Latest Florida case to fail
Business Insurance by Nick Youngson CC BY-SA 3.0 Alpha Stock Images
One of the prominent business interruption coverage lawsuits from the pandemic that we’ve been watching here in Florida has ended in dismissal – again for “lack of physical damage,” as required in the insurance policy. A federal judge in Tampa has thrown out the case filed by Prime Times Sports Grill against underwriters for Lloyd’s of London. The restaurant claimed $200,000 in damages from the state’s inside dining ban last April, prompted by the spread of the coronavirus.
U.S. District Judge Charlene Honeywell noted the economic loss the restaurant suffered was not the result of “tangible damage.” “This is not the type of loss that Defendant undertook to pay for based on the plain meaning of the language in the policy. Again, the Business Income (and Extra Expense) Coverage states that Defendant “will pay for the actual loss of Business Income [Plaintiff] sustain[s] due to the necessary ‘suspension’ of [its] ‘operations’ during the ‘period of restoration’ ” and that ” ‘suspension’ must be caused by direct physical loss of or damage to property at premises which are described in the Declarations,” the judge wrote in her Order of dismissal.
While the restaurant didn’t claim it found the coronavirus inside its premises, the insurance lawyers also argued that the lack of direct physical loss or damage made the claim ineligible under the policy’s “civil authority” provisions, too.
This case is the latest among Florida businesses suing their insurance companies unsuccessfully for business interruption claims arising from the pandemic. Two cases in Hillsborough County court were dismissed in November. Both judges utilized “plain reading” standards, as did Judge Honeywell here, noting that “Florida law supports a legal conclusion that the mere presence of COVID-19 on business premises does not constitute direct physical loss or damage. Without direct physical loss or damage, there is no covered cause of loss.”
While they may be losing COVID-19 claims in court, our businesses, especially small businesses such as restaurants, are receiving additional financial help from the federal government. The second COVID-19 relief package that passed Congress over the holidays, contains $325 billion in extra funding for small business. That includes a second wave of PPP forgivable loans, a set-aside for businesses with 10 or fewer employees, and allows those in the restaurant and hospitality industries to receive larger awards of 3.5 times average total monthly payroll, rather than 2.5 times in the first PPP package last spring. We’ve found this excellent easy to read detailed summary if you’d like to learn more.
LMA Newsletter of 1-4-21
