Is cleaning a surface contamination a “repair”? In other words, does “direct physical loss or damage” refer to permanent alteration of property that can only be remedied by repair or replacement and not to simple impairment of the use of that property?

From my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes”:


When reading an insurance contract, what is the intent of the parties, from a coverage standpoint, expressed by structure, syntax, semantics, and context of the policy language? In a general sense, that’s an easy question. The intent of most insurers is to cover what was actuarially contemplated by the premium charged. The intent of most insureds is to cover every event that results in financial loss. As expressed in the Dedication of this book by California Chief Justice Malcolm Lucas, “No one knows what evil lurks in the hearts of men…but it’s all insured.”

Needless to say, insureds are not happy when a claim is denied and insurers are not happy when they are compelled to pay for a claim not contemplated by the actuarial department and the drafters of the policy form. Insureds can minimize their grief by recognizing that insurance is not a commodity and that the adage “You get what you pay for” often holds true. You bought cheap, you got cheap. Insurers can reduce the likelihood of continuing interpretive misery by, as outlined in the last chapter, revising the policy language that resulted in unintended coverage.

The legal system takes a more pragmatic view of what is meant by “intent” of the parties when it comes to interpreting a contract, specifically an insurance contract. In determining coverage, or lack thereof, the judicial consensus, by word if not by action, is that the first goal is to identify the intent of the parties entering into the insurance contract. In doing so, most courts will try to determine the meaning of words and phrases within the four corners of the policy via a literal reading of the form language in its plain and ordinary meaning and within the context of the facts of the claim….

So, what is the intent of the ISO CP 00 30 business income form when it comes to coverage for viral surface contamination? The primary business income overage is triggered by “direct physical loss or damage” to property on the premises. Coverage applies during the “suspension of operations,” a term defined as [emphasis added]:

“Period of restoration” means the period of time that:

a. Begins:

     (1) 72 hours after the time of direct physical loss or damage for Business Income Coverage; or

     (2) Immediately after the time of direct physical loss or damage for Extra Expense Coverage;

     caused by or resulting from any Covered Cause of Loss at the described premises; and

b. Ends on the earlier of:

     (1) The date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality; or

     (2) The date when business is resumed at a new permanent location.

The consensus is that the viral contamination can usually be removed from the surface of property by simple disinfection. Even in the absence of that, the virus allegedly dies of its own accord within about 3 days. That sounds less like “direct physical damage” and more like an indirect loss involving simple temporary impairment of the use of the property.

The time period for coverage is based on when property should be “repaired, rebuilt or replaced.” Does simply cleaning temporarily impaired property surfaces constitute repair, rebuilding or replacement? Or does “direct physical damage” refer only to a permanent alteration of property that must be remedied by actual repair or replacement and not just a temporary impairment of the use of that property?

Based on the logic of this analysis, one could argue that this coverage was never intended to apply to “damage” that can be remedied by the use of Clorox wipes in a matter of hours in most businesses. In other words, the language in this definition refers to “direct physical damage” that requires an actual repair or replacement of the damaged property.

For a deeper dive into these issues:

Additional articles on the insurance implications of the COVID-19 pandemic can be found on my blog at

Note: Any of my blog articles can be reprinted without express permission if properly attributed and the copyright notice included, as outlined on my blog Reprints page.

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Bill Wilson

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One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information