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State of New York

Court of Appeals

OPINION

This opinion is uncorrected and subject to revision 

before publication in the New York Reports.

No. 7 

Consolidated Restaurant 

Operations, Inc.,

 Appellant,

 v.

Westport Insurance Corporation,

 Respondent.

Robin L. Cohen, for appellant. 

Aidan M. McCormack, for respondent.

Chefs’ Warehouse Inc. et al., United Policyholders, American Property Casualty 

Insurance Association et al., Metropolitan Transportation Authority et al., Medical 

Society of the County of Erie, Envision Healthcare Operating, Inc., American Museum of 

Natural History, New York State Trial Lawyers Association, Caesars Entertainment, Inc., 

amici curiae.

HALLIGAN, J.:

This appeal presents the question of whether allegations that SARS-Co-V-2, the 

virus that causes COVID-19 (“coronavirus” or “virus”), was present in insured restaurants 

and resulted in cessation of in-person dining services and related business interruption 
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losses are sufficient to state a claim for “direct physical loss or damage,” as that phrase is 

used in plaintiff’s property insurance policy. We hold that direct physical loss or damage 

requires a material alteration or a complete and persistent dispossession of insured 

property, which petitioner has not alleged. We therefore affirm the order below dismissing 

the complaint.

I.

Consolidated Restaurant Operations (CRO), a company that owns and operates 

dozens of restaurants, obtained from Westport Insurance Corporation (Westport) an “allrisk” commercial property insurance policy covering the period from July 1, 2019 through 

July 1, 2020. Subject to certain exclusions, the policy insured “all risks of direct physical 

loss or damage to insured property” and business interruption losses “directly resulting 

from direct physical loss or damage” to insured property. The policy is governed by New 

York law under its express terms.

Beginning in late 2019 and early 2020, the spread of the coronavirus led to a global 

pandemic with devastating impacts worldwide. In addition to the severe consequences for 

human health and mortality, many business owners and the economy at large suffered 

tremendously. According to a report by the World Bank, the COVID-19 pandemic 

triggered “the largest global economic crisis in more than a century” (The World Bank, 

World Development Report 2022: Finance for an Equitable Recovery at 1, 

https://openknowledge.worldbank.org/bitstream/handle/10986/36883/9781464817304.pd

f).
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CRO, like many businesses directly serving the public, sustained a significant 

reduction in revenue during the pandemic. In its original complaint, CRO alleged that it 

was forced to suspend or substantially curtail its operations due to the presence of the 

coronavirus in its restaurants and government restrictions on nonessential businesses. CRO 

sought coverage for the ensuing loss of revenue and, after Westport denied coverage, 

commenced this action seeking a declaration as to Westport’s obligations under the policy 

and damages for breach of contract. Westport moved to dismiss for failure to state a cause 

of action, arguing that CRO could not establish that the coronavirus caused “direct physical 

loss or damage” to its properties as a matter of law.

Supreme Court declared that the policy did not cover CRO’s alleged losses and 

granted Westport’s motion to dismiss. Relying upon the construction of identical policy 

language in Roundabout Theatre Co. v Continental Cas. Co. (302 AD2d 1 [1st Dept 2002]) 

and Northwell Health, Inc. v Lexington Ins. Co. (550 F Supp 3d 108 [SD NY 2021]), the 

court acknowledged that the alleged cause of CRO’s business interruption was something 

physical—the coronavirus. Supreme Court concluded, though, that CRO had not alleged 

that its premises were “uninhabitable” or in need of repair or replacement, and thus had not 

adequately alleged a resulting physical loss or damage to insured property. The court later 

denied as futile that part of a motion in which CRO sought leave to amend its complaint.

