A federal district court in Austin, Texas, on Wednesday refused to dismiss a COVID-19 business interruption lawsuit filed by a barbershop against a Hartford Financial Services Group Inc. unit based on language in its virus exclusion that provides for up to 30 days of business interruption coverage.

The U.S. District Court’s ruling in Independence Barbershop, LLC, individually and on behalf of all others similarly situation v. Twin City Fire Insurance Co., joins a handful of other decisions, most of them by state courts, that have refused to dismiss the litigation.

In refusing to dismiss the litigation filed by the Austin barbershop and grooming supply retailer against the insurer for denying its business interruption claim, the ruling focuses on a section of its virus exclusion that allows for up to 30 days of coverage for business interruption if “loss or damage to property caused by…virus” causes a suspension of operations and “Time Element Coverage applies.” 

Time element coverage “is a term of art in the insurance industry referring to coverages measured in time, including business Interruption and Civil Authority coverages,” the ruling states.

“The Court holds that Plaintiff has plead a plausible claim for relief pertaining to coverage” under this section, the ruling states.  “The text of the insurance policy does not limit (the section) to certain contributing causes,” as found in another section of the virus exclusion, which the Hartford had argued was the case.

“However, the Court holds that the Virus Endorsement contains a valid exclusion clause that precludes recovery” under these other sections of the virus endorsement, the ruling states.

The court also refused to dismiss the plaintiff’s motion to certify the case as class action, stating it “will determine the question of class certification at the appropriate time.”

Attorneys in the case did not respond to requests for comment.

More insurance and risk management news on the coronavirus crisis here.