US courts agree Covid-19 is not covered in BI cases

In two decisions issued on 22 April the Iowa Supreme Court held claims for Covid-19-related loss of use do not constitute covered “direct physical loss of or damage to property”.The decision came a day after the Supreme Judicial Court of Massachusetts also backed insurers in a business interruption case.

In  Wakonda Club v Selective Insurance Company of America, the Iowa Supreme Court interpreted “direct physical loss of or damage to property” as a matter of first impression. Reasoning the term “physical” “has to mean something”, the court held Iowa law requires there to be a “physical aspect to the loss of the property to satisfy the requirement for a ‘direct physical loss of or damage to property’”.