Direct physical loss or damage
6593 Weighlock Drive, LLC v. Springhill SMC Corp., 71 Misc. 3d 1086 (N.Y. Sup. Ct. Onondaga Cnty. 2021)
In 6593 Weighlock Drive, the Court dismissed a breach of contract action against Mound Cotton’s client, Zurich American Insurance Company, on the ground that the presence of the COVID-19 virus does not constitute “direct physical loss or damage” to the insureds’ hotel properties. The court concluded that the phrase “direct physical loss or damage” requires “actual physical damage to the insured’s property” and that a “mere loss of use of the property is insufficient” to trigger coverage. The court rejected plaintiffs’ argument that “the virus spreads through droplets and aerosols and can, according to scientists, live on surfaces for up to several days” and concluded that there is “no physical loss of or damage to property when ‘an item or structure…merely needs to be cleaned.”
The court also held that the amended complaint failed to state a cause of action under the civil authority and ingress/egress provisions. In particular, Judge Karalunas found that the “various government orders were not issued as a result of any physical loss or damage to the property,” but instead were intended to mitigate and slow the spread and impact of coronavirus.
The decision can be read here.