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Ohio federal judge rules against Zurich in Henderson Road BI lawsuit


A federal judge in Ohio has ruled that Zurich American Insurance must pay the Covid-19 BI losses of a restaurant chain with multiple premises in the state.

The decision, which was issued on Tuesday, says that the insurer may not deny coverage, declaring that a direct physical loss had occurred, and that a microorganism exclusion in the policy does not apply.

“After considering the ordinary definitions of the undefined words in the policy, the court finds that the plaintiffs have shown that their business operations were suspended by direct physical loss of or damage to property at the premises,” the judge said in the decision.

Henderson Road Restaurant Systems was covered by a commercial insurance policy written by Zurich, which denied coverage after the insured filed a claim in March.

In response to civil authority shutdown orders issued that month to halt the spread of coronavirus, the hospitality group was forced to close all but four of its premises, which subsequently also closed after providing take-out dining for a period.

In its argument to the court, Henderson said it was uncertain when the premises would be able to reopen.

The court decision follows a string of positive judgments for the industry that have largely found that infection of a surface with Covid-19 does not constitute a physical loss.

According to data from the University of Pennsylvania’s Carey School of Law, this is only the fourth such ruling to go against the industry. The ruling on Tuesday is final but also appealable.

Zurich and legal representatives for Henderson Road Restaurant did not respond to a request for comment.

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