Firebirds International, LLC v. Zurich American Insurance Co.

2022 IL App (1st) 210558 (Ill. App., 2022)

Words & Phrases

Fire Insurance: Business Interruption Covid Cases

Trial Judge

Michael T. Mullen

Appellate Judge

Harris

Holding

Plaintiff's business losses due to the Covid-19 pandemic were not covered because they were not "physical" losses or damages.

Fact Summary

Firebirds owns more than 50 wood fired grill restaurants in 19 states. In order to curb the spread of COVID-19, the government in each of those 19 states issued orders prohibiting restaurants from offering dine-in service. Firebirds' restaurants also incurred additional expenses to clean, sanitize, repair, alter, and modify the premises in order to keep their employees and patrons safe. Firebirds alleged that the actual presence of the virus in its restaurants caused property loss or damage. Also, as a result of the pandemic, Firebirds' restaurants have had their "gross revenues destroyed."

At the time, Firebirds possessed two identical, all-risk commercial property insurance policies issued by Zurich. These policies insured "against direct physical loss of or damage caused by a Covered Cause of Loss to Covered Property..." 

Firebirds submitted a claim under the policies, seeking coverage for the significant losses incurred by their restaurants. Zurich, however, denied Firebirds' claim because the COVID-19 did not constitute a "direct physical loss or damage to property." Zurich also denied coverage based on the contamination exclusion contained in the policies.

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