And so it begins . . . one of the first coronavirus insurance coverage cases in N.C. was filed recently in Guilford County Superior Court. Not surprisingly, the plaintiffs are restaurants that were forced to close or curtail their services due to Gov. Cooper’s stay-at-home order that went into effect in mid-March. Most of the allegations are more legal arguments than facts (read full complaint here), but plaintiffs recognize that one of the issues is whether the government-mandated closings caused “direct physical loss,” which is alleged to be undefined in the policies at issue. There is apparently a “virus” exclusion in some of the policies, but plaintiffs argue that the actual cause of their losses was public fear, commotion, and/or government action. Plaintiffs further contend the court should find coverage for their lost business revenue because they paid premiums for that coverage.

As with most litigation, there will be no quick answers from the Court. I predict we’ll see a decision on a summary judgment motion in about 12-18 months, and then an appeal after that. It’s one to keep an eye on.

This was originally posted on the North Carolina Bar Blog.