In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 21-1186 

SANDY POINT DENTAL, P.C.,

Plaintiff-Appellant, 

v.

THE CINCINNATI INSURANCE COMPANY, 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 20 CV 2160 — Robert W. Gettleman, Judge. 

____________________ 

No. 21-1559 

THE BEND HOTEL DEVELOPMENT COMPANY, LLC,

Plaintiff-Appellant, 

v.

THE CINCINNATI INSURANCE COMPANY, 

Defendant-Appellee. 
2 Nos. 21-1186, 21-1559 & 21-1203 

___________________ 

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 20 CV 4636 — Elaine E. Bucklo, Judge. 

____________________ 

No. 21-1203 

TJBC, INC.,

Plaintiff-Appellant, 

v.

THE CINCINNATI INSURANCE COMPANY, 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the

Southern District of Illinois. 

No. 3:20-cv-00815-DWD — David W. Dugan, Judge. 

____________________ 

ARGUED SEPTEMBER 10, 2021 — DECIDED DECEMBER 9, 2021 

____________________ 

Before MANION, WOOD, and HAMILTON, Circuit Judges. 

WOOD, Circuit Judge. No one doubts that the COVID-19 

pandemic has inflicted enormous losses on businesses, large 

and small, throughout the country. It is therefore not surprising that an avalanche of insurance claims has followed in 

the wake of the pandemic, as the suffering businesses look 

for assistance in absorbing those losses. We resolve three 

such claims in this opinion—those brought by plaintiffs 
Nos. 21-1186, 21-1559 & 21-1203 3

Sandy Point Dental, P.C. (“Sandy Point”), the Bend Hotel 

Development Company (“Bend Hotel”), and TJBC, Inc. 

(“TJBC”). We refer to the plaintiffs collectively as the Businesses unless the context requires otherwise. 

Each Business was required to close or dramatically scale 

back its operations in response to a series of executive orders 

issued by Illinois Governor J. B. Pritzker in an effort to curb 

the spread of the virus in the state. The Businesses held materially identical commercial-property insurance policies,

sold by the same insurer, the Cincinnati Insurance Company 

(“Cincinnati”). In brief, these policies provided coverage for 

income losses sustained on account of a suspension of operations caused by “direct physical loss” to covered property. 

The policies also provided coverage for income losses sustained as a result of an action of civil authority prohibiting

access to covered property, when such action was taken in 

response to “direct physical loss” suffered by other property.

Each Business filed claims for coverage under its policy, 

and each time, Cincinnati denied the claim and litigation ensued. In all three cases, the responsible district court granted 

Cincinnati’s motion to dismiss for failure to state a claim upon which relief could be granted. See FED. R. CIV. P. 12(b)(6). 

Each court reasoned that the Business before it did not adequately allege that either the virus that causes COVID-19, 

SARS-CoV-2, or the resulting closure orders caused “direct 

physical loss” to property. All three Businesses appealed; we 

resolve those appeals in this consolidated opinion. 

Our review is de novo, but we find little to criticize in the 

district courts’ resolutions of these cases, and so we affirm 

the judgments of dismissal. In doing so, we join the four circuits that so far have addressed the central question before 
4 Nos. 21-1186, 21-1559 & 21-1203 

us: whether loss of use, unaccompanied by any physical alteration to property, may constitute “direct physical loss”

under the relevant insurance policies. See Santo’s Italian Café 

LLC v. Acuity Ins. Co., 15 F.4th 398 (6th Cir. 2021); Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021);

Mudpie, Inc. v. Travelers Cas. Ins. Co., 15 F.4th 885 (9th Cir. 

2021); Gilreath Family & Cosmetic Dentistry, Inc. v. Cincinnati 

Ins. Co., --- F. App’x ---, 2021 WL 3870697 (11th Cir. Aug. 31, 

2021). 

