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DC Judge Rules COVID-19 Closure Orders Not "Physical Loss"

A District of Columbia judge ruled against a group of restaurants on Thursday and said civil authority shutdown orders did not constitute a "direct physical loss" sufficient to trigger policy coverage.


Judge Kelly A. Higashi sided with Erie Insurance Exchange in a suit led by Rose's 1 LLC, which owns and operates several restaurants in the city, letting the insurer off the hook for the losses the restaurants suffered when they had to close their doors.


In response to the argument that the loss is "physical" because COVID-19 is "material," and that the loss resulted from the orders rather than "abstract mental phenomenon" like irrational fear, the judge wrote that the restaurants offered no evidence the virus was present in the insured properties, and the mayor's orders didn't have any effect on the physical structure of the properties.

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