The Ohio Supreme Court has ruled that commercial insurance policies don’t cover a business’s loss of income, even if it occurred during the state-enforced lockdown ordered by Gov. Mike DeWine early in the COVID-19 pandemic.
The decision marked the latest in a string of defeats for businesses across the nation that filed hundreds of lawsuits seeking billions of dollars in coverage after states imposed lockdowns and other restrictions in an attempt to slow the spread of COVID-19.
The court released a 6-1 opinion (
pdf) on Dec. 12 that answered a certified question submitted by the U.S. District Court for the Northern District of Ohio, which is considering a lawsuit filed by audiology company Neuro-Communication Services against Cincinnati Insurance Co.
Neuro-Communication Services argued that its “all-risk” policy should cover financial losses from the shutdown, which forced the audiology company to close for several weeks in the spring of 2020 and endure unspecified financial losses.
“The definition of the term ‘loss’ is clear: for coverage to be provided, there must be loss or damage to covered property that is physical in nature,” the majority opinion
states. “Such loss or damage does not include a loss of the ability to use covered property for business purposes.”
The ruling is seen as a boon to the state’s massive insurance industry, which includes Ohio-based Progressive Corp. and Nationwide Mutual Insurance Co.
“We thank the Court for its careful consideration of this case and are pleased its decision joins those from State Supreme Courts in Iowa, Massachusetts, Oklahoma, South Carolina, Washington, and Wisconsin, and all federal appeals courts to date ruling that business closures and restrictions related to the COVID-19 pandemic do not constitute direct physical loss or damage to property required to trigger coverage under our property insurance policy,” Betsy Ertel, spokesperson for defendant Cincinnati Insurance Co.,
wrote in an email.
Ohio Supreme Court Justice Michael P. Donnelly wrote in a
dissenting opinion that the court shouldn’t have granted review because it “already has a well-established body of jurisprudence on basic contract interpretation” that the federal court could have relied on.
The plaintiff argued that the language in the policy, as well as the possible presence of virus particles, should have led the court to the opposite conclusion.
“We are disappointed in the Court’s ruling on behalf of our many clients and Ohio business owners,” Nicholas DiCello, a partner at Cleveland-based Spangenberg Shibley & Liber LLP,
said in an email to Bloomberg Law. “Nevertheless, the Court received comprehensive briefing and heard substantial argument, and we respect its ruling.”
While most of those rulings were in federal courts, state high courts in
Iowa,
Massachusetts, and
South Carolina have also ruled in favor of insurers. The
Vermont Supreme Court currently stands as the only instance in which a state high court ruled in favor of the plaintiff.
