ORDER ON DEFENDANTS’ MOTION TO DISMISS (Doc. 12) Plaintiffs are business owners who seek to recover first-party insurance coverage under a commercial policy issued by defendant Philadelphia Indemnity Insurance Company. Their claim concerns business interruption losses due to occupancy limits imposed by New York State in an effort to reduce COVID-19 infection rates. A. The Insurance Policy Plaintiffs operate a martial arts and fitness business in Buffalo, New York under the name “Master Gorino’s Pil-Sung Tae Kwon-do.” (Doc. 1-2 at 11.) In 2019, Plaintiffs obtained an insurance policy from defendants for the period June 5, 2019 – June 5, 2020 (the “Policy”). (Doc. 1-2 at 11.) The Policy includes a first-party commercial property component as well as general liability coverage. This case concerns claims for business interruption under the first-party coverage. Plaintiffs seek compensation for losses in revenue they sustained when their business closed due to the COVID-19 pandemic and related executive orders in the spring of 2020. The Policy includes a declarations section identifying the parties and listing the substantive provisions that define the scope and conditions of coverage. These provisions include the “Businessowners Special Property Coverage Form” describing the first-party coverage. The insurer promises to “pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.” (Doc. 1-2 at 21.) After defining the “covered property,” the form defines “covered cause of loss” as “Risks of Direct Physical Loss unless the loss is a. Excluded in Section B., Exclusions; or b. Limited in Paragraph A.4, Limitations….” (Doc. 1-2 at 22.) The Policy provides for coverage of loss of business income as a result of a covered loss. (Doc. 1-2 at 24.) It provides: We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your ‘operations’ during the ‘period of restoration.’ The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss of damage must be caused by or result from a Covered Cause of Loss. (Id.) The term “period of restoration” is defined in the Policy as “the period of time that: a. Begins: (1) 72 hours after the time of direct physical loss or damage for Business Income Coverage…caused by or resulting from any Covered Cause of Loss at the described premises” and ends at the resumption of business or a reasonable repair period. (Id. at 42.) The Policy also provides for loss of business income as a result of “action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss.” (Doc. 1-2 at 76.) B. Plaintiffs’ Allegations of Direct Physical Loss or Damage The complaint alleges “Covered Loss” as follows: Plaintiffs’ employees, customers and vendors were exposed to the virus, became ill, and were instructed by civil authorities to self-isolate and suspend business operations. (Doc. 1 48.) The insured property was exposed to the virus and closed due to orders of the civil authorities. (Doc. 1
49, 59.) These orders prohibited Plaintiffs’ access to the insured property. Property in the vicinity of the insured premises was also exposed to the virus and closed by the authorities. (Doc. 1 50.) The virus is “ubiquitous, such that it exists everywhere,” including the insured property and other properties within a mile. (Doc. 1
