In the second federal appellate ruling on Covid-19 business losses, the Eleventh Circuit has joined the Eighth Circuit in holding that they do not trigger coverage because they do not involve “physical loss” or “physical damage” to property. In Gilreath Family & Cosmetic Dentistry Inc. v. Cincinnati Insurance Co., No. 21-11046, Slip. Op. (11th Cir. Aug. 31, 2021), the insured dentistry practice canceled routine and elective dental procedures at the beginning of the Covid-19 pandemic in response to state orders and CDC recommendations. Because these procedures made up the bulk of its business, the insured lost a substantial portion of its usual income. To recover that lost income, the insured filed a claim for business interruption coverage with its insurer.

The policy at issue provided “Business Income” and “Extra Expense” coverage for income lost “due to the necessary ‘suspension’” of the insured’s operations and for extra expenses it sustained during that suspension, but only if the suspension and expenses resulted from “direct ‘loss’ to property” at the insured premises, and only if that “loss” resulted from a “Covered Cause of Loss.” The policy defined “Covered Cause of Loss” as a “direct ‘loss’” not excluded or limited under the policy, and “loss” as “accidental physical loss or accidental physical damage.” The policy also provided “Civil Authority” coverage for business losses and extra expenses sustained as a result of a civil authority order prohibiting access to the insured’s practice when physical damage occurs to property in the area immediately surrounding the insured’s premises.