Wisconsin Supreme Courtroom guidelines towards insurance coverage protection for COVID losses

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The Wisconsin Supreme Court ruled on Wednesday, June 1, that businesses are not entitled to insurance coverage for losses resulting from the COVID-19 pandemic and related public safety restrictions.

As reported by Reuters, the midwestern state’s highest court ruled unanimously that government-imposed indoor dining restrictions should not trigger coverage under property insurance policies, and neither should the presence of the COVID-19 virus within business premises.

The decision overturned a February 2021 ruling by a Milwaukee judge in favor of Colectivo Coffee Roasters, which operates a chain of cafes in the state. Colectivo was allowed to proceed with a class action on behalf of businesses insured by Society Insurance, to try and recover financial losses under several clauses of Society’s property insurance policies, including business-income interruption.

However, Justice Rebecca Frank Dallet ruled against the café chain because it failed to declare that the presence of the COVID-19 virus or the loss of the use of its properties created a “tangible harm,” which would be necessary to trigger coverage.

According to the Reuters report, Justice Dallet said the presence of COVID-19 cannot constitute a physical loss or damage to property because the virus does not alter a property’s appearance or structure.

“One may think of the business-income provision as indirect loss-of-use coverage, but that does not change the fact that a prerequisite for that provision is still a direct physical loss or damage,” Dallet wrote for the 7-0 court .

The Wisconsin Supreme Court followed the top courts of Massachusetts and Iowa, who reached similar conclusions in April around whether property insurance policies will cover COVID-19 related losses. When reporting the court’s decision, Justice Dallet cited the “overwhelming majority” of courts across the US that have ruled in similar cases.

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