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Wednesday, August 4 • 1:00pm - 2:30pm
7A1 Illustrating Judicial Determinations of Policy Ambiguity with a COVID-19 Business Interruption Case

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Elizabeth Ragland, University of Louisiana at Monroe; Allison Jarrell, University of Louisiana at Monroe; Deborah Golemon, University of Louisiana at Monroe

Judicial opinions addressing current insurance policy disputes help undergraduate risk
management and insurance students better understand the distinct characteristics of insurance
contracts. The opinion in North State Deli v. The Cincinnati Insurance Company, No. 20-CVS-
02569 (N.C. Sup.Ct. Oct. 9, 2020) addresses business income losses during the COVID-19
pandemic and demonstrates how courts interpret insurance policies. The 2020 government-
mandated COVID-19 shutdowns has had an unprecedented impact on businesses, and thousands
of businesses have filed business interruption claims under their commercial property insurance
policies to recover business income losses. Insurers have denied the majority of these claims,
finding that the insureds had not lost business income due to the requisite “direct physical loss”
to property. These denials have led to more than 1,700 lawsuits. Although the majority of courts
have agreed with insurers’ interpretation of policy language, a few courts, including the court in
North State Deli, have found that the business interruption “direct physical loss” policy language
is ambiguous and have ruled in favor of insureds. The North State Deli opinion is a valuable
teaching tool, because it addresses a current policy dispute and demonstrates how a court
interprets policy terms. It illustrates how a court determines if a policy term is ambiguous and
how a finding of ambiguity results in the court’s interpreting the contract in the light most
favorable to insureds. This presentation will review the North State Deli case, including the
policy language, the parties’ arguments, and the court’s analysis, as well as the teaching
applications of the case in undergraduate risk management and insurance courses.


Elizabeth Ragland

University of Louisiana at Monroe

Wednesday August 4, 2021 1:00pm - 2:30pm EDT