Ohio Supreme Court Finds No Business Income, Property Damage, Extra Expense, Or Civil Authority Coverage for Covid – as the Mere Presence of Covid In the Community or on Surfaces at Business Premises or via Infected Persons Being On the Premises Does Not Constitute Physical Loss or Damage to Covered Property
In a December 12, 2022 decision, by a 6-1 vote, the Ohio Supreme Court issued a ruling that likely sounds the death knell for claims for “Business Interruption,” Property Damage, Extra Expense and Civil Authority coverage arising from governmental orders that limited or shut down businesses during the Covid pandemic. See Neuro-Communication Services, Inc. V Cincinnati Insurance Company, 2022-Ohio-4379.
The Ohio Supreme Court reasoned that the presence of Covid in the community, on or business surfaces, or in infected people on business premises, did not constitute “direct physical loss” or “damage to property” necessary to fit within the grants of coverage for Business Interruption, Property Damage, Extra Income, or Civil Authority coverage claims.
The Court ruled that the term “loss” is clear: for coverage to be provided, “ * ** there must be loss or damage to Covered Property that is physical in nature. Such loss or damage does not include a loss of the ability to use Covered Property for business purposes.” Id. at Paragraph 17.
The Court rejected the argument that the absence of a “virus” exclusion, and the fact that the carrier may have put a specific virus exclusion in later insurance policies, is an indication that a “direct loss” to Covered Property can occur even in the absence of a physical alteration of that property.
Many Ohio lower courts, and federal courts, hearing Ohio Business Interruption Covid coverage claims, had stayed their cases pending today’s ruling from the Ohio Supreme Court.
Ohio Supreme Court Decision: