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[Win!] Courts rule in favor of policyholders for business loss claims.

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In these dark days for the hospitality industry, any good news is welcome relief. Fortunately, there’s some to share: the first Washington coronavirus business income loss decisions are in and both decisions were policyholder wins.  

On November 12, a King County Superior Court judge denied an insurer’s motion to dismiss a coronavirus business income loss claim. The Court rejected the insurer’s arguments that no business income loss coverage could be owed for losses caused by coronavirus and/or the various government closure orders. This was the first ruling in Washington on coverage for coronavirus business income loss and it was quickly followed by another –a Spokane court rejected a similar insurer motion the same day. That makes the score card in Washington 2-0 policyholders.  

Nationally, a recent North Carolina decision went even further. In that case, the state court judge issued summary judgment to the policyholder, finding that, as a matter of law, the policyholder was owed coverage for its coronavirus business income loss claim. The North Carolina court’s decision was based on what has been termed the “closure theory.” Under the closure theory, a typical business income loss policy is triggered by a government closure order because the order itself constitutes “the physical loss of” the policyholder’s insured property.   

While there will likely be more Washington state court decisions in the coming months, the next big date on the business income loss calendar is early March. At that point, the 50-or-so business income loss cases pending in the Western District of Washington (federal court) are set to be ruled upon by Judge Barbara Rothstein.  

In the meantime, it’s important for Washington Hospitality Association members to take a look at the suit limitations clauses in their commercial property policies. Those clauses usually state that no “legal action” may be brought against the insurer “unless . . . the action is brought within [one or two] years after the date on which the direct physical loss or damage occurred.”  

For policyholders with one-year suit limitations clauses, their contract right of actions will likely be expiring in early February unless they either file a lawsuit or  obtain a tolling agreement with the insurer.   

If you have questions regarding business income loss coverage, feel free to contact Tristan Swanson, a partner at Miller Nash Graham and Dunn. Tristan focuses his practice on policyholder work and currently represents many of Washington’s best known restaurant groups relative to their COVID-19 business income loss claims.  


Tristan Swanson

Pier 70

2801 Alaskan Way, Suite 300

Seattle, WA 98121

Direct: 206.777.7530 | Office: 206.624.8300 | Fax: 206.340.9599