The Appellate Division affirmed the first Supreme Court order and that part of the 

subsequent order denying leave to amend the complaint (205 AD3d 76, 87 [1st Dept 

2022]). The court first considered the meaning of the phrase “direct physical loss or 

damage,” which it had interpreted in Roundabout “to mean something that directly happens 
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to the property resulting in physical damage to it” (205 AD3d at 82, citing Roundabout, 

302 AD2d 1). It concluded that Roundabout was “factually distinguishable” (Roundabout

involved a wholly exogenous event—a street closure—and no allegations of a physical 

substance on the insured premises) but still “a useful starting point” (id.). The court noted 

that numerous federal and state court cases had applied both New York law and the law of 

other states to hold that the terms “direct” and “physical,” as they relate to “damage or loss 

to property,” require “a direct physical loss of property, not simply the inability to use it” 

(id. at 83-85). The court concluded that “the plain meaning of ‘physical’ as commonly 

understood, requires some tangible alteration of the property,” reasoning that “the words 

‘direct’ and ‘physical’ modify or qualify the phrase ‘loss or damage’ to require a showing 

of actual, demonstrable physical harm of some form to the insured premises” (id. at 84, 

85).

Turning to the pleadings, the Appellate Division held that CRO’s allegations that 

the coronavirus physically altered its properties were too “conclusory” to withstand a 

motion to dismiss (id. at 83). CRO had not identified “any physical change, transformation, 

or difference in any of its property,” the court observed, and absent such allegations, the 

complaint failed to state a cause of action (id. at 86). CRO’s “statement that [coronavirus] 

particles and droplets damage property is merely a conclusion that will not save the 

complaint from dismissal” (id.). Nor would the proposed amended complaint require a 

different result, the court determined, because it “failed to identify any physical change, 

transformation, or difference in any of its property” (id.). The court concluded that because 

“[t]he additional facts that [CRO] seeks to add” in its proposed amended complaint “do not 
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remedy” the pleading “defect,” the motion for leave to amend was properly denied (id. at 

87).

This Court granted CRO leave to appeal from the Appellate Division order to the 

extent that it affirmed dismissal of the complaint and granted judgment in favor of Westport 

(see 39 NY3d 943 [2022]).1

II.

As with any motion to dismiss, we must give CRO’s pleadings “a liberal 

construction, take the allegations of the complaint as true and provide plaintiff the benefit 

of every possible inference” (EBC I Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]; 

see also CPLR 3026 [directing that “(p)leadings shall be liberally construed” and “(d)efects 

shall be ignored if a substantial right of a party is not prejudiced”]). A motion to dismiss 

“must be denied if from the pleadings’ four corners ‘factual allegations are discerned which 

taken together manifest any cause of action cognizable at law’ ” (511 W. 232nd Owners 

Corp v Jennifer Realty Co., 98 NY2d 144, 152 [2002]). Furthermore, to prevail on a 

motion to dismiss based on documentary evidence, “the moving party (here, the Insurers) 

must establish that the documentary evidence ‘conclusively refutes’ the plaintiff’s 

 1 Because CRO sought leave to amend its complaint in a motion that postdated the August 

2021 judgment, the Appellate Division order, insofar as it affirmed that part of Supreme 

Court’s September 2021 order denying leave to amend, is nonfinal and hence 

nonappealable to this Court. Accordingly, we granted leave to appeal only in part, and we 

dismissed CRO’s motion for leave to appeal, on finality grounds, from so much of the 

Appellate Division order as resolved the appeal from Supreme Court’s September 2021 

order (see 39 NY3d 943). Any issues relating to the proposed amended complaint are 

therefore not properly before us.
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allegations” (J.P. Morgan Sec. Inc. v Vigilant Ins. Co., 21 NY3d 324, 334 [2013], quoting 

AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 591 [2005]).

Under New York law, insurance contracts are construed by applying general 

principles of contract interpretation (see Universal Am. Corp. v National Union Fire Ins. 

Co. of Pittsburgh, Pa., 25 NY3d 675, 680 [2015]). A contractual provision is unambiguous 

if its language has “a definite and precise meaning, unattended by danger of misconception 

in the purport of the policy itself, and concerning which there is no reasonable basis for a 

difference of opinion” (Breed v Insurance Co. of N. Am., 46 NY2d 351, 355 [1978]). 

