In a resounding victory for policyholders, an Oklahoma state court granted partial summary judgment for the Cherokee Nation in its COVID-19 business interruption claim. The Cherokee Nation is seeking coverage for losses caused by the pandemic—specifically, the inability to use numerous tribal businesses and services for their intended purpose.
Based on the “all risks” nature of the policy and the fortuitous nature of its loss, the Cherokee Nation sought a partial summary judgment ruling that the policies afford business interruption coverage for COVID-19-related losses. The policy provided coverage for “all risk of direct physical loss or damage,” which the Cherokee Nation contended was triggered when the property was “rendered unusable for its intended purpose.” In support of this view, and consistent with established insurance policy interpretation principles, such as providing meaning to every term and reading the policy as a whole, the Cherokee Nation argued that a distinction must exist between “physical loss” and “physical damage.” This distinction demands an interpretation supporting the “intended purpose” reading of the policy language. Thus, the physical presence of COVID-19 depriving the Cherokee Nation of the use of covered property for its intended purpose triggered a covered loss.
The Cherokee Nation also highlighted that many insurers, including those at issue in the lawsuit, added exclusions to their policies specifically barring coverage for communicable disease, but did so only after other policyholders filed similar claims for COVID-19 losses. Such exclusions would be superfluous if communicable disease coverage were not covered under the original policy language.
The court agreed, holding that the Cherokee Nation had made a “plausible claim” under its all-risk policy for business interruption coverage, while the insurers failed to show any exclusions would bar coverage. In support of its decision, the court cited to the recent policyholder win in the Elegant Massage LLC v. State Farm case (discussed in a prior post on this blog) affirming that court’s broad reading of the phrase “direct physical loss” to assert a plausible claim for business interruption coverage.