A California state court judge has refused to dismiss COVID-19 business interruption litigation filed by a national retailer against a Zurich Insurance Group Ltd. unit and other insurers.

Dublin, California-based Ross Stores Inc. had filed suit against Zurich American Insurance Co. and several excess insurers claiming pandemic-related coverage under all-risks and cargo policies, according to court papers in Ross Stores Inc. at al. Zurich American Insurance Co. et. al.

Zurich was the primary policy on the property coverage, covering up to $25 million in excess of $500,000, with three excess layers providing an additional $500 million in coverage, in addition to coverage provided by the other insurers, according to the complaint in the case, which was filed in December 2020 in California Superior Court in Oakland. Ross operates nearly 2,000 retail and nonretail locations nationwide, according to the complaint.

Its cargo policy provided for coverage of up to $10 million per location, according to the complaint. COVID-19 litigation typically focuses on all-risks policies.

The court refused to dismiss the litigation for either policy, in a ruling issued July 13, that was not made public until last week.

On its property policy, the court said, “The policy covers ‘all risks of physical loss of or damage to property.’ The phrase does not include the word ‘direct.’ The court does not imply or infer the word ‘direct.’

“When the case law refers repeatedly to the phrase ‘direct physical loss,’ the absence of the word ‘direct’ suggests that the phrase ‘all risks of physical loss of or damage to property’ can include both direct and indirect physical loss or damage to property physical loss of or damage to property.”

The ruling said also that the scope of a contamination exclusion is “unclear.”

On the cargo policy, the ruling states “The court concludes that a reasonable reading” of a policy endorsement “might provide coverage for the losses that Ross alleges.”

Ross’ attorney and a Zurich spokeswoman had no comment.