Unambiguous provisions of an insurance contract, like any contract, “must be given their 

plain and ordinary meaning, and the interpretation of such provisions is a question of law 

for the court” (Universal Am. Corp., 25 NY3d at 680, quoting Vigilant Ins. Co. v Bear 

Stearns Cos., Inc., 10 NY3d 170, 177 [2008] [internal quotation marks omitted]). On the 

other hand, “any ambiguity must be construed in favor of the insured and against the 

insurer” (White v Continental Cas. Co., 9 NY3d 264, 267 [2007]).

CRO advances two primary arguments for reversal and reinstatement of its 

complaint. It first contends that the Appellate Division erred in interpreting “direct 

physical loss or damage” to require “tangible, ascertainable damage, change or alteration 

to the property” because that formulation, according to CRO, does not give the words 

“physical loss” independent meaning. CRO would have us read the phrase more broadly, 

to encompass situations where a physical event occurs on insured property and impairs its 

functionality or renders it, in whole or in part, unusable for its intended purpose. Second, 

CRO argues that even if the policy is read to require physical alteration to its property, it 
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alleged as much. Westport disputes each of these points, and further argues that coverage 

was independently barred by several exclusions in the policy. We hold that “direct physical 

loss or damage” requires a material alteration or a complete and persistent dispossession 

of insured property, which CRO did not allege. Because we conclude that the policy thus 

does not cover CRO’s claims, we do not reach the question of whether the policy exclusions 

are triggered here.

A.

The first question before us is what the relevant provisions of the insurance policy 

mean. CRO’s all-risk commercial property insurance policy provides in relevant part that 

it “insures all risks of direct physical loss or damage to INSURED Property while on 

INSURED LOCATION(S) . . . .” Insured property is defined to include both real property 

and personal property owned by CRO. The policy also insures against business 

interruption, referred to as “TIME ELEMENT loss,” “during the Period of Liability 

directly resulting from direct physical loss or damage insured by this POLICY to 

INSURED PROPERTY at INSURED LOCATION(S) . . . .” The period of liability “for 

building and equipment” is defined as “the period of time” “[s]tarting on the date of 

physical loss or damage insured by this POLICY to INSURED PROPERTY,” and 

“[e]nding when with due diligence and dispatch the building and equipment could be 
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repaired or replaced with current materials of like size, kind and quality and made ready 

for operations; . . . .”2

To interpret the phrase in question, we begin with each of its constituent words (see

Universal Am. Corp., 25 NY3d at 680-681 [utilizing dictionary definitions of constituent 

words to construe undefined policy phrase]). Direct means “marked by absence of an 

intervening agency, instrumentality, or influence” (Merriam-Webster.com Dictionary, 

direct [https://www.merriam-webster.com/dictionary/direct]). Physical means “[o]f, 

relating to, or involving material things; pertaining to real, tangible objects” (Black’s Law 

Dictionary [11th ed 2019], physical). Loss means “[t]he failure to maintain possession of 

a thing” (Black’s Law Dictionary [11th ed 2019], loss; accord Wilson v USI Ins. Serv. LLC, 

57 F4th 131, 141-142 [3d Cir 2023]; Terry Black’s Barbecue, L.L.C. v State Auto. Mut. 

Ins. Co., 22 F4th 450, 456 [5th Cir 2022]; Santo’s Italian Café LLC v Acuity Ins. Co., 15 

F4th 398, 401 [6th Cir 2021]; Estes v Cincinnati Ins. Co., 23 F4th 695, 700 [6th Cir 2022]), 

and “damage” means the “loss or harm resulting from injury to person, property, or 

reputation” (Merriam-Webster.com Dictionary, damage [https://www.merriamwebster.com/dictionary/damage]; accord Wilson, 57 F4th at 142; Uncork & Create LLC v 

Cincinnati Ins. Co., 27 F4th 926, 932 [4th Cir 2022]). And because the words “direct” and 

“physical” both modify the phrase “loss or damage,” we read the phrase “direct physical 

 2 CRO notes that it purchased additional coverage for the “reasonable and necessary costs 

incurred” for “cleanup, removal[,] and disposal of the actual not suspected presence of 

COMMUNICABLE DISEASES” if property use was limited, restricted, or prohibited by 

a government order or company officer, but CRO’s complaint did not seek coverage under 

this provision, which was capped at $250,000 annually.
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loss or damage” to mean “direct physical loss” or “direct physical damage” (see Starr 

Surplus Lines Ins. Co. v Eighth Jud. Dist. Ct. in and for County of Clark, — Nev — , —,, 

535 P3d 254, 261 [2023] [“In the phrase ‘direct physical loss or damage,’ both ‘direct’ and 

‘physical’ function as prepositive modifiers giving meaning to “loss” and “damage” 

individually”]).

