California Judge Rules In Favor of Insurer, Upholding Policy’s Virus Exclusion

This week in California, U.S. District Magistrate Judge Jacqueline Scott Corley ruled in favor of the insurance industry in a lawsuit on pandemic-related business interruption (BI) claims—filed by attorneys representing two Napa Valley-based French restaurants—on the basis that the virus exclusion precludes coverage for losses caused by the COVID-19 pandemic.
“While the court acknowledges the havoc that the COVID-19 pandemic and consequent shelter-in-place orders have caused businesses throughout this country and the world, the court cannot read an ambiguity into an insurance contract where none exists,” Judge Corley said.
This California ruling adds to the growing list of favorable rulings over the last year affirming insurers’ position that global pandemic risks are uninsurable. Insurers are doing what they can in response to the pandemic, including providing premium rebates, policy extensions, and making charitable donations, as they work to keep their promises to policyholders for covered losses.
The full article is available here. For more information and resources, visit


A Growing List Of Court Decisions Affirms The Necessity Of Direct Physical Damage For Business Interruption Insurance

Business interruption (BI) policies are not designed to cover pandemics and necessitate a direct physical loss to property to be activated. As such, the widespread litigation against insurers, attempting to alter BI policies to cover pandemic-related income losses, is a misguided effort that places the interests of attorneys ahead of business owners’.

To date, there has been an increasing number of court rulings affirming insurers’ position:

