The U.S. Court of Appeals for the Ninth Circuit recently upheld the dismissal of a lawsuit filed by an Oregon company against its insurer for COVID-19-related losses. The basis for the dismissal centered on previous rulings in over 800 similar cases nationwide.
The claim by Oregon Clinic, affirming that its commercial property insurance policy was unjustly denied for COVID-19 incurred losses, was dismissed on the foundation that the business failed to prove “direct physical loss or damage”, a pre-requisite for invoking coverage under such policies.
The language of these policies assumes significant importance in decisions such as these, wherein claims of ‘loss of use’ doesn’t satisfy the standard of ‘direct physical loss or damage’. This interpretation has set a precedent in over hundreds of judgements across the country.
In the context of Oregon’s judiciary, this decision draws its strength from two state court opinions which, according to the Ninth Circuit, suggest that the Oregon Supreme Court would interpret this key phrase as necessitating some sort of physical alteration or damage to the property. It is these elements that carry enough weightage to trigger coverage under the Policy, rather than mere ‘loss of use’.
As such, legal professionals would benefit from familiarizing themselves with language nuances in insurance policies and considering how courts at different levels interpret such language.
This decision underscores the importance of clarity in policy language and its relationship with its efficacy, thus influencing the success of coverage claims.
Interested readers can delve into the detailed facts of this case via the complete court judgement.