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Another appeals court rejects COVID BI coverage


The 10th U.S. Circuit Court of Appeals in Denver joined five other federal appeals courts Tuesday in holding there is no COVID-19-related business interruption coverage.

The Denver-based appeals court ruled against Oklahoma City-based Goodwill Industries of Central Oklahoma Inc. in a lawsuit it filed against Tokio Marine Holdings Inc. unit Philadelphia Indemnity Insurance Co. seeking business interruption coverage after it halted its operations in March 2020 following an executive order by the Oklahoma governor,  according to the decision in Goodwill Industries of Central Oklahoma Inc v. Philadelphia Indemnity Insurance Co. The ruling affirmed a November 2020 ruling by the U.S. District Court in Oklahoma City.

Goodwill’s policy said it would pay for the suspension of operations caused by direct physical loss or damage, and included a virus exclusion, according to the appeals court ruling.

The district court granted Philadelphia’s motion to dismiss the case on the grounds that “a direct physical loss unambiguously requires a showing of tangible damage,” which Goodwill had failed to allege, and under the policy’s virus exclusion.

In affirming the lower court ruling, a unanimous three-judge appeals court panel said, “The Business Income provision unambiguously covered any losses stemming from physical alteration or tangible dispossession of property. Neither occurred here. The policy’s Period of Restoration clause reinforces this conclusion.

“So do the decisions of every other circuit and the vast majority of district courts to address this issue,” said the ruling, which also held the virus exclusion was valid and enforceable.

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

The ruling affirms similar rulings issued by the 6th U.S. Circuit Court of Appeals in Cincinnati, the 7th Circuit in Chicago, the 8th Circuit in St. Louis, the 9th in San Francisco and the 11th in Atlanta.





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