In one of the first coronavirus-related court rulings, last week, Michigan Circuit Court Judge, Joyce Draganchuk, ruled in favor of the insurer in a case where the issue was whether or not coverage was owed for restaurants that were closed, or substantially closed, due to COVID-19-related government orders. The case is Gavrilides Management Company v. Michigan Insurance Company. 

Gavrilides Management Company owns two central Michigan restaurants, the Soup Spoon Café and The Bistro, and is insured by Michigan Insurance. The insurer filed a motion to dismiss after Gavrilides sued for insurance coverage based on lost revenue during the coronavirus lockdown. The policy in place provided coverage for business interruption.

Appropriately, this landmark ruling was handed down from the bench following a Zoom hearing. The hearing was later posted on YouTube. The court explained that coverage under the policy is provided for actual loss of business income sustained while operations are suspended, and the suspension must be caused by direct physical loss of or damage to property. Further, the Judge noted that direct physical loss of or damage to the property must be "something with material existence. . . that alters the physical integrity of the property." Judge Draganchuk also noted that the complaint did not allege any physical loss of or damage to the restaurants, instead it alleged loss of business due to executive orders shutting down dining in the restaurant due to the global COVID-19 pandemic. She explained that the complaint stated specifically that at no time did COVID-19 enter the restaurants.