North Carolina Restaurants Win Court Ruling on COVID BI

Ruling runs counter to more than a dozen other court decisions.
October 28, 2020

A North Carolina judge has ruled that The Cincinnati Insurance Co. owes a group of restaurants coverage for their losses stemming from state-mandated COVID-19 shutdowns, a move that the group’s attorneys say is the first decision to hold that shutdown orders to contain the virus caused a “physical loss.”

Superior Court Judge Orlando F. Hudson Jr. said that the plain definition of the term “direct physical loss” includes an “inability to utilize … something in the real, material or bodily world, resulting from a given cause,” and does not need physical alteration to trigger coverage. The judge granted summary judgment to the restaurants, led by North State Deli LLC, on their claim for declaratory relief in an order published Oct. 7.

READ: NC Ruling Goes Against Prevailing Judicial Wisdom

The decision in the North Carolina case runs counter to more than a dozen court decisions since May that business interruption policies only take effect if a property sustains physical damage. A Cincinnati spokesperson said the company plans to appeal.

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