A Louisiana appeals court found that an all-risk property policy covered business-income interruption losses caused by COVID-19 shutdown orders and other operational restrictions.

In a 3-2 split Wednesday, Louisiana’s Fourth Circuit Court of Appeal reversed a bench verdict for Certain Underwriters at Lloyd’s, London in an action for declaratory relief filed by the operators of New Orleans’ 500-seat Oceana Grill.

It’s the first appellate win for an insured business according to a database at University of Pennsylvania Carey Law School.

Two of the panel’s judges found the policy’s requirement of ‘direct physical loss or damage’ was ambiguous as applied to a temporary suspension of operations, and read it in favor of the insured restaurant. A third judge concurred on other grounds.

The two dissenters said the policy clearly required physical damage to property, and that there was no ‘manifest error’ in the trial judge’s factual finding that the presence of COVID-19 did not cause physical damage.