“Physical damage” must be understood to require a material physical alteration to 

the property—one that is perceptible, even if not visible to the naked eye (accord 

Huntington Ingalls Indus., Inc. v Ace Am. Ins. Co., 287 A3d 515, 527-528, 2022 VT 45, ¶ 

26 [2022]). CRO contends that it has alleged a material physical alteration—specifically, 

the presence of the coronavirus at its restaurants. For the reasons set forth in Point II.B 

below, we disagree. 

Turning to “direct physical loss,” CRO argues that this phrase encompasses 

impaired functionality and either a partial or complete loss of use for a limited period of 

time. That reading is untenable, though, because it would collapse coverage for “direct 

physical loss” into coverage for “loss of use” (see Northwell Health, 550 F Supp 3d at 117; 

cf. Schlamm Stone & Dolan, LLP v Seneca Ins. Co., 6 Misc. 3d 1037[A], 2005 NY Slip Op 

50324[U], *4 [Sup Ct, NY County 2005] [interpreting insurance policy that defines 

“property damage” to include “loss of use of tangible property which has not been 

physically injured or destroyed”]; 10A Steven Plitt et al., Couch on Insurance § 148:47 [3d 

ed June 2020] [discussing insurance policy that defines “property damage” to include “loss 

of use of tangible property which has not been physically injured or destroyed”]). 

“[L]osing a thing is conceptually different than losing the functional use of that thing for a 
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period of time” (Tapestry, Inc. v Factory Mut. Ins. Co., 482 Md 223, 244, 286 A3d 1044 

[2022]; see also Chief of Staff LLC v Hiscox Ins. Co. Inc., 532 F Supp 3d 598, 602 [ND Ill 

2021]; Santo’s, 15 F4th at 402). To take a practical example, forgetting the password to 

unlock one’s phone is quite different than losing possession of it entirely because it has 

been stolen or inadvertently left somewhere. “This distinction is clear enough that had the 

parties intended the policy to cover a loss of use of property, they would have said so 

explicitly” (Terry Black’s, 22 F4th at 457-458). “Direct physical loss” thus requires more 

than loss of use; it requires an actual, complete dispossession. 

Our reading is bolstered by other provisions in CRO’s policy. The “Time Element” 

provision provides coverage for “TIME ELEMENT loss, during the Period of Liability, 

directly resulting from direct physical loss or damage . . . to the INSURED PROPERTY.” 

Thus, the insured must suffer direct physical loss that in turn causes “time element” (i.e., 

business interruption) losses. Reading “direct physical loss” to include loss of use is 

circular and fails to give distinct meaning to the two concepts (see Tapestry, 482 Md 223, 

245, 286 A3d 1044, 1056-1057; Verveine Corp. v Strathmore Ins. Co., 489 Mass 534, 541 

184 NE3d 1266, 1274 [2022]). Additionally, the period of liability provision references 

the time for “repair[ing]” or “replac[ing]” buildings and equipment and restoring them to 

“the same or equivalent physical and operating conditions that existed immediately prior 

to such physical loss or damage,” and similarly, the time element coverage provision 

requires the insured to act with due diligence in “repairing or replacing physically damaged 

buildings and equipment.” The words “repair” and “replace” are fairly read to contemplate 

physical damage to or complete and persistent dispossession of the insured property, rather 
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than loss of use of it. Thus, construing “direct physical loss or damage” to require physical 

damage or complete and persistent dispossession harmonizes the relevant provisions of the 

policy (accord Uncork & Create LLC, 27 F4th at 932 & n 9; Sandy Point Dental, P.C. v 

Cincinnati Ins. Co., 20 F4th 327, 333 [7th Cir 2021]; Oral Surgeons, P.C. v Cincinnati Ins. 

