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At Last! Covid-Related Business-Interruption Suit Prevails

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October 14, 2021

A string of losses by policyholders who go to court to collect on Covid-related business interruption disputes has been broken, and legal experts are wondering if it signals a major shift. In Novant Health Inc. vs. American Guarantee and Liability Insurance Co., a U.S. district court judge in North Carolina declined to dismiss the lawsuit. The order highlights a number of evolving issues in COVID lawsuits – conflicting policy language, the definition of physical damages, the role of federal courts in state-regulated insurance matters. It also illustrates how Covid litigation has evolved since the pandemic began. Initially, most policyholders claimed physical damage to the property in an attempt to get around a virus exclusion. Novant and others are taking a different approach, claiming that the virus damages the very air that patients and employees must breathe. “I think Novant and the other cases out there that have gone the same way are harbingers of a change in the insurers’ fortunes on motions to dismiss these cases,” said attorney Andy Lundberg, managing director of Burford Capital, which finances insurance coverage lawsuits.

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