The Oklahoma Supreme Court recently reversed a district court’s ruling that the Cherokee Nation’s insurance policies provided coverage for Covid-19 losses.
Three of the nine Oklahoma Supreme Court justices disagreed with the majority’s decision that an “all-risk” property insurance policy does not cover losses due to an unprecedented pandemic.
Court records show the Cherokee Nation, Cherokee Nation Businesses LLC and Cherokee Nation Entertainment temporarily closed their properties in March 2020 “to prevent Covid-19 related harm to their patrons, employees and properties.” The tribal entities filed claims with their insurers to recover economic losses due to the temporary shutdowns.
The Cherokee Nation had purchased an all-risk property insurance policy from its insurers, including business interruption coverage. The District Court of Cherokee County granted the tribe partial summary judgment, noting that the insurance policies and exclusions raised by insurers did not address “pandemics, or suspected, imminent, threatened or fear of viruses,” although similar language commonly is used by other carriers.
The insurers appealed the district court’s decision to the Oklahoma Supreme Court, which ruled the policies could not be understood to cover losses “incurred by some intangible harm that rendered Cherokee property unusable for its intended purpose.”
Instead, the policies cover losses for business interruption caused by “direct physical loss or damage to real and/or personal property,” meaning the policies only cover physical damages that make the property unusable.
In dissent, Justice James Edmondson wrote the pandemic created the worst health crisis in a century and caused the “greatest shock to our economy since the Great Depression. Before today’s decision, an all-risk business interruption insurance policy, lacking a definition or exclusion to the contrary, would provide coverage, as the district court held. These conclusions effectively give the armor of a named perils policy to an all-risk policy which is devoid of pertinent definitions and exclusions, and convert a business interruption insurance policy into nothing more than fire insurance. At the very least, the remand should be clear that the Nation be given a full opportunity to present its defenses.”
