Bloomberg Law
June 15, 2022, 9:19 PM

Lloyd’s Owes Louisiana Restaurant for Viral Damage, Court Says

Daphne Zhang
Daphne Zhang
Insurance Correspondent

A New Orleans restaurant prevailed against Underwriters at Lloyd’s for insurance coverage of pandemic-related losses, after a Louisiana appellate court found that the coronavirus physically contaminated the eatery’s property.

Lloyd’s insurance policy is ambiguous, and the Oceana Grill’s argument that Covid-19 caused property damage by contaminating its facilities is plausible, said a 3-2 majority panel of the Louisiana Fourth Circuit Court of Appeal Wednesday, reversing a lower court ruling.

The ruling in favor of the policyholder comes as courts around the country have been mostly siding with insurers against businesses’ claims for losses related to Covid-19, concluding that the coronavirus and government closure orders don’t cause property damage.

“The physical presence of COVID-19 substantially diminished the usable space of the property, as tables needed to be pushed farther apart, and resulted in economic losses due to the slowdown of the appellants’ business,” Chief Judge Terri Love wrote. Other federal and state court rulings in favor of insurance companies are not binding to the Louisiana court, she added.

Lloyd’s has argued that Oceana Grill’s operation was never fully interrupted because the restaurant continued to serve take-out and delivery during the lockdown. Even though its customers could not access the dining areas, its employees could work on-site, and the restaurant never lost access or experienced full business suspension, it said.

But the majority panel disagreed. The insurance policy defines covered business suspension as both a “slowdown” and a “cessation” of business activities, the majority said. The business doesn’t need to experience a complete shutdown and loss of access to its facilities to get coverage, the judges said.

Lloyd’s policy also doesn’t have a virus exclusion, the panel said. The restaurant owner testified that he would not have bought a policy that excluded coverage for viruses or bacteria because the business serves raw oysters, it said.

The French Quarter restaurant reasonably expected the policy to cover pandemic-related losses, and the all-risk commercial insurance pays for all losses unless specifically excluded, it said.

Judges Roland Belsome and Lynn Luker disagreed, siding with a lower court that found the restaurant didn’t suffer property damage.

“Numerous courts applying Louisiana law, in the context of business interruption coverage due to COVID-19” found the same policy language not ambiguous, Belsome wrote in the dissenting opinion. Oceana Grill’s never experienced “tangible alteration to the property that required repair”—a precondition of property policies, he said.

Even if a virus physically damages property, it can be easily removed by disinfectant, so there is no lasting property damage covered by the insurance, Belsome said.

Oceana Grill employed 200 staff members and hosted up to 500 guests at a time before the pandemic, according to filings. The restaurant paid $91,000 in premiums for its insurance.

Representatives for the parties couldn’t immediately be reached for comment.

Oceana Grill is represented by Gauthier Murphy & Houghtaling LLC; Davillier Law Group LLC; Alvendia, Kelly & Demarest; Chehardy, Sherman, Williams, Murray, Recile, Stakelum & Hayes LLP; Law Office of Bernard Charbonnet; Law Office of Desiree M. Charbonnet LLC; Irpino Law Firm; and Reed Smith LLP.

Lloyd’s is represented by Schonekas Evans McGoey & McEachin; Phelps Dunbar LLP; and Adams and Reese LLP.

The case is Cajun Conti v. Certain Underwriters at Lloyd’s, 2021-CA-0343, 6/15/22

To contact the reporter on this story: Daphne Zhang in New York City at

To contact the editor responsible for this story: Melissa B. Robinson at, Roger Yu at

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