Companies Gain Legal Ground in COVID-Related Business Interruption Insurance Claims by Daniel Hughes, CPA/CFF, CGMA, CVA

Posted on December 22, 2020 by Daniel Hughes

It has been nine months since millions of businesses were forced to shut down due to COVID-19 only to learn that their insurers would not payout claims for business interruption losses. While the courts have dismissed a significant number of legal actions filed by policyholders against insurers for breach of contract, it appears the tides may be changing in favor of business owners based on some recent court cases.

For the most part, the courts have sided with insurers’ arguments to deny claims based on a lack of direct physical, tangible damage or loss to policyholders’ places of businesses.  In the absence of policy language expressly covering viruses and pandemics, the courts have historically denied these claims.

However, as early as August, a Missouri District Court rejected an insurance company’s claims that a group of policyholders’ business interruption losses should be dismissed based on a lack of structural damage to its physical property. Rather, the court in Studio 417, Inc., et al. v. The Cincinnati Ins[1]. reasoned that absent a specific virus exclusion, the plaintiffs met the dictionary definitions of “direct,” “physical,” and “loss” required to trigger business interruption coverage.

More recently, a North Carolina Superior Court ruled in North State Deli, LLC v. The Cincinnati Insurance Co[2]that government-mandated business closures and stay-at-home orders resulted in a sufficient dictionary definition of “direct” “physical” “loss” to property. In doing so, the court found the 16 restaurant plaintiffs are covered for property insurance and entitled to compensation for loss of income resulting from the COVID-19 pandemic.

In September, the U.S. District Court in Orlando refused an insurer’s request to dismiss a policyholder’s claims of breach of contract for failure to provide reimbursement for covered business interruption losses. The court’s finding in Urogynecology Specialist of Florida, LLC v. Sentinel Insurance Company, Ltd.3, pointed to the ambiguity of the language contained in the virus exclusions of the insurance policy.

While it is true that each case should be based on its unique merits, these recent decisions give legal counsel and their clients some hope for how the courts interpret the language of their policies and their ability to collect on claims of losses from the COVID-19 health crises.

These recent decisions combined with the assistance of forensic accountants may help to influence your clients’ abilities to recover for business interruption losses. For more information, contact the Forensic and Advisory Services Group at Berkowitz Pollack Brant Advisors + CPAs at (305) 379-7000 or at

[1] Studio 417, Inc., et al. v. The Cincinnati Ins. Comp., No. 20-cv-03127-SRB, Order Denying Mot. to Dism., issued Aug. 12, 2020 (W.D. Mo.)


[2] North State Deli, LLC, et al. v. The Cincinnati Insurance Co., et al., Case No. 20-CVS-02569 (N.C. Super. Ct. Oct. 7, 2020).


3 Urogynecology Specialist of Florida LLC v. Sentinel Insurance Company Ltd., Case No. Case No. 6:20-cv-1174 (M.D. Fla. Sept. 25, 2020)