My Last Comment on Direct Physical Loss Requirement Again
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Post 5096
In Tulalip Tribes of Washington v. Lexington Insurance Co., Wn.App. 2d, 566 P.3d 149 (2025), the Washington Court of Appeals held that COVID-19 does not trigger coverage under an “All Risk” policy that predicates coverage on “direct physical loss or damage” to property. Because the trial court’s ruling in this matter is contrary to Tulalip, the Court of Appeals reversed and remanded to the trial court ordering dismissal.
In The Board Of Regents Of The University Of Washington v. Employers Insurance Company Of Wausau, A Liberty Mutual Company, No. 86493-9-I, Court of Appeals of Washington, Division 1 (June 9, 2025) the question of direct physical loss claims as a result of the Covid Pandemic got resolved again.
THE POLICIES
The University of Washington (UW) obtained from Employers Insurance Company of Wausau (Wausau) “All Risk” insurance coverage for several of its properties. UW sought coverage after government orders relating to COVID-19 required temporary closures of those properties. The relevant policy provisions predicate coverage on “direct physical loss or damage.”
THE SUIT
Wausau denied coverage based on those policy provisions, UW filed a complaint asserting claims for breach of contract, declaratory judgment, bad faith, and violations of the Washington Consumer Protection Act and Washington Insurance Fair Conduct Act. Wausau filed a motion to dismiss the claims based on the policy provisions, and the trial court denied that motion.
ANALYSIS
Construction of an insurance policy is always a question of law. The Court of Appeals examined the policy to determine whether under the plain meaning of the contract there is coverage. If the policy’s language is clear and unambiguous, the court must enforce the policy as written. Also, relevant here, the insured bears the burden of showing that coverage exists.
Thus, the issue is whether UW has alleged the required “direct physical loss or damage” to trigger coverage under the relevant policies for the COVID-19-related losses at issue.
The Court of Appeals rejected the arguments raised by UW for a similar loss of functionality argument in Tulalip because, the insureds in Tulalip maintained possession of the property, the property was still functional and able to be used, and the insureds were not prevented from entering the property.
The Court of Appeals concluded that the insureds’ deprivation was more akin to an abstract or intangible loss. An intangible loss is insufficient to establish direct physical loss or damage. The deprivation must still be caused by a physical impact to the property. The same reasoning and holding apply equally here because, as in Tulalip, UW’s allegations show it suffered an abstract or intangible loss as opposed to a physical loss.
The policies define a “covered loss” as “[a] loss to covered property caused by direct physical loss or damage insured by this Policy.” Thus, as in Tulalip, there must be direct physical loss or damage to property for UW to obtain coverage under the communicable disease coverage endorsements. Because UW has failed to allege such loss or damage the communicable disease coverage endorsements do not apply.
CONCLUSION
In sum, the Court of Appeals reject UW’s arguments regarding its entitlement to coverage under the policies at issue for the same reasons set forth in Tulalip. UW’s breach of contract and declaratory judgment claims fail on this basis. Because Tulalip is directly on point and fatal to UW’s coverage arguments, the Court of Appeals reversed and remanded the case to the trial court for for dismissal.
ZALMA OPINION
About two years ago I proposed to never again write about Covid claims and the need to prove direct physical loss. For reasons I don’t understand parties continue to bring to court cases claiming direct physical loss that is really abstract and intangible losses. Just alleging direct physical loss where none exist wastes the time of the parties, the lawyers, the courts and the courts of appeal. Washington affirmed its precedent that should tell the people of the US to stop trying to make insurers provide a coverage it did not agree to provide.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
Post number 5300
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Acting as Your Own Lawyer is Foolish
Evidence of Breach of Contract Survives Dismissal of All Other Charges
In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
Lee Lifeng Hsu and Jane Yuchen Hsu (“Plaintiffs”) purchased a homeowners’ insurance policy from State Farm Fire...
Insurance Condition Requires Following the Intent of the Parties
Post number 5307
Principles of Contract Interpretation Compels Reading Contract as Written
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In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
