Studio 417, Inc. v. The Cincinnati Insurance Company — court filings

Case summary

Studio 417, Inc. and other Missouri hair salons and restaurants sued The Cincinnati Insurance Company on April 27, 2020 in the U.S. District Court for the Western District of Missouri, Southern Division, Case No. 20-cv-03127-SRB, after the insurer denied their claims for losses caused by COVID-19 and the closure orders issued by civil authorities in Missouri and Kansas. The first amended class action complaint of June 1, 2020 asserts declaratory judgment and breach of contract claims across seven coverages and seeks certification of 14 nationwide classes and a Missouri subclass. The policies promise payment for direct loss, define a covered cause of loss as accidental physical loss or damage, do not define physical loss or physical damage, and contain no virus or communicable disease exclusion. The court denied the insurer's motion to dismiss on August 12, 2020.

Case at a glance

What does the amended complaint allege?

That the presence of COVID-19 and the closure orders caused a direct physical loss or direct physical damage to the plaintiffs' premises by denying use of and damaging the covered property and by causing a necessary suspension of operations during a period of restoration, and that the insurer denied the claims after notice. These are the complaint's allegations.

What did the court decide?

It denied the motion to dismiss, taking the allegations of the amended complaint as true at that stage.

What do the policies say?

That the insurer would pay for direct loss unless the loss is excluded or limited, with a covered cause of loss defined to mean accidental physical loss or accidental physical damage. The order records that the policies do not define physical loss or physical damage and do not include any exclusion for losses caused by viruses or communicable diseases.