I 

On March 15, 2020, in response to the rapidly expanding 

COVID-19 pandemic, Governor Pritzker issued an order

mandating the temporary closure to the public of restaurants, bars, and movie theaters. Exec. Order No. 2020-07. On 

March 20, 2020, he issued another order, this time requiring 

all non-essential businesses to shut down partially and temporarily. Exec. Order No. 2020-10. 

As a result of these orders, Sandy Point, a private dental 

group, had to suspend the elective and routine dental 

services that make up 95% of its business, and limit its

practice to emergency services. TJBC, which owns and 

operates two food and beverage establishments, was 

required to suspend in-person dining and limit its services to 

delivery and take-out. This lasted until June 26, 2020, when a 

superseding order permitted it to serve patrons in an 

outdoor setting, in parties of six persons or fewer, and in a 

socially distant manner. 

Bend Hotel’s allegations are less concrete, and so it is 

harder to tell what precisely these orders demanded of it. Its 

complaint alleges only that the first order “prohibited the 
Nos. 21-1186, 21-1559 & 21-1203 5

public from accessing [Bend Hotel’s] restaurants,” and that 

the second order “clos[ed] all ‘non-essential’ businesses in 

Illinois, including all restaurants ... and much of hotel 

operations.” But as Cincinnati points out, although the 

orders prohibited in-person dining, they permitted delivery

(including room service, in the case of a hotel) and takeaway. The second order even designated hotels as essential 

businesses, “to the extent used for lodging and delivery or 

carry-out food services.” Exec. Order No. 2020-10, ¶ 12.v.

Based on the complaint and text of the orders, which are 

official documents that have legal effect, and thus a proper 

subject of judicial notice, we proceed on the assumption that 

Bend Hotel did limit its restaurant services to delivery and 

take-out, and that its lodging services suffered from reduced 

capacity caused by restrictions on non-essential travel and 

social-distancing requirements. 

To recover the income losses occasioned by the closure 

orders, the Businesses turned to commercial property insurance policies sold to each of them by Cincinnati. The relevant 

provisions read as follows: 

SECTION A. COVERAGE. 

We will pay for direct “loss” to Covered Property at 

the “premises” caused by or resulting from any Covered Cause of Loss. ... 

(1) Business Income 

We will pay for the actual loss of “Business Income” 

and “Rental Value” you sustain due to the necessary 

“suspension” of your “operations” during the “period 

of restoration.” The “suspension” must be caused by 

direct physical “loss” to property at a “premises” 
6 Nos. 21-1186, 21-1559 & 21-1203 

caused by or resulting from any Covered Cause of 

Loss. ... 

(2) Extra Expense

We will pay “Extra Expense” you incur during the 

“period of restoration”: 

(a) To avoid or minimize the “suspension” of 

business and to continue “operations” ... 

(b) To minimize the “suspension” of business if 

you cannot continue “operations”. ... 

(3) Civil Authority 

We will pay for the actual loss of “Business Income” 

you sustain and “Extra Expense” you incur caused by 

action of civil authority that prohibits access to the 

“premises” due to direct physical “loss” to property, 

other than at the “premises, caused by or resulting 

from any Covered Cause of Loss. ... 

SECTION G. DEFINITIONS

... 

9. “Loss” means accidental loss or damage. 

In other words, incorporating the stated definition of 

“loss,” the Businesses were covered for income losses resulting from direct physical loss or direct physical damage to 

property. Thus, to survive Cincinnati’s Rule 12(b)(6) motion, 

they needed to allege that either the virus or the resulting

closure orders caused direct physical loss or direct physical 

damage to covered property. 
Nos. 21-1186, 21-1559 & 21-1203 7

II

Before addressing the question whether the Businesses 

adequately alleged “direct physical loss,” we first must determine what that phrase means under the Policy. We look 

to Illinois law for this purpose, because our subject-matter 

jurisdiction is based on diversity of citizenship, and the parties agree that Illinois supplies the rule of decision. Our task 

is to predict how the Supreme Court of Illinois would resolve the issue. See Webber v. Butner, 923 F.3d 479, 482 (7th 

Cir. 2019).

