By Mike Curley

Law360 (October 13, 2020, 2:30 PM EDT ) The Cincinnati Insurance Co. is urging an Illinois federal court to throw out claims by The Bend Hotel Development Co. LLC that the insurer was wrong to deny it coverage for COVID-19-related losses, saying the virus does not cause physical damage, a "fundamental prerequisite" for coverage.

In a motion filed Friday, Cincinnati told the court that Bend Hotel's suit should be dismissed like others that have brought up the same question, such as Sandy Point Dental PC v. The Cincinnati Insurance Co. et al. , in which the same district court found that COVID-19 did not cause any physical alteration that triggered coverage.

The situation is the same in this case, Cincinnati said, arguing that Bend Hotel hasn't alleged that any real physical damage happened because of the virus.

"Plaintiff makes speculative, conclusory allegations that it has sustained physical loss to property based not on facts about the coronavirus and the premises, but instead on the basis that coronavirus exists in our world and that civil authority orders have been issued," the insurer told the court. "There is no allegation that the presence of the virus resulted in direct physical loss to property, only that its presence 'on or around' plaintiff's premises allegedly made the premises unsafe and unfit for its intended purpose."

Bend Hotel sued Cincinnati in August, arguing like many other hotels, eateries and other businesses that the insurer unreasonably denied coverage for its losses stemming from the COVID-19 pandemic. In the complaint, the hotel argued that Illinois courts have consistently held that the presence of a dangerous substance in a property constitutes "physical loss or damage," and, unlike many commercial property insurance policies on the market, the one at issue contains no exclusion for loss caused by a virus, it said.

Cincinnati, however, argued that because the coronavirus that causes COVID-19 dies on its own in a matter of days and can be cleaned off, it can't be said to have caused physical loss or damage, as the property remains intact.

The insurer added that businesses where COVID-19 is known to be present, such as hospitals, remained open, showing that the virus did not cause structural damage that made normal operations impossible.

And because the virus could not cause damage to Bend Hotel's property, it couldn't be said to have damaged nearby properties as is required for coverage under the hotel's civic authority claims, the insurer said.

In addition, none of the government orders prohibited access to the hotel's property, while the coverage requires that access to the premises be denied, Cincinnati argued.

The insurer further argued that the lack of a virus exclusion is not relevant, because the virus isn't covered anyway because of a lack of physical damage or loss.

Finally, the insurer asked the court to shoot down the hotel's claims that its denial is unreasonable, saying at the very least, there is a legitimate dispute over the terms of the policy and its position is a reasonable one.

Charles Aaron Silverman of Charles Aaron Silverman PC, representing the hotel, told Law360 on Wednesday that the motion and the large memorandum of law seem intent on getting as many pages and exhibits into play as possible. He added he will seek leave to file a sizable response.

Representatives for Cincinnati could not immediately be reached for comment Tuesday.

The hotel is represented by Charles Aaron Silverman of Charles Aaron Silverman PC.

Cincinnati is represented by Brian M. Reid of Litchfield Cavo LLP.

The case is Bend Hotel Development Company LLC v. Cincinnati Insurance Co., case number 1:20-cv-04636, in the U.S. District Court for the Northern District of Illinois.

--Additional reporting by Celeste Bott and Daphne Zhang. Editing by Alyssa Miller.

Update: This story has been updated with comment from the Bend Hotel's attorney.

For a reprint of this article, please contact reprints@law360.com.