Tiki's Grill & Bar, LLC v. DTRIC Insurance Company, Limited

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
29-OCT-2025
07:49 AM
Dkt. 71 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

–––O0O–––

TIKI'S GRILL & BAR, LLC, Plaintiff-Appellant, v.
DTRIC INSURANCE COMPANY, LIMITED, Defendant-Appellee

NO. CAAP-XX-XXXXXXX

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 1CCV-XX-XXXXXXX)

OCTOBER 29, 2025

WADSWORTH, PRESIDING JUDGE, AND McCULLEN AND GUIDRY, JJ.

OPINION OF THE COURT BY WADSWORTH, J.

This appeal stems from an insurance coverage dispute
between Plaintiff-Appellant Tiki's Grill & Bar, LLC (Tiki's) and
Defendant-Appellee DTRIC Insurance Company, Limited (DTRIC).
Tiki's had a commercial insurance policy with DTRIC (Policy) that
covered lost business income due to the suspension of operations
"caused by direct physical loss of or damage to property at
premises." In late March 2020, following the start of the COVID-
19 pandemic, the owner of the hotel in which Tiki's restaurant
was located nailed wooden boards across the hotel's entrances and
exits, blocking physical access to the restaurant. Tiki's
submitted a claim to DTRIC under the Policy. DTRIC denied the
claim, asserting that Tiki's business interruption was caused by
the government's COVID-related orders and not by direct physical
loss of or damage to the premises, and, in any event, a "virus
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

exclusion" in the Policy precluded coverage for the claimed loss
or damage. Tiki's sued DTRIC, seeking a declaratory judgment
that DTRIC was obligated to cover Tiki's claim. The Circuit
Court of the First Circuit (Circuit Court) ruled in favor of
DTRIC, granting its motion for summary judgment.1/
Tiki's appeals from the Circuit Court's Final Judgment,
entered on January 26, 2022. Tiki's also challenges the Circuit
Court's "Order Granting . . . DTRIC['s] Motion for Summary
Judgment" (Summary Judgment Order), entered on January 25, 2022.
On appeal, Tiki's contends that the Circuit Court erred
in granting summary judgment in DTRIC's favor. Specifically,
Tiki's argues that the Circuit Court "erroneously construed the
Policy as not providing coverage where [Tiki's] business
interruption was caused by the direct physical loss of or damage
to the physical access points of premises because it was caused
by the placement of physical barriers at those points by a third
person."
We hold that the Circuit Court erred in concluding that
Tiki's claim for lost business income was not covered by the
Policy as a matter of law. The relevant language of the Policy
can reasonably be read to cover the insured's suspension of
operations caused by the loss of physical access to its property
due to the imposition of a physical barrier. Here, Tiki's
presented evidence that its business interruption was caused by a
third party's imposition of physical barriers that blocked Tiki's
access to its leased space, thus preventing it from engaging in
any business within its space, including permitted carry out and
delivery service. Tiki's thus presented a genuine issue of
material fact as to whether its business interruption was "caused
by direct physical loss of or damage to property" at the
premises. In these circumstances, DTRIC also failed to establish
that any exclusion in the Policy precluded coverage as a matter
of law. Accordingly, we vacate the Final Judgment and the
Summary Judgment Order and remand the case to the Circuit Court.

1/
The Honorable James H. Ashford presided.

2
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

I. Background

Based on the parties' respective summary judgment
submissions, and unless otherwise indicated, the following facts
appear to be uncontroverted.

A. Tiki's Business Interruption

Tiki's operates a restaurant and bar in the Aston
Waikiki Beach Hotel (the Hotel) known as "Tiki's Grill & Bar."
Tiki's leases third-floor indoor and outdoor commercial space
within the Hotel, overlooking Waikiki Beach. Tiki's also offers
service throughout the Hotel by room service and at poolside and
other open space venues within the Hotel. All of Tiki's ingress
and egress points are within the structure of the Hotel.
On March 4, 2020, then-Governor David Y. Ige issued a
Proclamation declaring a state of emergency relating to the
COVID-19 pandemic. The same day, then-Honolulu Mayor Kirk W.
Caldwell issued a similar proclamation.
On March 16, 2020, Governor Ige issued a Supplementary
Proclamation, which, among other things, directed "[a]ll
residents . . . to heed any orders and guidance of federal and
state public health officials, including but not limited to, the
imposition of social distancing measures, to control the spread
of COVID-19." On March 20, 2020, Mayor Caldwell issued an
emergency order requiring, among other things, that all
restaurants close for 15 calendar days, "except solely for
drive-thru, pickup, or delivery service[.]"
On March 26, 2020, Governor Ige issued a Second
Supplementary Proclamation relating to the COVID-19 pandemic.
With certain exceptions, all persons entering the state were
subject to a mandatory 14-day self-quarantine period.
On or about March 25, 2020, the owner of the Hotel
boarded up all entries and ground floor windows to the Hotel
building, thus blocking all ingress to (and egress from) Tiki's,
by both Tiki's employees and the public. With these barriers in
place, Tiki's could not access its leased premises, including its
kitchen and bar areas, and was unable to engage in any business,