Co., 2 F4th 1141, 1144 [8th Cir 2021]; Mudpie, Inc. v Travelers Cas. Ins. Co. of Am., 15 

F4th 885, 892 [9th Cir 2021]; Goodwill Indus. of Cent. Oklahoma, Inc. v. Philadelphia 

Indem. Ins. Co., 21 F4th 704, 711 [10th Cir 2021]; SA Palm Beach, LLC v Certain 

Underwriters at Lloyd’s London, 32 F4th 1347, 1361-1362 [11th Cir 2022]; Tapestry, 482 

Md at 244-246, 286 A3d at 1056-1057; see also Newman Myers Kreines Gross Harris, 

P.C. v Great N. Ins. Co., 17 F Supp 3d 323, 332 [SD NY 2014] [“construing ‘direct physical 

loss or damage’ to require actual, physical damage to the insured premises gives effect to 

all provisions of the Policy”]).3

CRO invokes Western Fire Ins. Co. v First Presbyterian Church (165 Colo 34, 437 

P2d 52 [1968]) and various subsequent cases which hold that loss of a premises’ use due 

to infiltration of gasoline, fumes, or a similar substance constitutes “direct physical loss.”4 

 3 CRO notes that its policy lacks a “virus exclusion,” but that does not confer 

coverage. CRO also points out that its policy excludes certain invisible, noxious 

substances (e.g., microorganisms and contaminants), but “exclusion clauses subtract from 

coverage rather than grant it’’ (Raymond Corp. v National Union Fire Ins. Co. of 

Pittsburgh, Pa., 5 NY3d 157, 163 [2005] [citation omitted]).

4 Some of the decisions CRO cites for this proposition suggest there has been some element 

of physical damage to the property itself (see e.g. Essex Ins. Co. v BloomSouth Flooring 

Corp., 562 F3d 399, 404-405 [1st Cir 2009] [“the presence of a permeating odor” caused 

“physical injury to property”]; Gregory Packaging, Inc. v Travelers Prop. Cas. Co. of Am., 

2014 WL 6675934, *5, 2014 US Dist LEXIS 165232, *13-15 [D NJ Nov. 25, 2014, Civ. 
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The rationale of these decisions appears to be that total uninhabitability is akin to physical 

dispossession, and thus to “direct physical loss” (see e.g. Western Fire, 165 Colo at 38-40, 

437 P2d at 55; Sandy Point Dental, 20 F4th at 334 [“the gas infiltration (in Western Fire) 

. . . was so severe that it led to complete dispossession—something easily characterized as 

a ‘direct physical loss’ ”]; Wilson, 57 F4th at 142 [insured “must show that the 

functionalities of their properties were nearly eliminated or destroyed, that the structures 

were made useless or uninhabitable, or that there was an imminent risk of either of those 

things happening”]; cf. Huntington, 287 A3d 515, 2022 VT 45 [suggesting in dicta that 

deprivation of use is “direct physical loss,” but resolving case based on allegations of 

“direct physical damage”]). In general, these cases have found coverage only where 

physical contamination is “persistent” and complete—i.e., contamination that 

“eliminate[s]” “the function of the building” (Kim-Chee LLC v Philadelphia Indem. Ins. 

Co., 535 F Supp 3d 152, 161 [WD NY 2021], affd 2022 WL 258569, 2022 US App LEXIS 

2655 [2d Cir, Jan. 28, 2022, 21-1082-cv]). Other decisions have reached the opposite 

result, though, holding that “direct physical loss or damage” requires a physical alteration, 

not just contamination to the point of uninhabitability (see Uncork & Create, 27 F4th at 

932 & n 9; accord 10A Couch on Insurance § 148:46).

 

No. 2:12-CV-04418 (WHW)(CLW)] [relying on precedent involving physical damage]). 

