Another Court Agrees: COVID-19 Does Not Cause Physical Damage
August 7, 2020

In another substantial development in business interruption (BI) litigation, a District of Columbia Superior Court judge ruled that COVID-19 does not lead to physical property damage, arguing that the plaintiffs’ business insurance policy is not triggered because the shutdown did not amount to direct physical loss.

The judge reiterated what insurance contracts make clear: standard BI policies require “direct physical loss or damage” to the business–or structural alteration–such as in a fire, or for a civil authority to close off the area to a business nearby. The coronavirus leaves no visible imprint or structural alteration, and therefore does not trigger BI coverage.

The case ruling pointed out the following:  

This latest verdict follows a July Michigan state court ruling that also sided with insurers, finding that tangible alteration to a property is required to trigger BI coverage. 

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