurers to define the phrase to avoid the exact question that awaits the court.
the phrase "direct physical loss", the court instructed insurers not to make any attempt to clarify or define the phrase within the Cherokee Nation's policy to avoid a court adopting the policyholder's preferred interpretation of losses as closing a business in response to a pandemic would be covered.
However, the court did not have to rely on ambiguity principles because it not only found C Herokee Nation's interpretation was reasonable it found that Cherokee Nation provided only reasonable interpretation of "direct physical loss" or damage "used in the policy. Both the clear meaning of the policy language and the precedent showed that if the conditions made the property unusable for its intended purpose, these conditions fall within the scope of the policy risk risk, even without "physical change" of the property. The court noted the disjunctive "or" in "physical loss or injury" and emphasized that the policy must cover more than just physical change, which would already be included in the phrase "injury".
Other policy provisions confirmed that the policyholder's interpretation of "physical loss or damage" is reasonable. Various exceptions that are intended to block coverage for loss that does not require any "physical change" of property. The Court reasoned that if physical alterations were necessary to trigger coverage, those exceptions would be superfluous and contrary to the principles of interpretation of black letters. day after other strains submitted a similar measure for COVID-1
Finally, the court found that no exclusion prevented coverage. The only loss claimed was due to the COVID-19 pandemic, but "a pandemic is a loss different from a virus." In addition, Cherokee Nation & # 39 ;s property was still made "unusable" due to the reasonable action taken in response to the pandemic, whether or not it could definitively prove that the COVID-19 virus was on its property.
The Court also acknowledged that insurers clearly know how to regularly rule out pandemics and epidemic losses in "clear and distinct language" when they want to do so, as evidenced by the existence of such exclusions in other policies, such as the exclusion of communicable diseases shortly after. Cherokee Nation Claims filed. Insurers failed to do so in the Cherokee Nation policy, and as a result, they failed to bear the burden of demonstrating that the insurance exclusions that insurers rely on were clearly and unequivocally applied to the claim.
The court similarly rejected the insurers. & # 39; depending on the exclusion "loss of use". Assuming the position of insurers, which the court interpreted to mean that "all forms of loss of use are excluded", would be to read the exemption so broadly as to avoid coverage for virtually all losses of use, making policy coverage for business interruptions illusory. Instead, the court held that the exemption would not apply when the loss of use occurred in response to a dangerous condition. Therefore, the court ruled that no exceptions were applied to Cherokee Nation & # 39 ;s claim.
The Oklahoma State Court's decision provides additional support to policyholders seeking recovery for their extensive COVID-19 losses. Pending a probable appeal, this case serves as a good precedent for demonstrating the benefits of COVID-19 claims in cases across the country.