Court rules against Florida businesses over COVID-19 insurance coverage


A federal appeals court on Thursday rejected arguments by Florida restaurants and a furniture retailer that insurance policies should have covered losses resulting from closures at the start of the COVID-19 pandemic.

The 34-page decision in four consolidated cases came after a flood of claims and litigation across the country from companies that had to temporarily shut down or scale back operations in 2020 due to government orders.

A three-judge panel of the 11th United States Circuit Court of Appeals, based in Atlanta, ruled that under Florida law, “there is no coverage because COVID-19 has not caused any tangible alteration of the insured properties”.

The decision came in cases filed against various insurers by SA Palm Beach, LLC, a restaurant operator in Palm Beach; Emerald Coast Restaurants, Inc., an operator of restaurants and sports bars in Destin; Rococo Steak, LLC, a restaurateur in St. Petersburg; and RTG Furniture Corp., a Seffner-based operator of the Rooms To Go furniture chain.

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Arguments centered on whether all-risk commercial insurance policies should cover pandemic-related losses and expenses. The appeals court focused heavily on the parts of the policies that required coverage for “direct physical loss” or property damage.

The panel said the businesses alleged, in part, that the COVID-19 closure orders barred access to their properties, causing stores to lose “normal use and function.” The court cited other cases from across the country to reject the companies’ arguments.

“As far as we can tell, all federal and state appellate courts that have decided on the meaning of ‘physical loss or damage’ of property (or similar language) in the context of the COVID-19 pandemic 19 came to the same conclusion and found that a tangible change in ownership was necessary,” said the decision, written by Justice Adalberto Jordan and joined by Chief Justice William Pryor and Justice R. Lanier Anderson. “So there is no coverage for loss of use based on tangible and intangible property damage due to COVID-19 and the shutdown orders that have been issued by state and local authorities, even if the property has been rendered temporarily unsuitable for its intended use.”

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The decision also rejected arguments by Rococo Steakhouse and the Rooms To Go chain that they suffered damage due to the presence of COVID-19 in the buildings. The court said, for example, that the furniture retailer’s “need to clean or sanitize stores to get rid of COVID-19 does not constitute direct physical loss or damage under Florida law.”

The panel, however, referred a matter to a lower court for further consideration in the Emerald Coast Restaurants case. This question was about coverage for “spoilage” of food.


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