  • U.S. District Court for the Northern District of California: “A California magistrate judge on Tuesday dished out a dismissal in famed California [policyholder]’s suit seeking coverage for pandemic-related government shutdown orders, saying a virus exclusion precludes coverage for economic losses caused by COVID-19.”
  • U.S. District Court for the Southern District of Indiana: “An Indiana federal judge on Monday ruled that [policyholder] is not entitled to coverage for pandemic-related business interruption losses, finding that a clear virus exclusion in the [policyholder’s] policies forecloses their insurance claims.” (Law360, 3/8/21)
  • U.S. District Court in Cleveland: “‘This case turns on the meaning of the language ‘physical loss of or damage to’ property in the insurance policies,‘ Travelers wrote, but does not define the terms, the ruling said.” (Business Insurance, 2/19/21)
  • Civil District Court for the Parish of Orleans: “A New Orleans judge denied a motion for declaratory judgment that insurance coverage is owed to a restaurant for business income that was lost when it was required to close its dining room because of the COVID-19 pandemic.” (Claims Journal, 2/17/21)
  • U.S. District Court for the Southern District of Florida: “The plaintiff alleged that COVID-19 was ‘present’ at the insured properties on a particular date, but Chief Judge K. Michael Moore held that this allegation was insufficient to state a claim for coverage and granted the insurer’s motion to dismiss with prejudice.” (JD Supra, 1/25/21)
  • U.S. District Court for the Southern District of Florida: “Judge Robert N. Scola Jr. found that these allegations failed to state a claim for coverage under the policy’s business income coverage provision, which required ‘direct physical loss of or damage to’ the insured property to trigger coverage.” (JD Supra, 1/25/21)
  • U.S. District Court for the Western District of Pennsylvania: “A federal judge on Friday tossed [plaintiff’s] proposed class action seeking coverage from [insurer] for losses due to the coronavirus, finding that establishments limited to carry-out service had not sustained the ‘direct, physical loss‘ necessary to trigger their insurance policies.” (Law360, 1/15/21)
  • U.S. District Court for the Southern District of Mississippi: “A Hattiesburg, Mississippi, restaurant became the latest plaintiff to be denied COVID-19-related business interruption coverage by an insurer, when a federal district court ruled Wednesday there was no physical damage under the terms of its policy and that there was also no coverage because of a virus exclusion.” (Business Insurance, 11/5)
  • U.S. District for the Middle District of Florida: “The judge rejected [policyholder’s] argument that economic damage is synonymous with physical loss. ‘Plaintiff’s argument is unpersuasive because Florida law and the plain language of the policies reflect that actual, concrete damage is necessary,’ he said.” (WestLaw Today, 9/29)
  • U.S. District Court for the Northern District of California: “Judge Tigar wrote that because the government shutdown orders were preventative in nature — seeking to prevent the spread of the virus — that lends credence to [insurer’s] argument that they were not issued in response to physical loss or damage.” (Law360, 9/14)
  • U.S. District Court for the Southern District of California: “‘Plaintiffs are not the first policyholders to argue in court that government orders forcing their businesses to stop operating as a result of the COVID-19 pandemic trigger insurance under provisions similar or identical to the ones in the Policy here. Most courts have rejected these claims, finding that the government orders did not constitute direct physical loss or damage to property,’ Judge Bencivengo said in a ruling for [insurer].” (Business Insurance, 9/14)
  • U.S. District Court for the Eastern District of Michigan: The policy only covers lost income in the event of physical damage to a property, and even if that were not the case, the virus exclusion in the policy would bar pandemic-related coverage, the judge ruled. The ruling adds to the growing list of insurer wins on the issue of business interruption coverage for coronavirus-related losses.”  (Business Insurance, 9/4)
  • U.S. District Court for the Middle District of Florida: “Because [the plaintiff’s] damages resulted from COVID-19, which is clearly a virus, neither the Governor’s executive order narrowing dental services to only emergency procedures nor the disinfection of the dental office of the virus is a ‘Covered Cause of Loss’ under the plain language of the policy’s exclusion,’ the ruling states.” (Business Insider, 9/3)
  • U.S. District Court for the Central District of California: “‘An insured cannot recover by attempting to artfully plead impairment to economically valuable use of property as physical loss or damage to property,’ Wilson said, adding that [the plaintiff] has only plausibly alleged that in-person dining restrictions interfered with the use or value of its property — ‘not that the restrictions caused direct physical loss or damage.'” (Law360, 8/28)
  • U.S. District Court for the Western District of Texas: “In so ruling, Judge Ezra indicated that ‘while there is no doubt that the COVID-19 crisis severely affected Plaintiffs’ businesses, [insurer] cannot be held liable to pay business interruption insurance on these claims as there was no direct physical loss, and even if there were direct physical loss, the Virus Exclusion applies to bar Plaintiffs’ claims.'” (The National Law Review, 8/25)
  • District of Columbia Superior Court: “The judge found the plaintiffs offered no evidence that the virus was present in their inured properties and found that the mayor’s orders did not have any material or tangible effect on the insured’s properties.” (Insurance Journal, 8/7)
  • Michigan’s Ingham County 30th Judicial Circuit Court: “The court said that [the plaintiffs’] argument was ‘just simply nonsense, and it comes nowhere close to meeting the requirement that there has to be some physical alteration to or physical damage or tangible damage to the integrity of the building.'”  (JD Supra, 7/17)
  • Southern District Court of Florida & Eleventh Circuit Court: “Based on the Eleventh Circuit’s analysis, coverage will not be triggered for similar claims because the presence of the COVID-19 virus, or cleaning related to the virus, does not constitute direct physical loss or damage to property. The Eleventh Circuit’s holding provides helpful guidance that will most certainly be used in the analysis of COVID-19 business interruption claims.” (JD Supra, 7/21)

As highlighted in FAIR’s one-minute explainer video below, trial attorneys’ attempts to retroactively include the uninsurable pandemic risk in business interruption insurance contracts is detrimental to policyholders, communities, insurers, and economic growth. Insurers are doing what they can in response to the pandemic, as they work to keep their promises to policyholders for covered catastrophe losses such as hurricane damage.

For more information and resources, visit


Houghtaling Loses BI Coverage Claim

A New Orleans judge has denied a motion that would have forced an insurer to pay a business interruption (BI) claim to a restaurant closed because of COVID-19.

The case is particularly significant because it was the first known legal action filed against insurers over COVID-19 and BI. 

The motion, brought by well known class action attorney John Houghtaling II, joins a pool of nationwide rulings that have been overwhelmingly decided in favor of insurers. As in many similar cases, the ruling came down to the physical damage requirement present in most BI policies.

From Claims Journal:

Attorneys who represent insurers laid the groundwork to deny virus-related business-interruption claims early on. They argued that coverage is not triggered under commercial property policies without some tangible physical alteration to the insured property.

State and federal judges around the country have ruled in favor of insurers in motions to dismiss or for summary judgment in about four cases out of five so far.

