Broker Check

Cleaning Up Is Not Covered Physical Damage

August 25, 2020

One of the arguments raised by insureds seeking coverage for business interruption due to COVID-19 shutdowns is that cleaning their premises is covered "physical loss". So far this argument has not been received favorably by either insurance thought leaders or the courts. It recently got a setback in a Florida case not related to COVID-19.

A restaurant by the side of a road under construction sued to recover diminished earnings due to the construction. They claimed their expenses to clean the premises were physical loss triggering a business interruption claim. In an unpublished decision reported in insurance Journal and on the Internet, the court rejected this argument.

While it could be argued that governments should compensate businesses when their actions lead to loss of income, this is a public policy question outside the  scope of insurance.