Late last week, the U.S. District Court for the Eastern District of Michigan ruled in favor of insurers in a business interruption lawsuit filed by a Michigan chiropractic practice.
"'Accidental direct physical loss to Covered Property' is an unambiguous term that plainly requires Plaintiff to demonstrate some tangible damage to Covered Property," wrote Judge Thomas Ludington in his decision. "Because Plaintiff has failed to state such damage, the complaint does not allege a Covered Cause of Loss."
The plaintiff sought coverage on COVID-related business losses as well as damages from the insurers' alleged breach of contract based on its "all risks" business interruption insurance policy, which had an virus exclusion. Even if business interruption losses were caused by accidental direct physical loss, the Judge further explained, the virus exclusion still applies.
The number of federal and state courts that have noted the absence of physical damage, required in business interruption claims, is approaching double-digits. The growing list includes federal courts in Florida, California, Texas, and New York, as well as the Eleventh Circuit and courts in the District of Columbia and Michigan.
For more information, please visit fairinsure.org.