3
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

including carry out and delivery service to guest rooms, poolside
and other locations within the Hotel building. The board
barriers remained in place from March 25, 2020, until July 31,
2020, when the boards were removed. The Hotel reopened on
August 2, 2020, and Tiki's reopened on August 6, 2020.
Tiki's asserts that neither the Hotel closure nor the
boarding up of the premises was required by any governmental
order, and that hotels were actually encouraged to remain open
under various orders by Governor Ige and Mayor Caldwell
throughout the Spring and Summer of 2020. Tiki's further asserts
that it was permitted by law to resume indoor table service
dining from June 5, 2020,2/ and bar service from June 19, 2020.

B. The Policy

Tiki's maintained a commercial insurance policy issued
by DTRIC for the relevant time period. The Policy provided
coverage for personal property and business income, including
extra expense, at Tiki's Waikiki location.
As relevant here, the Policy's "BUSINESS INCOME (AND
EXTRA EXPENSE) COVERAGE FORM" (Business Income Form) states in
pertinent part:

A. Coverage

1. Business Income

Business Income means the:
a. Net Income (Net profit or Loss before
income taxes) that would have been earned
or incurred; and

b. Continuing normal operating expenses
incurred, including payroll.
For manufacturing risk, Net Income includes the
net sales value of production.

. . . .
We will pay for the actual loss of Business Income you
sustain due to the necessary "suspension" of your

2/
On June 3, 2020, Mayor Caldwell amended his previous orders to
permit table service dining beginning June 5, 2022, subject to capacity
limitations and social distancing requirements.

4
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
"operations" during the "period of restoration". 3/
The "suspension" must be caused by direct physical
loss of or damage to property at premises which are
described in the Declarations and for which a Business
Income Limit of Insurance is shown in the
Declarations. The loss or damage must be caused by or
result from a Covered Cause of Loss. . . .

3/
The Business Income Form defines the terms in quotation marks in
relevant part, as follows:
F. Definitions

. . . .
2. "Operations" means:
a. Your business activities occurring at the
described premises; and
b. The tenantability of the described
premises, if coverage for Business Income
including "Rental Value" or "Rental Value"
applies.
3. "Period of Restoration" means the period of time
that:

a. Begins:
(1) 72 hours after the time of direct
physical loss or damage for Business
Income coverage; or

(2) Immediately after the time of direct
physical loss or damage for Extra
Expense coverage;
caused by or resulting from any Covered
Cause of Loss at the described premises;
and

b. Ends on the earlier of:
(1) The date when the property at the
described premises should be
repaired, rebuilt or replaced with
reasonable speed and similar
quality; or
(2) The date when business is resumed at
a new permanent location.
. . . .

6. "Suspension" means:
a. The slowdown or cessation of your business
activities; or
b. That a part or all of the described
premises is rendered untenantable, if
coverage for Business Income including
"Rental Value" or "Rental Value" applies.

5
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
With respect to the requirements set forth in the
preceding paragraph, if you occupy only part of the
site at which the described premises are located, your
premises means:

a. The portion of the building which you
rent, lease or occupy; and
b. Any area within the building or on the
site at which the described premises are
located, if that area services, or is used
to gain access to, the described premises.
. . . .

3. Covered Causes Of Loss, Exclusions And
Limitations
See applicable Causes of Loss Form as shown in
the Declarations.
. . . .

5. Additional Coverages
. . . .
b. Alterations And New Buildings

We will pay for the actual loss of
Business Income you sustain and necessary
Extra Expense you incur due to direct
physical loss or damage at the described
premises caused by or resulting from any
Covered Cause of Loss to:
(1) New buildings or structures, whether
complete or under construction;

(2) Alterations or additions to existing
buildings or structures;

. . . .

If such direct physical loss or damage
delays the start of "operations", the
"period of restoration" for Business
Income Coverage will begin on the date
"operations" would have begun if the
direct physical loss or damage had not
occurred.

