Earlier this month, a North Carolina court judge ruled in favor of a group of restaurants, finding that the insurer must cover losses resulting from state-mandated COVID-19 shutdowns even if COVID-19 had not caused property damage.

This is a first in more than 15 rulings that did not rely on the historical legal precedent that a virus does not cause direct physical damage. A few key conditions contributing to this decision have been overlooked, according to a summary by the Centers For Better Insurance.

The ruling also gave rise to the notion that ambiguous language favors the plaintiff, and for this reason, many more decisions like this will ensue. This assumption, however, is inaccurate for various reasons:

• Insurance contracts are carefully underwritten, with clear parameters guiding the coverage. Litigation attempts to characterize insurance language as unclear or ambiguous often seek to rewrite existing policies.
  

• As shown in our court decisions tracker, judges presiding over both federal and state courts overwhelmingly ruled in favor of insurers, citing that the COVID-19 virus does not cause “direct physical damage.”
  

• This decision is not yet the final word on the case, given that the insurance company involved, Cincinnati Insurance Co., is appealing the decision.
  

Read more in-depth analysis on the decision here.

For more information and resources, visit fairinsure.org