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On Wednesday, a federal judge in the U.S. District Court for the Western District of Missouri decided that a group of hair salons and restaurants can sue their insurer for business interruption losses caused by the coronavirus pandemic, which they say caused a “direct physical loss” to their premises. The case is Studio 417 Inc. et al v. Cincinnati Insurance Co., U.S. District Court, Western District of Missouri, No. 20-03127.

Studio 417 paid premiums to The Cincinnati Insurance Company (Cincinnati) for a policy that included coverage for potential business losses due to a variety of possible causes. The suit indicates that Cincinnati violated the insurance contract when it refused to reimburse the salons for lost business income during the time when the state’s stay at home orders were in effect.  Studio 417 also argued that no virus exclusion existed in the insurance contract, so Cincinnati could not use that exemption.

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