For more information and resources, go to


Business Interruption Litigation Remains Unsuccessful In Florida

Attempts to force insurers to pay uncovered pandemic-related business interruption claims remain unsuccessful in Florida, as described by a recent article in Florida’s Business Observer:

  • “Out of 29 rulings or resolutions so far in Florida, insurance firms have won all 29 cases, according to the national Covid Coverage Litigation Tracker, a University of Pennsylvania Carey Law School project.”

Quoting the Triple-I’s Mark Friedlander, the piece notes these lawsuits have failed because most policies contain virus exclusions or require physical damage to trigger a business interruption claim:

  • “Industry officials say insurers have been prevailing in these cases for the simple reason that policy language doesn’t cover a pandemic-driven business shutdown. Also, about  80% of business interruption policies in the U.S. have virus exclusions, says Mark Friedlander, a spokesman for the Insurance Information Institute, a pro-insurance industry group.”

To read the full piece from Business Observer, click here.


Allianz Risk Barometer: A “Covid Trio” Of Risks Will Continue To Drive Disruption In 2021

Allianz Global Corporate & Specialty (AGCS) conducts annual research on the views of 2,769 industry experts in 92 countries and territories, including CEOs, risk managers, brokers, and insurance experts. The 2021 Allianz Risk Barometer identified the “Covid Trio”—business interruption, pandemic outbreaks, and cyber incidents—as 2021’s major business risks:

  • Business interruption. Although Covid-19 emerged as the dominant risk last year, it only added to multiple other concerns for business interruption. This is the 8th time that business interruption has fallen as the top risk for the annual Allianz Risk Barometer report. More traditional business interruption risks like natural catastrophes, extreme weather, and fire, remain major threats for business interruption across many industries. Additionally, there is growing awareness of other risks such as political instability, violence, and terrorism. 
  • Pandemic outbreaks. The 2020 Covid-19 global outbreak demonstrated that business interruption events on an extreme, global scale are real possibilities. According to expert Philip Beblo of AGCS’s global property underwriting team, “The consequences of the pandemic—wider digitalization, more remote working and the growing reliance on technology of businesses and societies—will likely heighten BI risks in coming years.”
  • Cyber incidents. The world recently accelerated its trend toward remote work and digitalization as a result of the need to stay at home during the pandemic. The FBI reported that during the first wave of lockdowns in April 2020, cybercrime incidents increased by 300%. Cybercrime is estimated to cost the global economy more than $1 trillion, which is a 50% increase from two years ago. For several countries, including Brazil, France, India, Japan, and the U.S., cyber incidents are a top three risk.

The report notes that building greater resilience in business models will be key to mitigating future disruption. 

Although it’s a new year, Covid-19 and its effects are not yet in the rearview mirror. American businesses are still struggling. Policymakers have not yet executed a viable, sustainable, and inclusive government-backed solution to provide relief for the COVID-19 business interruption crisis, or established a solution for the inevitable crises of a similar caliber in our future. As the 2021 Allianz Risk Barometer indicates, the pandemic and business interruption concerns are too important for stability to dismiss. It’s essential that policymakers prioritize building resilience in 2021, and a necessary first step is a federal backstop for this pandemic and for future ones.

You can read the full report on 2021’s major business risks here.


NEW POLL: Pandemic Relief Should Come From Policymakers—Not Litigators

The vast majority of Americans continue to believe that COVID-19 relief should come via public policy solutions — and not litigation — according to polling released this week by the American Tort Reform Association (ATRA). 

Key takeaways from the poll include:

  • 59% say those harmed by the pandemic should get assistance from policies passed by elected officials, versus just 7% who say they should get payouts from lawsuits
  • 74% say small businesses affected by COVID-19 should be supported by government grants or loans versus 6% who say lawyers should help small businesses pursue legal claims

More information on the polling is available on ATRA’s website. For information on the principles the broader insurance industry have put forth for a government-backed pandemic policy solution, click here.


U.K. Supreme Court Ruling On BI Is Not Relevant To U.S. Litigation, Insurance Expert Affirms

On January 15, the U.K. Supreme Court released a ruling in favor of policyholders for a business interruption (BI) test case appeal, providing clarity on some key contractual uncertainties for pending claims. The original case was brought by the country’s Financial Conduct Authority to the U.K. High Court on behalf of affected businesses.

