The Massachusetts Supreme Court has ruled that their all-risk property insurance policies did not cover business losses sustained by restaurants due to COVID-19.
The court said the policies provide that the insurer will pay for direct physical loss of or damage to covered property. Direct physical loss of or property damage requires some distinct, demonstrable physical alteration of the property.
Why This is Important… This decision is one of a national series of cases testing whether various forms of business insurance policies covered pandemic losses. Mostly, courts have been ruling they do not. The crux of these cases is that the courts find, like this one, that the injury to the business has to be a result of some physical alteration or effect on the property.