Insurer wins COVID-related dispute over vacation rental

A North Carolina appeals court on Tuesday affirmed a lower court ruling in an insurer’s favor in a COVID-19-related business interruption case filed by the owner of a vacation rental property.

Kill Devil Hills, North Carolina-based Four Roses LLC had filed suit against its insurer, Lake Mary, Florida-based First Protective Insurance Co., arguing it was entitled to business interruption coverage because of the financial losses it incurred stemming from the county prohibiting nonresident’s entry into its jurisdiction because of the pandemic, according to the ruling by a three-judge panel of the Raleigh-based appeals court in Four Roses LLC v. First Protective Insurance Co.

While policy provisions provide coverage against direct physical loss to the dwelling, the plaintiff has not alleged any such loss “as required by the plain and unambiguous terms of the Policy,” says the ruling, in affirming a decision by the Manteo, North Carolina, trial court.

Under the policy’s “plain terms,” losses that trigger coverage are those that make the property “not fit to live in” or where the civil authority prohibits the property’s use as a result of direct damage to neighboring premises, the ruling says. 

The complaint does not allege facts that provide coverage for the loss of the property’s fair retail value or where a civil authority prohibits its use, nor where the county’s road closures “rendered their property itself not fit to live in.”

Attorneys in the case did not respond to requests for comment.

Earlier this month, the same court overturned a lower court ruling in policyholders’ favor in a COVID-19 business interruption case.