Issue

Commercial—government-ordered pandemic restrictions—policy interpretation—viral contamination exclusion

Summary

A clothing retailer's claim for insurance coverage for loss of business as a result of government-mandated restrictions imposed during the COVID-19 pandemic was properly dismissed for failure to state a claim pursuant to Civil Procedure Rule 12(b)(6). The Supreme Court modified and affirmed the Court of Appeals' decision upholding the trial court's dismissal where, contrary to the lower appellate court's determination, plaintiff did allege a "direct physical loss of or damage to" its property–a definition which did not require a tangible alteration of property–based on the forced closure of its stores and the undertaking of significant remediation before being allowed to reopen. However, coverage was nevertheless precluded because plaintiff's "all-risk" commercial property insurance policy–which defined the scope of covered risks by its exclusions–contained an exclusion for viral contamination.

Summary from the North Carolina Reports digest (official subject index). Read the opinion →