Others provide insufficient factual detail to understand the basis for the court’s conclusion 

(see e.g. Farmers Ins. Co. of Or. v Trutanich, 123 Or App 6, 10, 858 P2d 1332, 1335[Or 

1993] [“pervasive odor” is “physical” because it “damaged” house]; Sentinel Mgt. Co. v 

New Hampshire Ins. Co., 563 NW2d 296, 300-301 [Minn 1997] [asbestos contamination 

may result in “direct physical loss,” even though buildings were not uninhabitable]).
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CRO cites several cases applying New York law, but upon close reading, they do 

not shed much light on this question. Schlamm Stone held that the presence of post-9/11 

noxious particles in the air and on surfaces constituted “property damage,” but that is 

“direct physical damage,” not “direct physical loss,” and the policy there explicitly defined 

“property damage” to include “loss of use of tangible property which has not been 

physically injured or destroyed” (2005 NY Slip Op 50324[U], *4). In Port Authority, the 

Third Circuit reasoned that elimination of a property’s “function” or “utility” due to 

asbestos contamination could trigger coverage for “physical loss,” but offered no specific 

decisional support for its conclusion (Port Auth. of New York & New Jersey v Affiliated 

FM Ins. Co., 311 F3d 226, 236 [3d Cir 2002]).

Because CRO has alleged neither persistent contamination nor total uninhabitability 

of its restaurants, we need not decide today whether such allegations could fairly be equated 

with actual material dispossession, and thus “direct physical loss” (cf. Sandy Point, 20 F4th 

at 334 [“This is not to say that no circumstances can exist under which a loss of use, 

unaccompanied by any physical alteration to property, might be so pervasive as effectively 

to qualify as a complete physical dispossession of property and thus a ‘direct physical loss.’ 

. . . We leave these questions for another day”]; Santo’s, 15 F4th at 401 [“Correctly decided 

or not, these cases (involving coverage for uninhabitable property) stand a significant step 

removed from today’s dispute. (Plaintiff) has not alleged that its property is unusable or 

uninhabitable”]). 

Indeed, CRO’s complaint makes clear that neither of those conditions is met. 

Although the complaint alleges that the coronavirus rendered its restaurants “unusable” 
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such that it had to “suspend[ ] or severely curtail[ ] [its] operations” and “limit[ ] [its] onpremises dining and operations,” it does not allege a complete shutdown—for example, 

that its employees could not enter the restaurants or that they could not provide take-out 

and delivery services. And while CRO alleges that it was “forced to close 30 restaurants,” 

nowhere does it allege that those closures were because the properties themselves were 

contaminated to the point of uninhabitability, as opposed to prudent economic decisions in 

light of lost “foot-traffic.” Even if we were to generously construe the complaint to allege 

that the presence of the coronavirus prompted various remediation efforts (e.g. adding 

physical partitions at its restaurants, increasing the distance between tables, and 

implementing stringent cleaning procedures), as does the proposed amended complaint, 

that would not yield a different result. These efforts, even if useful to facilitate in-person 

dining, do not establish that the restaurants were completely uninhabitable until property 

was repaired or replaced (see Starr Surplus Lines, 535 P3d at 261 [“social-distancing, 

plexiglass installation, sanitizing mechanisms, and regular cleaning . . . do not aim to 

‘repair, rebuild, or replace’ the property; they aim to redress the way people pose harm to 

one another by carrying and transmitting the virus at the property”] [cleaned up]). Nor 

does CRO allege a permanent impact; its complaint alleges only that the coronavirus “can 

survive on surfaces for days and even weeks.” These allegations do not amount to 

persistent and complete uninhabitability.

Our reading of the phrase “direct physical loss or damage” is consistent with that 

applied by federal courts in COVID-19 insurance coverage cases governed by New York 

law (see e.g. 10012 Holdings, Inc. v Sentinel Ins. Co., 21 F4th 216, 221 [2d Cir 2021] 
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[noting that court had identified “no contrary authority in New York that diverges from the 

holding in Roundabout, which state and federal courts in New York have (at either the 

motion to dismiss stage or on summary judgment) uniformly applied since the start of the 

COVID-19 pandemic to deny coverage under similar insurance provisions where the 

insured property itself was not alleged or shown to have suffered direct physical loss or 

physical damage”]; Kim-Chee, 2022 WL 258569, *2, 2022 US App LEXIS 2655, *4-5; 

Northwell Health, 550 F Supp 3d at 117).