(Footnote added.)
The "applicable Causes of Loss Form," referenced above
in Paragraph A.3., appears to be a form entitled "CAUSES OF LOSS
- SPECIAL FORM" (Causes of Loss Form). That form states in
relevant part:

A. Covered Causes Of Loss
When Special is shown in the Declarations, Covered

6
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Causes of Loss means Risks Of Direct Physical Loss 4/
unless the loss is:
1. Excluded in Section B., Exclusions; or

2. Limited in Section C., Limitations;

that follow.
B. Exclusions
1. We will not pay for loss or damage caused
directly or indirectly by any of the following.
Such loss or damage is excluded regardless of
any other cause or event that contributes
concurrently or in any sequence to the loss.
a. Ordinance Or Law

The enforcement of any ordinance or law:
(1) Regulating the construction, use or
repair of any property; or

. . . .
This exclusion, Ordinance Or Law, applies
whether the loss results from:

(1) An ordinance or law that is enforced
even if the property has not been
damaged; or

(2) The increased costs incurred to
comply with an ordinance or law in
the course of construction, repair,
renovation, remodeling or demolition
of property, or removal of its
debris, following a physical loss to
that property.

. . . .

2. We will not pay for loss or damage caused by or
resulting from any of the following:

. . . .
b. Delay, loss of use or loss of market.

The Policy also contains an "EXCLUSION OF LOSS DUE TO
VIRUS OR BACTERIA" (Virus Exclusion), which provides in relevant
part:

A. The exclusion set forth in Paragraph B. applies to all
coverage under all forms and endorsements that
comprise this Coverage Part or Policy, including but
not limited to forms or endorsements that cover
property damage to buildings or personal property and
forms or endorsements that cover business income,

4/
The phrase "Risks Of Direct Physical Loss" is not defined in the
Policy.

7
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
extra expense or action of civil authority.
B. We will not pay for loss or damage caused by or
resulting from any virus, bacterium or other
microorganism that induces or is capable of inducing
physical distress, illness or disease.

However, this exclusion does not apply to loss or
damage caused by or resulting from "fungus", wet rot
or dry rot. Such loss or damage is addressed in a
separate exclusion in this Coverage Part or Policy.
C. With respect to any loss or damage subject to the
exclusion in Paragraph B., such exclusion supersedes
any exclusion relating to "pollutants".
. . . .
E. The terms of the exclusion in Paragraph B., or the
inapplicability of this exclusion to a particular
loss, do not serve to create coverage for any loss
that would otherwise be excluded under this Coverage
Part or Policy.

C. The Claim and Denial

On June 18, 2020, Tiki's, through its insurance agent,
submitted a claim (Claim) to DTRIC under the Policy. The Claim
was described as a "Business Interupption [sic] claim due to
hotel closing doors and limited operating service." An attached
email from Tiki's managing member, William Tobin (Tobin),
explained that "the hotel has been closed and boarded up - since
approximately March 25, 2020"; "[t]ake out and delivery have been
allowed during this entire time"; "[f]ull-service dine-in has
been allowed since June 5, 2020"; and "[b]ecause we are known for
having outdoor seating, we are currently missing out on the pent
up demand . . . ."
DTRIC denied the Claim in a letter dated July 9, 2020.
The letter stated in part:

From the information provided to date, it appears the Claim
arises out of guidelines and orders issued by state and
local authorities to encourage "social distancing" and
minimize person-to-person contact during the COVID-19
pandemic. While this appears to have resulted in the
closure of your business or curtailment of your regular
business activity, there has been no showing, at the present
time, of direct physical loss of or damage to the Property
described in the Declarations of your Policy. To the extent
there has been any loss, it does not appear to have been
caused by direct physical loss of or damage to property at
premises which are described in the Declarations, as
required for coverage under the Policy.
Further, it also appears that the "EXCLUSION OF LOSS DUE TO
VIRUS OR BACTERIA" is applicable to your Claim. This

8
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
exclusion precludes coverage for loss or damage caused by or
resulting from any virus that induces or is capable of
inducing physical distress, illness or disease. This
exclusion applies to all forms and endorsements that
comprise the Policy's Commercial Property coverage.

D. Proceedings in the Circuit Court

Tiki's filed the operative First Amended Complaint
against DTRIC on September 3, 2020. Tiki's alleged, among other
things, that: (1) on or about March 25, 2020, it "was excluded
from the insured premises located within the . . . Hotel . . . ,
and thereafter prevented from conducting any business on the
premises and within other areas of the [H]otel"; (2) "[t]he
[H]otel . . . was . . . closed down and boarded up thereby
preventing [Tiki's] from physically accessing its business
premises"; (3) "[Tiki's] was thus prevented, by the physical
closure of the building by a third party, from using its premises
and generating business income thereby, including . . . from
outside dining and/or take-out service during times when indoor
dining was not permitted by government regulation"; (4) Tiki's
submitted the Claim to DTRIC; (5) DTRIC informed Tiki's that
DTRIC would not cover the Claim under the Policy; and (6)
"[t]here is an actual and continuing controversy between [Tiki's]
and DTRIC as to the coverage available to [Tiki's] under the
[P]olicy . . . ." Tiki's sought "[a] declaratory judgment
finding and declaring that DTRIC is obligated to cover [Tiki's]
for its Claim in whole or in part[,]" as well as other
appropriate relief.
DTRIC answered the Complaint on September 24, 2020.
DTRIC denied that the Policy covers the loss claimed by Tiki's
and further denied Tiki's allegation that it "has suffered a
direct 'physical loss' of the covered premises" or that it "has
suffered loss of business revenue as a direct and proximate cause
of such physical loss."
On July 16, 2021, DTRIC filed its motion for summary
judgment. DTRIC sought summary judgment on two grounds: (1)
Tiki's business income claim was not covered under the Policy
because there was no direct physical loss or damage to Tiki's
property or any other relevant property; and (2) the Policy's