Under Illinois law, an insurance policy is to be construed 

as a whole, “giving effect to every provision, if possible, because it must be assumed that every provision was intended 

to serve a purpose.” Valley Forge Ins. Co. v. Swiderski Elecs., 

Inc., 860 N.E.2d 307, 314 (Ill. 2006). “If the words used in the 

policy are clear and unambiguous, they must be given their 

plain, ordinary, and popular meaning.” Cent. Ill. Light Co. v. 

Home Ins. Co., 821 N.E.2d 206, 213 (Ill. 2004). Furthermore,

“[a] policy provision is not rendered ambiguous simply because the parties disagree as to its meaning.” Founders Ins. 

Co. v. Munoz, 930 N.E.2d 999, 1004 (Ill. 2010). Rather, an ambiguity exists when the policy language is “subject to more 

than one reasonable interpretation.” Hobbs v. Hartford Ins. 

Co., 823 N.E.2d 561, 564 (Ill. 2005). 

No decision of the Illinois Supreme Court has addressed 

the precise policy language before us. But we are not entirely 

without guidance. In Travelers Ins. Co. v. Eljer Mfg., Inc., 757 

N.E.2d 481 (Ill. 2001), the state’s highest court addressed 

similar language, holding that “the term ‘physical injury’

unambiguously connotes ... an alteration in appearance, 

shape, color or in other material dimension.” Id. at 502. 
8 Nos. 21-1186, 21-1559 & 21-1203 

When interpreting “direct physical loss” in other cases involving coverage disputes over COVID-19-related losses, 

many courts have turned to this language from Travelers and 

concluded that the phrase “direct physical loss,” like the 

language in Travelers, requires a physical alteration to property. See, e.g., Paradigm Care & Enrichment Center, LLC v. West 

Bend Mutual Ins. Co., 529 F. Supp. 3d 927, 935 (E.D. Wis. 

2021) (“While Travelers does not interpret the exact phrase at 

issue in this case, the Court finds it likely that, pursuant to 

the Illinois Supreme Court’s interpretation of the terms 

‘physical injury,’ Plaintiffs have not alleged ‘physical loss or 

damage to’ their covered premises.”). Cincinnati argues that 

this interpretation is correct, and the district courts in each of 

these appeals agreed with that position. 

The Businesses offer a competing (and more expansive)

interpretation. “Direct physical loss,” they posit, captures 

not only physical alterations to property but also loss of use, 

even loss that is unaccompanied by any physical alteration. 

They point to two textual clues in support of this reading. 

First, they argue that the use of the disjunctive in the phrase 

“direct physical loss or damage” suggests that “loss” must 

mean something different from “damage,” lest the policy

language be redundant. “Damage,” they suggest, refers to a 

physical alteration to property, while “loss” refers to the 

deprivation of use or possession. Second, the Businesses

argue that the nature of the exclusions demonstrates that the 

Policy calls for an expansive understanding of “direct 

physical loss”—one that includes loss of use—and that the 

absence of a virus exclusion thus means that the loss of use 

they suffered from the executive orders, or from the virus, is

covered under the Policy.
Nos. 21-1186, 21-1559 & 21-1203 9

We have no quarrel with the idea that the disjunctive indicates that “loss” means something different from “damage.” See ANTONIN SCALIA & BRYAN GARNER, READING LAW:

THE INTERPRETATION OF LEGAL TEXTS 174 (2012) (discussing 

the canon against surplusage). But the Businesses’ proposed 

distinction is neither the only possible reading nor a likely 

one. The phrase is “direct physical loss or damage.” The 

words “direct physical” are most sensibly read as modifying 

both “loss” and “damage.” But even if they can be divorced 

from “damage” (and we do not think that they can), they indisputably modify “loss.” Any other interpretation would 

commit the same sin against which the Businesses caution

us—namely making surplusage out of the word “physical.”

Whatever “loss” means, it must be physical in nature. See 

Oral Surgeons, 2 F.4th at 1144 (“there must be some physicality 

to the loss or damage of property”) (emphasis added); see also Mudpie, Inc., 15 F.4th at 893 (favorably citing Oral Surgeons

for the same proposition).

