"This appeal presents only the question of whether the COVID-19 pandemic and the related government-imposed restrictions constitute direct 'accidental physical loss or accidental physical damage' under the policy." So said the appellate panel in Oral Surgeons, P.C. v. Cincinnati Ins. Co., ___ F.4th ___, No. 20-3211, 2021 WL 2753874, at *3 n.2 (8th Cir. July 2, 2021) (case involved Iowa substantive law).
Oral Surgeons made a claim for insurance coverage after it "suspended non-emergency procedures due to the COVID-19 pandemic and the related government-imposed restrictions" thus causing Oral Surgeons to lose business income and incur extra expense. "Oral Surgeons did not allege any physical alteration of property." Oral Surgeons, 2021 WL 2753874, at *3.
The trial judge ruled that the policy required direct, accidental physical loss to or accidental physical damage. Since in the eyes of the trial judge, Oral Surgeons did not allege any physical loss or physical damage, the trial judge granted the insurance carrier's motion to dismiss. The appellate panel affirmed. Oral Surgeons, 2021 WL 2753874, at *3.
It is well worth noting that the only insurer conduct at issue in the Oral Surgeons cases was the insurer's denial of coverage. In other cases in which an insurer's denial of coverage for COVID was the only carrier conduct at issue, it has been held that there cannot be a viable claim for bad faith, either. See, e.g., 10E, LLC v. Travelers Indem. Co., 483 F. Supp. 3d 828, 837 (C.D. Cal. 2020).
Hot off the press for a Hot July Day!
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