Another Appeals Court Rules For Insurer In COVID BI Case

The 5th U.S. Circuit Court of Appeals in New Orleans became the eighth federal appeals court Wednesday to rule that a policyholder was not entitled to COVID-19 business interruption coverage, in a lawsuit filed by two barbeque restaurants.

As with decisions filed by its sister appeals courts, the New Orleans-based 5th Circuit ruled that Terry Black’s Barbeque LLC and Terry Black’s Barbecue Dallas LLC, which own and operate two barbecue dine-in restaurants in Austin and Dallas, failed to establish the virus had caused physical damage in the restaurants, according to the ruling in Terry Black’s Barbecue LLC; Terry Black’s Barbecue Dallas, LLC. v. State Automobile Mutual Insurance, which affirmed a decision by the U.S. District Court in Austin.

The restaurants had argued they were entitled to coverage under their business income and extra expense coverage and their extension coverage, which covered the suspension of operations due to a civil authority order.

The restaurants’ business income/extra expense coverage requires TBB ‘to allege it suffered a direct physical loss of property at its restaurants. These words, however, are not defined in the policy,’ the ruling said.