2021 Ohio 4211
Ohio Ct. App.2021Background
- Hiscox issued a Businessowners Policy to The Nail Nook, a nail salon, for Dec. 1, 2019–Dec. 1, 2020; the policy covers Business Personal Property (e.g., furniture, equipment) but not the premises or business activity generally.
- Nail Nook sought business-interruption coverage for losses caused by Ohio’s March 2020 COVID-19 emergency orders that mandated closure of nail salons.
- The policy provides Business Income and Extra Expense coverage only if caused by a "direct physical loss of or damage to Covered Property" and limits the period of restoration to repair/replacement or move to a new permanent location.
- The policy contains a virus/bacteria exclusion that bars coverage for loss or damage "caused directly or indirectly by" any virus "capable of inducing physical distress, illness or disease."
- Nail Nook sued for declaratory relief and breach; it argued the policy is ambiguous (terms like "direct" and "physical loss or damage" undefined) and alleged its property was damaged by coronavirus-related events.
- The trial court granted Hiscox’s Civ.R. 12(C) motion for judgment on the pleadings, finding the virus exclusion clear and that Nail Nook failed to allege the required direct physical loss; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy is ambiguous such that coverage could apply | Policy language is ambiguous because terms like "direct" and "physical loss or damage" are undefined; therefore coverage should be construed in insured’s favor | Policy language (including the virus exclusion) is clear; court should enforce plain terms as written | Court: Policy unambiguous; virus exclusion clear; judgment for Hiscox |
| Whether the virus exclusion bars coverage even if government orders contributed to losses | Government-mandated closures—not physical destruction—caused losses and thus may fall within business-interruption coverage | Exclusion precludes losses caused directly or indirectly by a virus, "regardless of any other cause or event" in the causal chain | Court: Exclusion applies to losses caused directly or indirectly by virus; causal-chain arguments do not avoid exclusion |
Key Cases Cited
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978) (construction of a written contract is a question of law; courts must enforce clear, unambiguous contract language)
- State ex rel. Seikbert v. Wilkinson, 69 Ohio St.3d 489, 633 N.E.2d 1128 (1994) (standard for presuming truth of complaint allegations when reviewing dismissal)
- State ex rel. Pirman v. Money, 69 Ohio St.3d 591, 635 N.E.2d 26 (1994) (Civ.R. 12(C) motion treated as belated Civ.R. 12(B)(6) dismissal)