Quick Note: Physical Loss or Damage Under Property Insurance Policy = Actual, Tangible Alteration to Property

August 15, 2022
David Adelstein - Florida Construction Legal Updates

In one of Florida’s first appellate opinions dealing with business interruption losses and COVID-19, the appellate court found COVID-19 was not covered under the terms of the commercial property insurance policy to cover business interruption losses. In this case, a restaurant/bar suffered losses due to emergency measures imposed by Miami Dade due to COVID-19. Such emergency measures restricted the occupancy of restaurant/bars and undeniably resulted in business interruption. Occupancy and patrons are the lifeline of restaurant/bars. So why weren’t business interruption losses covered? Because there was no direct physical loss of or damage to the property at the restaurant/bar. The appellate court, affirming the trial court, explained direct physical loss of or damage to the property means there needs to be actual tangible alteration to property. COVID-19 did not cause actual tangible alteration to property which caused the restaurant/bar to suffer business interruption losses. Moreover, any COVID-19 particles that got on property could be cleaned. The analogy the appellate court provided, as cited here, is as follows: “The difference “between [the restaurant/bar’s] loss of use theory and something clearly covered—like a hurricane—is that property did not change. The world around it did. And for the property to be useable again, no repair or change can be made to the property—the world must change.”

Mr. Adelstein may be contacted at dma@kirwinnorris.com


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