If you are being told that your business interruption coverage and commercial policy will not respond to a loss from COVID-19 due to a lack of physical damage, then this update will be of interest to you. Many insurers have been arguing that because there is no structural damage due to COVID-19, there cannot be physical loss and therefore, there cannot be coverage. However, this is wrongly discounting the fact that many courts have defined physical loss to expansively include airborne contaminants, bacteria and odors.
Therefore, the fact that you have an exclusion requiring physical loss, does not summarily preclude you from coverage. In most policies, the phrase “direct physical loss,” on which these insurers are hinging their denial of coverage, is not defined. The courts have taken this term and have adopted a wide range of interpretations that have frequently found for coverage despite a lack of structural damage.
Given the above, there is a basis for arguing that COVID-19 constitutes direct physical loss. While this is a novel situation and there is no clear precedent surrounding coverage for COVID-19, to simply believe your insurance companies statements barring coverage would be a mistake.
While much of what you read online will highlight the hoops you may have to jump through in order to get coverage for your loss, you can rest assured that firms like Weg & Myers stand ready to keep you informed and prepared to face these hurdles. If we can be of any assistance, or if you have questions, we would like to help. Just call our office (212) 227-4210. Ask to speak with Cynthia Rexach to schedule a teleconference or Zoom conference. If you prefer to use e-mail, Cynthia can be reached at Crexach@wegandmyers.com.