Over the last two years, 77 federal and 44 state appeals courts have ruled in favor of insurance companies regarding whether COVID-19 caused “tangible property damage.” This month the Lousiana 4th Circuit Court of Appeals issued the first decision in favor of the policyholder. Ironically, the case was also the first U.S. lawsuit filed seeking insurance coverage for a business shut down due to the coronavirus. 

Prior to the pandemic, the restaurant Oceana Grill employed 200 people and had a capacity of 500 guests in New Orleans’ French Quarter. On March 16, 2020, the restaurant ceased sit-down dining due to an ordinance issued by Louisiana Governor John Bel Edwards. Oceana reopened on May 16, 2020, at 25% capacity. Later they increased to 50% capacity where the restaurant operated for the next year. The restaurant’s attorney successfully argued that “the physical presence of infectious viral particles decreased the habitable portion of the insured property and caused a slowdown of business activities.”

Read the Claims Journal’s coverage of the case here or the full opinion from the Lousiana 4th Circuit Court of Appeals.