Eleventh Circuit Dismisses COVID
Coverage Suits for Lack of Physical Damage

June 6, 2022

The Eleventh Circuit has issued an opinion dismissing lawsuits filed against Certain Underwriters from Lloyd’s of London, Aspen Specialty Insurance Company, and other insurers by businesses seeking coverage for COVID-19 losses.  In reaching its decision, the court found the policies at issue expressly required there to be “direct physical loss of or damage to” property, meaning some tangible change to the property, and the businesses failed to show they suffered such physical damage from the virus.  The decision is SA Palm Beach, LLC v. Certain Underwriters at Lloyd’s London, et al., (11th Cir. May 5, 2022).  Florida’s Third District Court of Appeal recently reached a similar decision in Commodore v. Certain Underwriters at Lloyd’s London, et al., 2022 WL 1481776 (Fla. 3d DCA May 11, 2022), finding “direct physical loss” required some tangible alteration to insured property and there was no coverage for loss of use based on intangible harm to the property due to COVID-19 and the closure orders issued by state and local authorities. With these two decisions, there is now binding precedent at both the federal and state levels dismissing COVID-relating coverage suits, and the issue will be considered by the Fourth DCA soon.

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