Our conclusion also accords with the views of other jurisdictions across the country, 

notwithstanding variation in their precise understandings of the term “direct physical loss 

or damage.” To our knowledge, in cases that allege loss of use due to COVID-19-related 

government shutdown orders, no appellate court has allowed an insurance coverage claim 

under similar policy terms to proceed past a motion to dismiss. And the outcomes have 

been no different where the alleged loss of use was due to the presence of the coronavirus 

on insured property (see e.g. Colectivo Coffee Roasters, Inc. v Society Ins., 401 Wis 2d 

660, 974 NW2d 442 [2022]; Verveine Corp. v Strathmore Ins. Co., 489 Mass 534, 184 

NE3d 1266 [2022]; Indiana Repertory Theatre v Cincinnati Cas. Co., 180 NE3d 403 [Ind 

Ct App 2022]; Tapestry, Inc. v Factory Mutual Ins. Co. 482 Md 223, 286 A3d 1044 [2022]; 

Schleicher & Stebbins Hotels, LLC v Starr Surplus Lines Ins. Co., 175 NH 744, 302 A3d 

67 [2023]; Starr Surplus Lines Ins. Co. v Eighth Jud. Dist. Ct. in & for Cnty. of Clark, —

Nev —, 535 P3d 254 [2023]; Neuro-Communication Servs., Inc. v Cincinnati Ins. Co., 171 

Ohio St 3d 606, 219 NE3d 907 [2022]; Legal Sea Foods, LLC v Strathmore Ins. Co., 36 

F4th 29 [1st Cir 2022]; Wilson v USI Ins. Serv. LLC, 57 F4th 131 [3d Cir 2023]; Uncork 
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& Create LLC v Cincinnati Ins. Co., 27 F4th 926 [4th Cir 2022]; Bridal Expressions LLC 

v Owners Ins. Co., 2021 WL 5575753, 2021 US App LEXIS 35676 [6th Cir, Nov. 30, 

2021, Case No. 21-3381]; Sandy Point Dental, P.C. v Cincinnati Ins. Co., 20 F4th 327 [7th 

Cir 2021]; Olmsted Med. Ctr. v. Cont’l Cas. Co., 65 F4th 1005 [8th Cir 2023]; Circus 

Circus LV, LP v AIG Specialty Ins. Co., 2022 WL 1125663, 2022 US App LEXIS 10298 

[9th Cir, Apr. 15, 2022, No. 21-15367]; Sagome, Inc. v Cincinnati Ins. Co., 56 F4th 931 

[10th Cir 2023]; SA Palm Beach, LLC v Certain Underwriters at Lloyd’s London, 32 F4th 

1347 [11th Cir 2022]; cf. Huntington Ingalls Indus., Inc. v Ace Am. Ins. Co., 287 A3d 515, 

2022 VT 45 [2022] [resolving appeal on theory of “direct physical damage” and thus not 

reaching question of whether complaint alleged “direct physical loss”]).

B.

CRO next argues that even if “direct physical loss or damage” requires a physical 

alteration of property, they have sufficiently alleged that. We disagree. The complaint 

contains minimal allegations about the presence of the coronavirus in CRO’s restaurants. 

While the complaint offers some details about how an infectious virus is transmitted from 

surfaces to humans, it alleges nothing specific about how the presence of the coronavirus 

might affect the physical integrity of structures or property. The complaint states that 

“droplets carrying the virus . . . are physical objects that attach to and cause harm to 

property,” and that the coronavirus “is resilient and can survive on surfaces for days and 

even weeks.” Without elaboration, CRO further alleges that “[t]he virus thus compromises 

the physical integrity of the structures it permeates and poses an imminent risk of physical 

damage to all other structures.” But CRO does not allege there was any need to repair or 
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replace insured property; only business interruption losses are identified. Other allegations 

in the complaint concern the risk that the coronavirus poses to humans, not property. And 

even as to whether the coronavirus was actually present in its restaurants, CRO offered 

contradictory allegations, stating in its complaint that “the virus might not actually be 

present at the Restaurants.” Even generously construed to allege that various surfaces in 

the restaurants became vectors for transmission of the coronavirus, CRO “fails to identify 

. . . a single item that it had to replace, anything that changed, or that was actually damaged 

at any of its properties” (205 AD3d 76, 86). As the Appellate Division found, “[n]othing 

stopped working” (id.). And the allegations themselves confirm that the presence of the 

coronavirus was temporary.

