The Hawaii Intermediate Court of Appeals (ICA) vacated and remanded the trial court’s grant of summary judgment to the insurer regarding closure of a restaurant during the onset of the. COVID-19 pandemic. Tiki’s Grill & Bar, LLC v. DTRIC Ins. Co., Ltd., 2025 Haw. App. LEXIS 527 (Haw. Ct. App. Oct. 29, 2025).

Tiki’s operated a restaurant and bar in a hotel. In March 2020, government proclamations were issued ordering that all restaurants be closed. The owner of the hotel boarded up all entries and ground floor windows to the hotel building, including all ingress and egress to Tiki’s for both employees and the public. Tiki’s could not access its leased premises, including its kitchen and bar areas, and was unable to conduct any business. The boarded barriers remained in place from March 25, 2020, until July 31, 2020. Tiki’s reopened on August 6, 2020.

Tiki’s submitted a claim for business interruption to its insurer, DTRIC. The claim was denied. DTRIC’s denial letter stated there was no showing of “direct physical loss or damage to the property . . . To the extent there has been any loss, it does not appear to have been caused by direct physical loss or damage to property at [the] premises.” DTRIC also relied upon a virus exclusion in the policy.

Tiki’s filed suit seeking a declaratory judgment. DTRIC moved for summary judgment. The trial court granted the motion finding that the shutdown that was the basis for Tiki’s claim was not covered by the policy.

Tiki’s appealed. The ICA first examined the phrase “direct physical loss of or damage to property.” The phrases “physical loss of” and “[physical] damage to,” as used in the policy, had separate meanings, even if the meanings overlapped. To conclude otherwise would render one or the other phrase superfluous.

The phrase “direct physical loss of . . . property” could reasonably be construed to mean the deprivation of physical access to property at the premises due to the imposition of a physical barrier. Other courts held that tangible damage such as physical alteration or destruction was not required to trigger coverage under policies using the phrase “physical loss or damage to” property or similar language. Further, Tiki’s maintained here that there was a physical alteration of the premises that blocked access to its leased space.

Tiki’s alleged and presented evidence that an event – i.e., the boarding up of the hotel and the resulting loss of physical access to the restaurant – directly caused a loss related to the physical matter of property at the premises.

Tiki’s presented evidence that the suspension of its operations was caused by a third party’s imposition of physical barriers that blocked Tiki’s from accessing its leased space, thus preventing it from engaging in any business within its space. Tiki’s also presented evidence that neither the hotel closure nor the boarding up of the premises was required by any governmental order, and the COVID virus itself was not the direct cause of Tiki’s loss. Therefore, Tiki’s presented a genuine issue of material fact as to whether its suspension of operations was “caused by direct physical loss or damage to property” at the premises. The trial court erred in concluding that Tiki’s claim for lost business income was not covered by the policy’s coverage clause as a matter of law.

Nor could DTRIC rely on the virus exclusion to deny coverage. The exclusion provided, “We will not pay for loss or damage caused by or resulting from any virus . . .” The phrase “caused by or resulting from any virus” was ambiguous when the policy was viewed as a whole. Other exclusions in the policy added language to various exclusions stating, “Such loss or damage is excluded regardless of any other cause or event that contributed concurrently or in any sequence to the loss.” The virus exclusion omitted this language. In context, a reasonable reading of of this omission was that the phrase “caused by or resulting from any virus” was not intended to cover situations in which a virus was an “indirect” cause of loss or damage, or where a virus acted concurrently with or in sequence with a covered cause.

The order granting summary judgment was vacated and the case remanded for further proceedings.