Cincinnati proposes, and many courts have adopted, a 

reading that better accounts for both the disjunctive and the 

word “physical”: the word “loss” may refer to complete destruction while “damage” connotes lesser harm that may be 

repaired. See, e.g., Crescent Plaza Hotel Owner L.P. v. Zurich 

American Ins. Co., 520 F. Supp. 3d 1066, 1069–70 (N.D. Ill. 

2021). But because the Businesses’ properties were neither 

destroyed nor damaged in a way that called for repairs, this 

option does not help them. 

The next textual argument presented by the Businesses is 

equally unavailing. They contend that if “direct physical 

loss” were limited to physical alterations to property, the 

Policy would have no reason expressly to exclude things
10 Nos. 21-1186, 21-1559 & 21-1203 

such as nuclear reactions, radiation, or radioactive contamination, which do not (they assume) cause physical alterations. Why mention a few non-physical possibilities if all of 

them are already excluded? The presence of these exclusions 

must mean, the Businesses argue, that “direct physical loss” 

is more capacious than Cincinnati is willing to admit. And 

because an exclusion for viruses is conspicuously absent

from the Policy whose terms we are interpreting, it follows 

that the SARS-CoV-2 virus must not be excluded. 

The problem with this argument lies in its premise. Every

exclusion to which the Businesses can point does involve 

something that causes a physical alteration to property. Take 

nuclear radiation, which the Businesses present as their

clearest example. They contend that “[l]ike COVID-19, 

nuclear radiation exists in, but does not physically affect, the 

structure of a building.” But they present no basis for that 

assumption, and as a matter of fact, it appears to be

incorrect. See H.K. HILSDORF ET AL., THE EFFECTS OF NUCLEAR 

RADIATION ON THE MECHANICAL PROPERTIES OF CONCRETE 226 

(1978) (reporting on the effects of radiation, including 

embrittlement, on the physical properties of concrete and 

other solids).

But we need not wade into a debate about engineering or 

materials science. The Policy is replete with textual clues that 

reinforce the conclusion that “direct physical loss” requires a 

physical alteration to property. As Cincinnati points out, the 

Policy provides coverage for losses sustained during a “period of restoration,” which is defined by reference to “[t]he 

date [by which] the property ... should be repaired, rebuilt, or 

replaced.” (Emphasis added.) Without a physical alteration to 

property, there would be nothing to repair, rebuild, or re-
Nos. 21-1186, 21-1559 & 21-1203 11

place. See Toppers Salon & Health Spa, Inc. v. Travelers Prop. 

Cas. Co., 503 F. Supp. 3d 251, 256–57 (E.D. Pa. 2020). 

It is thus no surprise that the overwhelming majority of 

courts, including the four circuits that have so far spoken on 

the issue, have adopted this interpretation of the relevant 

provisions. See, e.g., Santo’s Italian Café, 15 F.4th at 401–03;

Oral Surgeons, 2 F.4th at 1144; Mudpie, Inc., 15 F.4th at 892; 

Gilreath, 2021 WL 3870697, at *2; Inns by Sea v. California 

Mutual Ins. Co., --- Cal. Rptr. 3d ---, 2021 WL 5298480, at *10 

(Cal. Ct. App. 2021). Only a small minority of district-court 

decisions have adopted the Businesses’ loss-of-use theory, 

and they have largely relied on the disjunctive-based 

argument that we already have considered and rejected. See, 

e.g., Studio 417, Inc. v. Cincinnati Ins. Co., 478 F. Supp. 3d 794, 

800–01 (W.D. Mo. 2020); Blue Springs Dental Care, LLC v. 

Owners Ins. Co., 488 F. Supp. 3d 867, 873–74 (W.D. Mo. 2020). 

Finding little support from cases dealing directly with the 

coronavirus, the Businesses direct us to others involving

termite infestations, asbestos, and gases. But these decisions 

are predicated on findings that the policyholders adequately 

alleged “direct physical loss” (or “physical injury,” the language at issue in the termite and asbestos cases), because 

property was physically altered. 

