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Two medical staff wearing protective suits treating a woman infected with coronavirus(Covid-19) inside an isolation ward at a hospital. Photo: Mongkolchon Akesin/Shutterstock.comAs New York businesses face unprecedented losses as the result of the COVID-19 pandemic and the associated civil closure orders, many find themselves turning to their business interruption insurance policies as a source of relief. However, they could be surprised to find that coverage for the greatest business interruption New York has ever faced may be far from a certainty.

The central issue, and one that carriers are already using as a basis to deny coverage, comes from the standard requirement that the business interruption be the result of “direct physical loss of or damage to” the affected property. Accordingly, billions of dollars in insurance will (or will not) be available to New York businesses based on whether the coronavirus or the associated civil orders constitute “direct physical loss of or damage to” a covered property. While the language in individual insurance policies differs, and even minor variations in language can have a significant impact on whether coverage is available, New Yorkers will undoubtedly face many of the same legal challenges in seeking coverage.

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