Insurers’ COVID-19 Notepad: What You Need to Know Now - Week of May 16, 2022

Courts Dismiss COVID-19 Business Interruption Claims

On May 11, 2022, the Florida Third District Court of Appeal affirmed the dismissal of a restaurant owner and operator’s COVID-19 business interruption claim.The court held that “because the ordinary meaning of ‘physical’ carries a tangible aspect, ‘direct physical loss’ requires some actual alteration to the insured property.” Order at 12. The appellant’s allegation that it suffered economic losses due to civil authority orders, the court found, “does not satisfy this requirement.” Id. at 18. The case is Commodore, Inc. v. Certain Underwriters at Lloyd’s London.

On May 5, 2022, the district court for the District of Arizona adopted the recommendations of a magistrate judge and granted Continental Casualty Company’s motion to dismiss a healthcare company’s COVID-19 business interruption claim. The court concluded that the plaintiff’s allegations that the coronavirus physically altered indoor air and rendered the premises unfit for its intended purposes were insufficient as a matter of law to be considered direct physical loss of or damage to property, because the plaintiff failed to allege “any physical aspect to the loss or damage claim.” Order at 4-5. The case is TMC Healthcare v. Continental Cas. Co.

On May 10, 2022, the district court for the District of Connecticut granted Factory Mutual Insurance Company’s motion to dismiss a manufacturing and technology company’s COVID-19 business interruption claim. The court concluded that the plaintiff failed to adequately allege any physical loss or damage, as the policy’s “physical loss or damage” requirement “is reasonably susceptible to only one interpretation, and unambiguously requires a physical alteration to property.” Order at 24-25. The case is ITT Inc. v. Factory Mut. Ins. Co.