Posing v. Merit Ins. Co., 629 N.E.2d 1179 (Ill. App. Ct. 

1994), illustrates the problem with these authorities. At issue 

there was whether termites, insects notorious for chewing 

through wood and compromising the structural integrity of 

buildings, created a “physical injury.” Id. at 1184. Given that

the reason termites pose a problem is that they physically

alter property, it is difficult to see how this case helps the 

Businesses. 
12 Nos. 21-1186, 21-1559 & 21-1203 

Similarly, the reasoning in the asbestos cases indicates 

that the courts deemed “physical injury” to be present because asbestos causes a physical alteration to property, not 

because the asbestos leads only to loss of use. See United 

States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 578 

N.E.2d 926, 930–31 (Ill. 1991); Board of Education v. Int'l Ins. 

Co., 720 N.E.2d 622, 625–27 (Ill. App. Ct. 1999). Indeed, the 

court in Wilkin all but said as much: “[Insurers] contend that 

the presence of [asbestos] results only in intangible economic 

loss. ... This court, however, has already found that asbestos 

fiber contamination constitutes physical injury to tangible 

property.” Wilkin, 578 N.E.2d at 931 (citation omitted). 

The gas cases are a little closer to the mark, but they too 

fall short. Gas infiltration might cause loss of use without 

any accompanying physical alteration. And yet the courts in 

these cases found that the policyholders had sustained a “direct physical loss.” See Western Fire Ins. Co. v. First Presbyterian Church, 437 P.2d 52, 55 (Colo. 1968); Gregory Packaging, 

Inc. v. Travelers Property Cas. Co., Civ. No. 2:12-cv-04418 

(WHW) (CLW), 2014 WL 6675934, at *1 (D.N.J. Nov. 25, 

2014); Matzner v. Seaco Ins. Co., No. CIV. A. 96-0498-B, 1998 

WL 566658, at *3 (Mass. Super. Ct. Aug. 12, 1998). This

would seem to support the Businesses’ contention that “direct physical loss” includes loss of use, even when it is unaccompanied by any physical alteration to property. 

But the gas infiltration in these cases led to more than a 

diminished ability to use the property. It was so severe that 

it led to complete dispossession—something easily characterized as a “direct physical loss.” In all three cases, the 

courts concluded that the contamination made the premises 

“uninhabitable,” Western Fire, 437 P.2d at 55; Matzner, 1998 
Nos. 21-1186, 21-1559 & 21-1203 13

WL 566658, at *3; Gregory Packaging, 2014 WL 6675934, at *6,

and “unfit for normal human occupancy,” Gregory Packaging, 

2014 WL 6675934, at *3. In other words, the gas infiltration 

made physical entry impossible, thus barring all uses by all 

persons.

That distinguishes these cases from the three that are 

now before us, where—at most—the Businesses’ preferred 

use of the premises was partially limited, while other uses 

remained possible. Without any physical alteration to accompany it, this partial loss of use does not amount to a “direct physical loss.” 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.” The gas cases 

present one such scenario: where gas infiltration renders a 

property completely uninhabitable, it has been physically 

lost in a meaningful sense, even if only temporarily. 

Harder questions arise if we tweak the facts slightly. Assume that a tornado leaves debris around a building, but it is 

possible to clear a path through it, thereby allowing the 

owner of the business, the policyholder, to enter the premises to maintain them until operations may resume. Has the 

policyholder been effectively dispossessed of the property?

What if the debris blocks all access to the primary commercial space but not to an adjacent manager’s office? No use 

may be made of the primary space, but productive uses remain for the office space. Has the policyholder been physically dispossessed of at least part of its property, such that it 

has alleged a “direct physical loss”? 
14 Nos. 21-1186, 21-1559 & 21-1203 

We leave these questions for another day. We raise them 

only to emphasize that our holding rests on the facts and 

policy before us. This is enough to dispose of the common 

arguments the Businesses have raised. We now turn to their 

individual points.

