South Carolina’s highest court rejects insurance coverage for COVID-related losses

A sign in a store informs customers that face masks are required upon entry. Picture taken May 2, 2022. REUTERS/David ‘Dee’ Delgado

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  • South Carolina Supreme Court rules restaurants not entitled to coverage for COVID-19 losses
  • The highest courts in Massachusetts, Iowa and Wisconsin have reached similar conclusions.

(Reuters) – South Carolina’s highest court on Wednesday became the fourth highest court in the state to find that businesses’ insurance policies do not cover losses they suffered during the COVID-19 pandemic and government-imposed assembly restrictions.

The South Carolina Supreme Court has ruled that the presence of COVID-19 in or near franchise-owned Carolina Ale House restaurants and resulting state bans on indoor dining do not trigger coverage. of its commercial property insurance policy.

The restaurants’ owner, Sullivan Management LLC, claimed the presence of COVID-19 and government orders qualified as “direct physical loss or damage” to its properties under a policy issued by Allianz SE units, including including Fireman’s Fund Insurance Co.

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Those orders included Republican Gov. Henry McMaster issued in March 2020, at the start of the pandemic before vaccines were developed, banning on-site dining in restaurants to curb the spread of the coronavirus.

But Judge Kaye Hearn, writing for a unanimous 5-0 court, said “mere loss of access to a business is not the same as direct physical loss or damage”, and that at instead, the damage had to be “something material and tangible”. need repair.

Justin O’Toole Lucey, a lawyer for Sullivan, said in an email “very disappointed”, saying that the “court’s analysis ultimately violates a canon of building insurance contracts – in favor of the insurance industry – to the detriment of the South Carolina policyholders.”

Brett Ingerman, Fireman’s Fund attorney at DLA Piper, said in a statement that his client was pleased the court reached the same conclusion as “nearly every other appellate court in the country.”

Hearn in his ruling noted that his ruling was consistent with most federal and state courts that have weighed in on the “tidal wave” of cases by companies trying to force insurers to cover the billions of dollars in losses that they suffered during the pandemic.

These include a growing number of state high courts, which have the final say on how to interpret their state’s insurance laws. The highest courts in Massachusetts, Iowa and Wisconsin, like that in South Carolina, have ruled for insurance companies.

The South Carolina Supreme Court took up the case at the request of a federal judge assigned to the Sullivan case who had certified matters of state law in the state’s highest court.

The case is Sullivan Management LLC, c. Fireman’s Fund Insurance Co, Supreme Court of South Carolina, No. 2021-001209.

For Sullivan: Justin O’Toole Lucey of Lucey Law Firm

For the Firefighters Fund: Brett Ingerman of DLA Piper

Read more:

Wisconsin’s highest court rejects insurance coverage for COVID-related losses

Latest Iowa court tossed out insurance coverage for COVID-related business losses

In a first, Massachusetts’ highest court rejects insurance for COVID-related business losses

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Our standards: The Thomson Reuters Trust Principles.

Nathalie Raymond

Thomson Reuters

Nate Raymond reports on federal judiciary and litigation. He can be reached at [email protected]

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