Sandy Point Dental, P. C. v. The Cincinnati Insurance Co.

Dist. Ct. did not err in dismissing plaintiffs-insureds’ insurance claims for losses incurred by plaintiffs’ businesses arising from either closure or scaling back of said businesses that stemmed from series of executive orders from Gov. Pritzker in effort to curb spread of COVID-19 virus. Instant policies provided coverage for income losses sustained on account of suspension of operations caused by “direct physical loss” to covered property, and Dist. Ct. based dismissals on fact that plaintiffs did not adequately allege that either COVID-19 virus or resulting closure orders caused “direct physical loss” to their business properties. Ct. of Appeals, in affirming instant dismissals, found that loss of use of property that is unaccompanied by any physical alteration to property may not constitute “direct physical loss” for purposes of collecting under instant policies. This is so, Ct. of Appeals reasoned, where plaintiffs failed to allege that presence of virus or closure orders physically altered their properties.