III

A. Sandy Point

In its amended complaint, Sandy Point makes only a single allegation explaining how it suffered a “direct physical 

loss.” This is what it said: “The continuous presence of the 

coronavirus on or around Plaintiff’[s] premises has rendered 

the premises unsafe and unfit for its intended use and therefore caused physical property damage or loss under the Policies.”

We agree with the district court that this fails adequately 

to allege “direct physical loss.” Sandy Point does not even 

attempt to describe how either the presence of the virus or 

the resulting closure orders physically altered its property. It 

points only to the loss of the property’s “intended use.” As 

we have explained, this is not enough. Sandy Point may 

have been unable to put its property to its preferred (and, we 

assume, its most lucrative) use. But this is a far cry from the 

complete physical dispossession of property suffered by the 

policyholders in the gas-infiltration cases. Sandy Point at all 

times remained able to perform some dental work, and

nothing precluded it from using the property for some other 

non-dental purpose consistent with the closure orders. 

We accept that these alternative uses would not have 

been equally, or even nearly, as satisfying to Sandy Point. 

But Sandy Point insured its property, not its ideal use of that 
Nos. 21-1186, 21-1559 & 21-1203 15

property. Having alleged neither a physical alteration to the

property nor its equivalent in its amended complaint, Sandy 

Point failed adequately to allege a “direct physical loss” under the Policy.

Sandy Point also appeals from the district court’s denial 

of its motion for leave to file a second amended complaint.

The denial of such a motion is typically reviewed for an 

abuse of discretion, but “when the basis for denial is futility,” as it seems to have been here, “we apply the legal sufficiency standard of Rule 12(b)(6) to determine whether the 

proposed amended complaint fails to state a claim. ... Accordingly, our review for abuse of discretion ... includes de 

novo review of the legal basis for the futility.” Runnion v. Girl 

Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 524 (7th Cir. 

2015) (citations omitted). 

Even under this standard of review, we fail to see how 

Sandy Point’s proposed new allegations would change the 

outcome. Sandy Point proposed to add the allegation that 

“COVID-19 physically attaches itself to the physical premises, and thereby deprive[s] plaintiff of the use of said premises.” It supported this contention with allegations regarding 

how the virus SARS-CoV-2 is “transmitted by air and surfaces through water droplets, aerosols, and fomites.”

But these allegations do not cure the deficiencies of the 

first amended complaint. Even if the virus was present and 

physically attached itself to Sandy Point’s premises, Sandy 

Point does not allege that the virus altered the physical structures to which it attached, and there is no reason to think 

that it could have done so. While the impact of the virus on 

the world over the last year and a half can hardly be overstated, its impact on physical property is inconsequential: 
16 Nos. 21-1186, 21-1559 & 21-1203 

deadly or not, it may be wiped off surfaces using ordinary 

cleaning materials, and it disintegrates on its own in a matter 

of days. We thus find no reversible error in the district 

court’s denial of Sandy Point’s motion for leave to amend its 

complaint.

Nor do we find an abuse of discretion in the district 

court’s decision to deny reconsideration of its orders. See 

O’Brien v. Village of Lincolnshire, 955 F.3d 616, 628 (7th Cir. 

2020) (“[w]e review a district court’s denial of a Rule 59(e) 

motion for reconsideration ... for abuse of discretion.”). 

Sandy Point’s motion for reconsideration was premised on a 

single new district court decision that it characterized as a 

“change in the law” that warranted reconsideration. But that 

decision is non-binding, and in addition, it did no more than 

follow Studio 417, another district court decision that the district court had considered and rejected. 

B. Bend Hotel

Bend Hotel’s complaint suffers from many of the same 

deficiencies as Sandy Point’s. Like Sandy Point, Bend Hotel 

alleges that “[t]he continuous presence of the coronavirus on 

or around Plaintiff’[s] premises has rendered the premises 

unsafe and unfit for its intended use and therefore caused 

physical property damage or loss under the Policies.” It further alleges that Governor Pritzker’s closure order “was 

made in direct response to the continued and increasing 

presence of the coronavirus on property or around Plaintiff’s 

premises.” 

