The underwriters issued property policies to Infinity Exhibits for April 2019 through April 2021 that cover business income losses sustained during periods of suspended operations caused by "direct physical loss of or damage to property," the order said.

The policies also provide coverage for "extra expenses" and "civil authority."

Extra expense coverage kicks in when an insured incurs additional costs during a restoration period due to direct physical loss or damage, and civil authority coverage is triggered when a covered cause of loss damages property within one mile of the insured's premises and a civil authority prohibits access to the premises.

Infinity Exhibits filed a claim March 18 for business income loss due to canceled trade shows.

Lloyd's declined coverage in an April 9 reservation-of-rights letter saying the policies "[do] not provide coverage for business interruption, extra expense or civil authority in the absence of direct physical loss of or damage to property."

Infinity Exhibits, represented by Joshua I. Gornitsky of Searles, Sheppard & Gornitsky PLLC, sued the underwriters alleging breach of contract and seeking a declaration that coverage is owed under its all-risk policies.

The underwriters, represented by Armando P. Rubio of Fields Howell LLP, moved for dismissal Aug. 11, saying Infinity Exhibits failed to allege that it sustained a direct physical loss to its property.

According to Lloyd's, the complaint did not describe physical damage, how it occurred or what needs to be repaired.

"A direct physical loss contemplates an actual change in insured property" caused by an accident that makes it unusable or requires repairs, the underwriters argued, citing Mama Jo's Inc. v. Sparta Insurance Co., No. 17-cv-23362, (S.D. Fla. June 11, 2018), a decision the 11th U.S. Circuit Court of Appeals upheld in August.

An all-risk policy is not an all-loss policy that extends coverage for every conceivable loss, Judge Moody said, citing Sebo v. American Home Assurance Co. Inc., 208 So. 3d 694 (Fla. 2016).

The judge rejected Infinity Exhibits' argument that economic damage is synonymous with physical loss.

"Plaintiff's argument is unpersuasive because Florida law and the plain language of the policies reflect that actual, concrete damage is necessary," he said.

A structure that needs cleaning has not sustained a direct physical loss, Judge Moody said, quoting the 11th Circuit's affirmance in Mama Jo's. Mama Jo's Inc. v. Sparta Ins. Co., No. 18-12887, (11th Cir. Aug. 18, 2020).

The 11th Circuit also said in Mama Jo's that direct physical loss "is the diminution of value of something," and "direct and physical modify loss and impose the requirement that the damage be actual," the judge said.

There is no business income or civil authority coverage as Infinity Exhibits failed to allege actual physical loss or damage, Judge Moody concluded.