Many business owners insured their property against loss through Business Income coverage. During the pandemic, policyholders sought coverage for their losses though this coverage. They were in for a surprise.

Typically, the Business Income clause is triggered by some variation of "direct physical loss of or damage to" the policyholder's property. Policyholders argue that the presence or suspected presence of SARS-Co-V-2 on their property prevented them from using their property as intended, causing a "loss of" that property. The insurance companies had a different interpretation.

Immediate relief was sought in the courts. Based on the hundreds of decisions that have been rendered thus far, there are 5 identifiable categories used to define "physical loss."

In the first three, courts accept that there is a difference between "loss of" and "damage to" property, but reach different conclusions about what "loss of" property means:

1) Some courts have found that "loss" and "damage" are distinct terms, separated by the disjunctive "or," and, as such, they must be given different meanings, and have further found that "loss" means (or can mean) the inability to use property for its intended purpose.

2) Other courts have found that "loss" can mean the inability to use property, but as used in property insurance policies, "loss" is limited to situations in which the policyholder suffers "permanent dispossession" of property.

3) Other courts have found that "loss" means total destruction of property, as compared to "damage," which means partial destruction of property.

4) A number of courts have recognized that "loss" and "damage," in the abstract, have different meanings, but found that, because they are preceded by "direct" and "physical," the phrase "direct, physical loss of or damage to" must be given a unitary meaning, typically requiring physical "alteration" of property.

5) Other courts have simply disregarded any possible difference between the terms "loss" and "damage," often on the ground that the phrases like "direct physical loss of or damage to property" have already been judicially construed to require some sort of "physical alteration" of property (most commonly, "distinct, demonstrable, physical alteration" of property).

(1) You are the attorney for the insurance company. Which interpretation would you urge upon the court to a claim against your insured? Why?