The insurer's argument that the insured restaurants' claim for business interruption due to COVID-19 should be dismissed because there was no physical damage to the structure was rejected by the federal district court in Alabama. Serendipitous, LLC v. Cincinnati Ins. Co., 2021 U.S. Dist. LEXIS 86998 (N.D. Ala. May 6, 2021).     Due to closure orders issued at the beginning of the coronavirus pandemic, restaurants could provide only curb pick up for months Later, they were allowed to seat customers, but at a restricted capacity.  The restrictions caused the restaurants to suffer business income losses, so the restaurants submitted a claim to Cincinnati for coverage. The claim was denied. The restaurants filed suit.     Cincinnati moved to dismiss, arguing that the restaurants had not adequately pleaded a direct physical loss under the terms of the policy. The court focused on the word "loss" as used in the policy. "Loss" was defined in the policy as "accidental physical loss or accidental physical damage." Cincinnati argued that the term "loss" was unambiguous and that the restaurants failed to identify "physical" loss or damage to property needed to trigger coverage. The restaurants argued "loss" was ambiguous as used in the policy. Further, the "loss" or "damage" requirements in the definition of "loss" were disjunctive, so the words must have distinct meanings.      The court agreed that the alternative phases "accidental physical loss" and "accidental physical damage" in the definition of "loss" indicated that each phrase had a separate meaning. Otherwise, one of the phrases was superfluous. The distinction indicated that loss meant something other than damage. Further, when property was damaged so badly that it could not be used again, it typically was considered a loss.      The restaurants alleged that they were physically deprived of their property because of the COVID-19 virus. Civil orders restricting the restaurants' access to their property because of the widespread presence of a rapidly spreading, invisible, lethal virus that survives on surfaces such as restaurant tables were no different from civil orders restricting access to a restaurant after fire destroys part of a building. The restaurants alleged that civil authorities limited access to the restaurants because the virus was so prevalent in the community. Further, the restaurants had to close completely when an employee contracted the virus, whether or not the employee contracted CZOVID-19 at the restaurant, to disinfect the premises because the potential for spread of the highly contagious virus made the premises "dangerous" and unusable until the premises were disinfected.      Accordingly, Cincinnati's motion to dismiss was denied.   

from Insurance Law Hawaii https://ift.tt/3wc4XJO