Court: Insurance doesn’t cover business losses

COLUMBUS, OHIO >> A commercial insurance policy doesn’t cover the income a business lost when the governor ordered a shutdown early in the COVID-19 pandemic, the Ohio Supreme Court said Monday in a decision consistent with multiple court rulings nationally weighing similar questions.

The state’s high court found that the temporary presence of COVID-19 in a community or at a business and the temporary presence of an infected person don’t amount to a direct physical loss that might be covered.

“Many other state and federal courts considering insurance claims for business losses due to COVID and related shutdown orders have concluded that the mere loss of use of a premises does not constitute a direct physical loss,” the Ohio court said.

A northeastern Ohio audiology company, Neuro-Communication Services Inc., had argued that its “all-risk” policy should cover financial losses from the shutdown. It was closed for several weeks in the spring of 2020 and said it suffered “significant income losses,” according to a court filing that didn’t specify the amount.

“Absent a virus exclusion, our clients understood they would be covered,” Neuro’s attorney, Nick DiCello, said by email Monday. He said they’re disappointed but respect the ruling.

In oral arguments earlier this year, DiCello had likened the virus to a dangerous element such as mold infiltrating a business.

But lawyers for Cincinnati Insurance Co. said the policy covers only accidental physical loss to Neuro-Communication’s property, not financial setbacks caused by closing because of the coronavirus.

One of its attorneys argued that the flu, though less serious, arrives every year but property isn’t replaced or repaired in reaction, and that the coronavirus similarly hurts people but doesn’t alter buildings.

“It would be absurd, for instance, to determine that as a matter of law a building suffered direct physical loss or damage because a virus is generally present in the community, just as the flu is generally present in the community during a season, every year,” attorney Daniel Litchfield argued.