While the findings of the verdict were highly anticipated by insurers and policyholders in the U.K., the ruling is not an indicator to the BI litigation landscape in the U.S., according to Insurance Information Institute (Triple-I) CEO Sean KevelighanAs reported by The Wall Street Journal, Kevelighan makes clear that “the British policies in question and typical U.S. policies have key contractual differences that would limit the applicability of the ruling.”

To date, there has been a growing list of court decisions in state courts across the U.S. in favor of insurers, affirming BI policies do not cover COVID-19 shutdowns. Direct physical loss or damage must occur for a BI claim to be triggered, and government orders do not constitute direct physical loss or damage to property.

For more information and resources, go to or reach out to the Triple-I for more info.


Bloomberg Article Reaffirms Necessity Of Government-Backed Pandemic Relief

Yesterday, Bloomberg published an article on the prospects of a government-backed pandemic insurance program, providing an overview of what stakeholders around the world are doing to advance this conversation. This timely piece highlights the importance of finding such a solution, as many businesses—especially small ones—continue to face economic strains during these challenging times.
Key takeaways from this article include:

  • Forcing insurers to cover pandemic-related business income losses would threaten the solvency of the insurance industry. “At the core is the reality that the global non-life insurance industry’s $2 trillion in capital won’t last in a ‘black swan’ event, such as a cyber attack or another pandemic, that hobbles the global economy.”
  • Given the scale of a pandemic, only the government has the financial capacity to cover such a risk, as insurers brace for greater climate change risks. “Anything as large as pandemic risk, the industry argues, will need government support. The coronavirus has shut down global economies in a way that very few prepared for, with revenue for millions of businesses cut or totally lost as they were forced to shut their doors. But it’s far from the only possible threat.”
  • Stakeholders—including policymakers and stakeholders—have been pushing for governmental action through policy proposals. “Lawmakers in the U.K., the European Union and the U.S. are grappling with ways for taxpayers to help in a more predictable way than hastily assembled bailouts. Insurance giants including Chubb Ltd., Axa SA and Lloyd’s of London are pushing for action before the lessons of 2020 fade.”

If interested, the article can be found here. For more information and resources, go to


Iowa Federal Court Affirms Insurers’ Position In A Business Interruption Case Ruling

The U.S. District Court for the Southern District of Iowa ruled in favor of the insurer in a lawsuit on pandemic-related business interruption (BI) claims due to lack of alleged physical property loss or damage that would trigger coverage.
According to Judge John A. Jarvey:

  • Direct physical loss necessitates tangible alteration of property, not the loss of use of property due to mandatory closures. “The closure orders amounted to a direct physical loss because they were prevented from doing normal business, [plaintiffs] said. Jarvey rejected this theory. ‘It is a settled matter in Iowa law that direct physical loss or damage requires tangible alteration of property and that loss of use alone is insufficient,’ he said.”
  • The virus exclusion in policyholders’ BI policy clearly prohibits coverage, even if statewide shutdown orders cause physical damage. “This virus exclusion lets [insurer] off the hook even if the [plaintiffs] could show that Covid-19 or statewide shutdown orders actually altered their property, he said. ‘The Virus Exclusion unambiguously states it will not pay for loss or damage that is directly or indirectly caused by any virus, regardless of any other cause or event that contributes to the loss.'”

This lawsuit is part of a nationwide litigation trend we’ve seen in recent months, led by trial attorneys, attempting to retroactively alter BI contracts to cover pandemic-related income losses—a misguided effort that places the interests of attorneys ahead of business owners’ and jeopardizes insurers’ ability to meet promises to policyholders on covered claims. The Iowa ruling adds to the growing list of favorable rulings affirming insurers’ position that global pandemic risks are uninsurable.
The full article is available here. For more information and resources, visit


Houston Small Biz Owners On Resilience & Recovery

new post on the Triple-I’s Resilience Blog shares the story of small business owners Bobby and Janice Jucker, who have nicknamed themselves the King and Queen of Disasters. Their business, Three Brothers Bakery, has weathered Hurricane Harvey, several floods, a fire, and now COVID-19. 

COVID-19 is the toughest disaster they have ever faced, but the Juckers’ unique and tough experiences with tragedies have given them special perspective. They offer several good pieces of advice in the blog post, including navigating the insurance market and knowing your business’ policy well. 

You can read the full profile on bakery owners Bobby and Janice Jucker here and watch their four-part business plan for disaster recovery here. For more information and resources, visit