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11th Circuit Holds Presence of Covid-19 Is Not Property Damage

In Frontier Development, LLC v. Endurance American Specialty Insurance Co., case number 21-13449 (11th Cir. Jun. 1, 2022), the Eleventh Circuit reaffirmed its holding that the presence of COVID-19 does not constitute “direct physical loss or damage” to property triggering coverage under an all risk property insurance policy. The plaintiff, a commercial landlord, sought damages for lost rental value caused by the closure and suspension of its tenants’ businesses during the pandemic, and alleged that the presence of COVID-19 damaged its property by preventing plaintiff from using the property, denying employees and customers access to the property, and rendering the property physically uninhabitable. Based on its opinion in SA Palm Beach, LLC v. Certain Underwriters at Lloyd’s London, 32 F.4th 1347 (11th Cir. 2022), the court affirmed the dismissal of plaintiff’s complaint, holding that the complaint failed to plausibly allege damage to the property required to trigger coverage. The court noted that “direct physical loss or damage” requires “tangible alteration of the insured property,” and that an item or structure that merely needs to be cleaned has not suffered a “loss” which is both “direct” and “physical.”

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