The insured claimed that the cost it incurred in migrating its customer data to other servers when its cloud service provider went insolvent entitled it to claim damages under a property insurance policy. A court rejected the claim on the grounds that the losses incurred were not damages resulting from “tangible, physical loss”
An American court has confirmed that government shutdown orders did not constitute ‘direct physical loss’ that would trigger an indemnity under the commercial insurance held by a group of restaurants (in Rose’s 1 LLC et al v Erie Insurance Exchange).
The court said that:
In a case arising from Superstorm Sandy in north eastern USA, the plaintiff lawyers claimed a business interruption loss from its property insurance company because the electricity company’s decision to shut down certain electrical services to prevent damage meant they could not enter their building for days. The court found this did not amount to