Our conclusion is in line with Northwell Health, which similarly involved 

allegations that virus droplets stay on surfaces, compromise the physical integrity of the 

structures they permeate, and render them unusable (550 F Supp 3d at 117). Those 

allegations, the court held, did not support the conclusion “that the coronavirus 

compromises the physical integrity of objects by harming surfaces and structures, as 

opposed to harming the people who touch them” and thus failed to state a claim (id.). 

Countless decisions across the country have likewise dismissed similar property insurance 

claims involving allegations that the presence of the coronavirus damaged insured property 

(see e.g. Kim-Chee LLC v Philadelphia Indem. Ins. Co., 535 F Supp 3d 152, 161 [WD NY 

2021], affd 2022 WL 258569, 2022 US App LEXIS 2655 [2d Cir, Jan. 28, 2022, 21-1082-

cv]; Jeffrey M. Dressel, D.D.S., P.C. v Hartford Ins. Co. of the Midwest, Inc., 2021 WL 

1091711, 2021 US Dist LEXIS 54067 [ED NY, Mar. 22, 2021, 20-CV-
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2777(KAM)(VMS)]; Verveine Corp. v Strathmore Ins. Co., 489 Mass 534, 184 NE3d 1266 

[2022]; Tapestry, Inc. v Factory Mutual Ins. Co. 482 Md 223, 286 A3d 1044 [2022]; Bridal 

Expressions LLC v Owners Ins. Co., 2021 WL 5575753, 2021 US App LEXIS 35676 [6th 

Cir, Nov. 30, 2021, Case No. 21-3381]; SA Palm Beach, LLC v Certain Underwriters at 

Lloyd’s London, 32 F4th 1347 [11th Cir 2022]). 

Indeed, CRO has not identified, nor have we discovered, any state or federal 

decision that has found coverage for COVID-19-related business interruption under a 

policy similar to CRO’s (see e.g. Oregon Clinic, PC v Fireman’s Fund Ins. Co., 75 F4th 

1064, 1071 [9th Cir 2023] [noting that dismissal of a COVID-19 coverage claim for failure 

to adequately allege physical alteration is “consistent with the conclusion reached in more 

than 800 cases nationwide, including decisions from the federal courts of appeal and state 

supreme courts”]), and it appears that just one state high court—and no Federal Circuit—

has allowed such a claim to proceed past a motion to dismiss (see Huntington, 287 A3d 

515, 2022 VT 45). We agree with the weight of authority nationwide.

Because we conclude that CRO did not sufficiently allege “direct physical loss or 

damage,” we do not reach the question of whether the exclusions in the policy apply.

* * *

We do not take lightly the severe economic losses incurred by restaurants and other 

businesses serving the public as a result of the COVID-19 pandemic. But our task is to 

faithfully interpret the terms of the insurance policy before us, not to “rewrite the language 

of the polic[y] at issue” to reach a result with “equitable appeal” (Fieldston Prop. Owners 

Assn., Inc. v Hermitage Ins. Co., Inc., 16 NY3d 257, 265 [2011]). The coverage provisions 
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relied upon by CRO only cover economic losses to the extent they are caused by “direct 

physical loss or damage” to insured property. We conclude that the business interruption 

caused by the actual presence of the coronavirus on the premises of CRO’s insured 

property, as alleged in the complaint, is insufficient to trigger such coverage.

Accordingly, the order of the Appellate Division insofar as appealed from should 

be affirmed, with costs.

Decided February 15, 2024

Order insofar as appealed from affirmed, with costs. Opinion by Judge Halligan. Judges 

Rivera, Garcia, Singas, Cannataro, Troutman and Connolly concur. Chief Judge Wilson 

took no part.