The Supreme Courts of Pennsylvania and North Carolina have issued two of what are presumably the last state supreme court decisions in COVID-19 business interruption insurance cases. While they reached split results (with the Pennsylvania court ruling for the insurer and the North Carolina court ruling for policyholders in a case without a virus exclusion), as a practical matter, this is unlikely to have a substantial impact on the insurance industry.
Overview
In Ungarean v. CNA, 323 A.3d 593 (Pa. 2024), the Pennsylvania Supreme Court ruled for the insurer, reversing an intermediate appellate court decision that had found coverage for business income losses resulting from COVID-19 government orders restricting the operations of a dental practice. Construing the meaning of “direct physical loss of or damage to property” together with the policy’s definition of “period of restoration,” the court held that “there must be some physical alteration to the subject property necessitating repairs, rebuilding, or entirely replacing the property either at the same location or a new one.”...
