RALEIGH — The North Carolina Supreme Court issued a unanimous ruling in a COVID-19 insurance coverage dispute involving 15 bars and restaurants in the state.
The court sided with North State Deli and 14 other businesses against Cincinnati Insurance Company, determining that their commercial property insurance policies covered losses from government-mandated COVID shutdowns.
The high court interpreted “direct physical loss” broadly, ruling that the temporary closures and restrictions on property use qualified as a covered loss under the policy’s terms.
The Supreme Court’s unanimous 24-page ruling, authored by Associate Justice Anita Earls, overturned a Court of Appeals decision that sided with the insurance company. The ruling remands the case back down to the appeals court and then to the trial court, which had previously sided with the businesses.
In a companion case involving the clothing retailer Cato, the court reached a different conclusion due to a significant policy difference. While the North State Deli case resulted in a favorable ruling for the businesses, the Cato lawsuit was rejected because its insurance policy explicitly excluded ”viral contamination” as a covered cause of loss.
On Oct. 22, the Supreme Court heard oral arguments in the North State Deli and Cato lawsuits, as well as two college pandemic closure cases: Lannan v. Board of Governors of UNC and Dieckhaus v. Board of Governors of UNC.
The following day, the court also heard arguments in four other pandemic cases that could be impacted by the North State Deli and Cato rulings. Those cases include N.C. Bar and Tavern Association v. Cooper, Howell v. Cooper, Happel v. Guilford County Board of Education and Land v. Whitley.
