Advisen

Florida federal court upholds virus exclusion in COVID-19 BI case

By Erin Ayers, Advisen

A Florida federal court ruled that the virus exclusion of commercial property policy bars recovery for COVID-19 business interruption claims by a dental practice in a switch from other cases that have focused on the lack of physical damage.

In Mauricio Martinez DMD v. Allied Insurance Company of America, the U.S. District Court for the Middle District of Florida granted the insurer’s motion to dismiss because “the insurance policy expressly excludes coverage from damages caused by a virus.” Allied Insurance is a subsidiary of Nationwide.

Martinez had claimed that he incurred costs to decontaminate his dental office and that he lost business income due to civil authority shutdowns in Florida. The Court found that, even accepting those allegations as true, “the dental practice’s argument still fails because the loss or damage asserted was not due to a “Covered Cause of Loss.”

Though there have now been several lawsuits over COVID-19 business interruption claims dismissed in favor of the defendant insurers, most have not ruled on the validity of virus exclusions. In cases where policies contained exclusions such as the recently decided 10E LLC v. Travelers, courts have found that the lack of direct physical damage barred coverage even before considering any exclusionary language. No courts have ruled on whether alleged or actual COVID-19 contamination constitutes “direct physical loss” under property policies.

Editor Erin Ayers can be reached at eayers@advisen.com.