In a 4-3 decision, the Ohio Supreme Court has recently agreed to answer a question involving insurance coverage for COVID-19 related losses. The Ohio Supreme Court will determine whether the general presence of COVID-19 in the community or on surfaces constitutes a "direct physical loss or damage to property."
The plaintiff in the case at issue, Neuro-Communication Services, bought an "all-risk" insurance policy from the defendant, Cincinnati Insurance. The policy covered "direct loss" at the premises due to a "Covered Cause of Loss." "Loss," in turn, was defined as "accidental physical loss or accidental physical damage." The policy did not include a virus exclusion.
As a result of COVID-19, Neuro-Communications stopped operations between late March and early May 2020, leading to significant financial losses. Neuro-Communication submitted a claim to its insurer based on those losses. Cincinnati Insurance, however, denied the claim saying that "[t]he claim does not involve direct, physical loss at your premises." Neuro-Communications ultimately filed a lawsuit, contesting Cincinnati Insurance's denial.
The case was filed in federal court—not Ohio state court. Given that the lawsuit is governed by Ohio law and the Ohio Supreme Court has not yet weighed in on this question, the federal court for the Northern District of Ohio used a process called certification to ask the Ohio Supreme Court to answer an important question in the case, which it agreed to do. Given the number of lawsuits already filed based on similar language in insurance contracts, this promises to be a crucial case in determining insurance coverage for COVID-19 related losses.
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