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Another Tasty “W” for Insureds in Missouri with COVID-19 Business Interruption Claims

The earliest COVID-19 insurance court rulings across the country were decided under a preliminary “motion to dismiss” standard – meaning, the courts were deciding whether the insured had a plausible claim for relief against the insurer if the insured’s allegations could be proven true, not that the insured was, in fact, entitled to coverage. In Missouri, the federal courts handed down at least three such initial rulings in favor of policyholders, finding the claims of a hair salon, a dental office and a restaurant/bar were adequately stated and could proceed. Now, however, a Missouri state court judge has taken things a step further and decided, on the merits, that a restaurant was in fact entitled to coverage for its COVID-19 business interruption losses. In Ja-Del, Inc. v. Zurich American Ins. Co., the Missouri court concluded that Zurich’s policy language was ambiguous and that Zurich was on the hook for coverage, where Jack Stack Barbecue's operator, Ja-Del, Inc., argued that COVID-19 droplets attach to covered physical property and then infect people when touched, thus satisfying the policy’s “direct physical loss” requirement. It also argued that Zurich’s microorganisms exclusion did not apply to viruses like COVID-19.

While the rulings out of Missouri have not been unanimously decided in favor of policyholders (some of whom did not allege COVID-19 on their premises and/or whose policies may have had other, more problematic exclusions), it is definitely a jurisdiction that stands out as being relatively policyholder-friendly.  Other jurisdictions logging summary judgment wins for policyholders include North Carolina, Washington, Pennsylvania, Oklahoma and Ohio. 

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

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Lathrop GPM is one of the largest law firms in the United States representing policyholders, providing policyholders with the necessary guidance and legal counsel to handle everything from negotiating coverage and managing risk to litigating insurance disputes and recovery. The Road to Insurance Recovery blog is dedicated to helping readers better understand and manage the complexities of the modern business insurance policy.
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