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Covid-Loss Case by Restaurant Is First U.S. Test for Insurers

  • New Orleans judge to decide if virus covered under policy
  • More than 1,300 business-interruption lawsuits filed in U.S.
Diners inside Oceana Grill in New Orleans earlier in March.
Diners inside Oceana Grill in New Orleans earlier in March.Photographer: Chris Graythen/Getty Images

The owners of a restaurant in the heart of the New Orleans French Quarter are asking a Louisiana judge to order some Lloyd’s of London insurers to cover losses from the Covid-19 outbreak -- the first of a growing number of U.S. business-interruption claims to go to trial.

The 500-seat Oceana Grill seeks to persuade Judge Paulette Irons that its “all-risks” policy covers losses attributed to a shut-down order the government issued because of the coronavirus pandemic. The non-jury trial started Monday in state court New Orleans.

The verdict in the case could set the tone for more than 1,300 other lawsuits against insurers who refused to pay claims on business-interruption policies, saying they don’t cover pandemic-related losses, said Tom Baker, a University of Pennsylvania law professor who is tracking the cases.

“This is the first opportunity business owners have to prove the virus can cause physical damage or loss,” Baker said. “The decision will have an impact on whether other cases can move forward.”