Business to Receive Damages for Being Forced Closed Due to Lockdown

Business to Receive Damages for Being Forced Closed Due to Lockdown

Historic Ruling Could RUIN The Insurance Industry

( – A Louisiana court has ruled that a restaurant is entitled to an insurance payout over its losses during the COVID pandemic. The decision could open the floodgates to a wave of claims. That might be very bad news for the insurance industry.

When Louisiana shut down restaurants on March 20, 2020, the owners of the famous Oceana Grill in New Orleans filed a claim with Lloyds of London for coverage of their losses. Lawyers for the restaurant argue that their insurance policy, purchased from a Lloyds member, entitled them to payments to cover the earnings they would have made. The insurance company countered by pointing out that the policy is for “direct physical loss or damage.” Last February, a New Orleans parish court ruled in favor of Lloyds, but on June 15, a state appellate court reversed that decision.

The latest ruling is based on the judge’s decision that “direct physical loss or damage” is ambiguous, a reasoning Lloyds is likely to challenge. Another factor is that the Oceana Grill’s policy didn’t contain an exclusion for the contamination of the restaurant and its food by a virus. Most restaurant policies do contain this exclusion, which limits the number of claims that could succeed based on this judgment.

The ruling does leave many insurance companies exposed to COVID-related claims, so it’s unlikely Lloyds will stop fighting this case.

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