Like Sandy Point, Bend Hotel has not alleged that the virus (or the resulting closure orders) physically altered its 

property. It has alleged only that the physical presence of 
Nos. 21-1186, 21-1559 & 21-1203 17

SARS-CoV-2 on its property “rendered the premises ... unfit 

for ... its intended use.” But, like Sandy Point, Bend Hotel 

has not alleged loss of use so substantial as to amount to a 

physical dispossession of its property. Although its allegations are vague, we gather that at least some of its hotel operations remained usable and that, although in-person dining at the hotel restaurant was prohibited, room service and 

take-out were possible. As in Sandy Point’s case, this is a far 

cry from the complete physical dispossession of property 

suffered by the policyholders in the gas-infiltration cases. 

Bend Hotel thus has failed adequately to allege a “direct 

physical loss” to property. 

C. TJBC

TJBC’s complaint made similar allegations and thus fares 

no better than the other two we have discussed. It alleged 

that “[SARS-CoV-2] droplets can ... attach to surfaces” and 

that the virus “can survive on solid surfaces for significant 

periods of time [and] can be spread long distances through 

the air.” It further alleged that four different executive orders 

issued by Governor Pritzker limited its business operations 

to different degrees at different times. Some, for example, 

“prohibit[ed] ... on-premises consumption of food and 

beverages and gatherings of more than 50 people”; others 

allowed it to re-open “but only for consumption offpremises, through such means as in-house delivery, thirdparty delivery, drive-through, curbside pick-up, and carryout”; while yet others allowed it to “resume service for onpremises consumption” limited to “six persons or fewer ... 

served outdoors and where each person in a party is 

distanced at least six feet away from any other person in any 
18 Nos. 21-1186, 21-1559 & 21-1203 

other party.” All of these orders prohibited customers from 

using the inside premises of TJBC’s businesses.

Like Sandy Point and Bend Hotel, TJBC did not initially 

allege that the SARS-CoV-2 virus physically altered its property, nor did it (or could it) allege that the resulting closure 

orders did so. During oral argument, and for the first time in 

the case, TJBC’s counsel shifted ground, arguing that the 

question is not whether the virus or the closure orders physically altered the property, but rather whether they physically 

altered the premises, and that the premises include the air. 

Because the virus altered the air, counsel argued, it altered 

the premises. But even if the premises included the air, the 

Policy specifies what it covers: “direct physical ‘loss’ to Covered Property at the ‘premises,’” not direct physical loss to 

the premises themselves. And in any event, neither the Policy nor the dictionary suggest that the word “premises” includes air. Instead, the Policy defines “premises” only as 

“the Location of Premises described in the Declarations,” 

which in turn include only a physical address. In short, even 

if we were to accept this last-minute change in emphasis, it 

would not change the result.

Turning back to its complaint, TJBC alleged only a reduced use of its property. It did not describe either a physical alteration to property nor a physical dispossession (literal 

or approximate), and so it has failed adequately to allege a 

“direct physical loss.” 

IV

To state a claim under the Policy before us, the Businesses needed to allege more than a partial loss of their preferred 

use of the insured properties. But they alleged neither a 
Nos. 21-1186, 21-1559 & 21-1203 19

physical alteration to property nor an access- or usedeprivation so substantial as to constitute a physical dispossession. They thus have not managed to state claims upon 

which relief could be granted. 

Given this conclusion, we see no need to address the 

Businesses’ additional claims of consumer fraud, commonlaw fraud, or vexatious refusal of coverage. Cincinnati could 

not have been fraudulent or vexatious in denying coverage 

where adequate grounds for coverage did not exist in the 

first place. 

We AFFIRM the dismissals of all three cases, as well as the 

denials of Sandy Point’s motions for reconsideration and for 

leave to amend its complaint.