Florida Court Splits On COVID-19 Coverage Claims; Holds Pleading Deficiencies Fatal And Finds Disease Exclusions Unenforceable

Applying Florida law, the United States District Court for the Middle District of Florida granted in part and denied in part motions to dismiss in a COVID-19 coverage dispute regarding a “Loss of Attraction” coverage for infectious or contagious disease. Gate Petroleum Co. v. Interstate Fire & Cas. Ins. Co., 2026 WL 1480348 (M.D. Fla. May 27, 2026). The court dismissed with prejudice the insured’s claims against four insurers for failure to plead a causal connection between the covered peril and claimed losses but denied two other insurers’ motions to dismiss, holding that their pollution/contamination and communicable disease exclusions rendered the infectious disease coverage provided by the “Loss of Attraction” insuring agreement illusory under Florida law.

The insured, a diversified company operating across several industries, sought coverage for over $73 million in claimed losses allegedly sustained as a result of COVID-19 between March 2020 and December 2021. The policies’ “Loss of Attraction” insuring agreement provided coverage for “Actual Loss Sustained by the Insured during a period of liability from . . . Infectious or contagious disease manifested by any person while on the premises of the Insured or within a radius of 50 miles thereof.” The insured alleged that hundreds of thousands of COVID-19 cases manifested at or near its locations, triggering coverage. The six participating insurers denied coverage on various grounds, including failure to trigger the insuring provision, pollution/contamination exclusions, and a communicable disease exclusion.

A group of four insurers jointly moved to dismiss, arguing that the complaint “fails to allege a single instance of a manifestation at any covered location, much less any loss resulting from such manifestation.” The court agreed, noting that the complaint failed to include allegations of any “actual losses sustained . . . from the manifestations it describes” and that the insured’s reliance on a scholarly article describing the early proliferation of COVID-19 failed to address the deficiency. Because of the insuring agreement’s requirement that there be “Actual Loss Sustained” “from” the manifestation of disease, the failure to allege a causal link between any loss and manifestation of disease was fatal to the claim for coverage.

The two remaining insurers moved to dismiss based on exclusions that generally barred coverage for losses caused by virus, pathogen, disease-causing or illness-causing agents, or any sickness capable of being transmitted. The court acknowledged that both exclusions would bar coverage if read in isolation. However, it held that applying the exclusions would render illusory the policy’s express grant of Loss of Attraction coverage for losses from infectious or contagious disease. Therefore, the court determined the exclusions to be unenforceable and denied the two insurers’ motions to dismiss.

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