The Oklahoma Supreme Court recently rejected an Indian tribe’s Covid-19 business interruption claim. In Cherokee Nation v. Lexington Ins. Co., 2022 Ok. 71, 521 P.3d 1261 (2022) rehearing demand 12/19/2022, the insured Indian tribe sought coverage under its tribal property insurance program. The policy covered business income losses that were caused by “direct physical loss or damage . . . to real and/or personal property”. The insurer denied coverage for the claim on the ground that the Tribal Nation’s inability to use its properties for their intended purpose was unconnected to any direct physical loss or damage. The Oklahoma Supreme Court agreed.
In this case, the Indian tribe failed to allege that its business income loss during the pandemic resulted from coverage-triggering “physical loss or damage.” The Tribe acknowledged in the litigation that it closed its business operations to prevent harm to its employees and customers, and not because the virus had affected its properties physically. The High Court found that the Tribal Nation was not forced to close due to contamination of the virus or by any emergency order regarding Covid-19. The Court noted that if it were to allow coverage under those circumstances, any business could unilaterally close for a myriad of reasons and recover under a business interruption clause.