NC Supreme Court Issues Pro-Policyholder Decision on COVID-Related Insurance Claims

On Dec. 13, the Supreme Court of North Carolina issued an extraordinary decision validating insurance coverage claims for losses caused by the COVID pandemic and related government-ordered shutdowns. The decision in North State Deli v. Cincinnati Ins. Co. rebuffs the overwhelming majority of rulings by other state and federal courts by correctly applying longstanding principles of insurance law.    

Robinson Bradshaw represented United Policyholders, the nation’s foremost advocate of policyholder interests, as amicus in North State Deli. We also represented the plaintiff/insured in the companion case of Cato Corp. v. Zurich Ins. Co.

The plaintiffs in North State Deli were a group of restaurants that lost the use of their properties as operating businesses due to government-ordered shutdowns during the COVID pandemic. The restaurants’ insurers denied coverage under their “all-risks” commercial property polices, arguing that there was no “direct physical loss” of the restaurant properties as the policies required. The insurers’ argument had been embraced by the vast majority of state and federal courts nationally. The Supreme Court declined to fall in with the majority, opting instead to fulfill its “responsibility” to apply “longstanding” principles of insurance law. Doing so, the Court ruled that “direct physical loss” as used in the restaurants’ policies includes the “loss of physical use of their properties as restaurants due to the pandemic orders.” The Supreme Court articulated the same conclusion in its Cato decision, although it found no coverage based on an exclusion that was absent from the policies at issue in North State Deli.

The Supreme Court’s bold ruling renews hope for North Carolina businesses whose commercial property insurers denied claims for COVID-related losses.

Robinson Bradshaw attorneys Steve DeGeorge, Matt Sawchak, Rich Worf, Ben DeCelle, Zac Johnson and Steven Joseph contributed to the effort.