Does the business harm caused by COVID-19 qualify as “direct physical loss” for insurance purposes? In Spirit Airlines, Inc. v. American Home Assurance Company, Index No. 655755/2021, Commercial Division Justice Robert R. Reed held that the answer is no. In a decision announced on the record at an August 18, 2022 oral argument and entered on September 13, 2022 (see here), Justice Reed explained that his decision was dictated by the First Department’s April 7, 2022 decision in Consolidated Restaurant Operations, Inc. v. Westport Insurance Corp., 205 A.D.3d 76 (1st Dep’t 2022), and that he “follow[s] the First Department until the Court of Appeals says that the First Department is wrong.”