9
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Virus Exclusion precluded coverage of Tiki's claim. DTRIC
requested that the Circuit Court take judicial notice of certain
COVID-related proclamations and orders issued by Governor Ige and
Mayor Caldwell at the start of the COVID pandemic, and relied on
cases in other jurisdictions purportedly concluding there was no
"direct physical loss of or damage to property" "where business
losses stem from shutdowns or a decline in business caused by the
COVID-19 pandemic[.]" As to the Virus Exclusion, DTRIC argued:
"[Tiki's] contends its loss flows from the decision of the
[H]otel . . . to shut down and board up its premises during the
early months of the COVID pandemic in response to government
orders and the dramatic drop in visitor arrivals. However,
because the . . . Hotel's temporary shutdown was clearly
precipitated by the COVID pandemic, which in turn was caused by a
virus, the exclusion plainly applies."
On September 13, 2021, Tiki's filed its opposition to
the summary judgment motion. Tiki's argued that: (1) the Policy
covered Tiki's claimed loss because it resulted from a physical
loss of the premises when ingress and egress were physically cut
off by the boarding up of the Hotel; and (2) the Virus Exclusion
was inapplicable because, at most, the virus was a remote or
concurrent cause of Tiki's loss, and such causes were not
included in the exclusion. Tiki's submitted the declaration of
Tobin, who stated, among other things:

10. Neither the Hotel closure nor the physical
boarding up of the premises was required by any governmental
order; in fact, hotels were actually encouraged to remain
open under various orders by Governor Ige and Mayor Caldwell
throughout the Spring and Summer, 2020. No government law
or ordinance, and no virus, required the Hotel completely to
shutter its business and board up, causing Tiki's to lose
its property and base of operations. Importantly,
from June 5, 2020, Tiki's was permitted by law to resume
table service dining within the premises, and bar service
from June 19, 2020.
11. Although there were some limitations placed upon
various businesses by Covid-related orders, such orders did
not require the Hotel or Tiki's to cease all business
activity. Indeed, Tiki's, like the Hotel, was identified as
an "essential business." Restaurant operators in Honolulu
have been permitted to prepare and provide food by carry out
and delivery throughout the pandemic.
12. Even when the restaurant's indoor dining was
prohibited under certain government orders, Tiki's was

10
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
permitted to continue serving customers by carry out
(takeout) and delivery.
13. However, as a consequence of the Hotel's
boarding up, Tiki's was prevented from accessing its
premises, including its kitchen and bar areas, and thus was
physically prevented from engaging in any business within
its leased premises, including carry out and delivery
service to guest rooms, poolside, and other locations within
the Hotel building. Even when there were limitation under
various Covid-related orders -- for example indoor dining
restrictions -- substantial components of Tiki's operations
were always permitted lawfully to continue.

Tiki's attached photos of the boards affixed to the Premises.
Tobin's declaration also described Tiki's claim, as
follows:

18. Tiki's made the business loss claim under the
Policy to recover the income of those parts of Tiki's
business that were permitted, if not encouraged, by the
State and City orders to continue in operation. Tiki's does
not claim that Tiki's business operations, or any part of
them, were interrupted by the presence of Covid virus on the
insured premises or that Tiki's should be compensated for
losses on business that government orders would not have
permitted to carry out even if the Hotel was not boarded up.

The motion was heard on September 21, 2021.
On January 25, 2022, the Circuit Court issued the
Summary Judgment Order. It stated in relevant part:

[T]he Court GRANTS [DTRIC's] Motion.

The Court is persuaded by and agrees with the analysis
in Ass'n of Apartment Owners of Imperial Plaza v. Fireman's
Fund Ins. Co., 939 F. Supp. 2d 1059 (D. Haw. 2013)[,] and
Waikiki Sports Hawai#i Inc. dba Sand People v. Fireman's
Fund Ins. Co., 2020 WL 6562332 (N.D. Cal.[] Nov. 9, 2020),
cited by [DTRIC]. The Court finds that the shutdown that is
the basis for [Tiki's] claim is not covered by the insurance
policy at issue.

This appeal followed.

II. Standard of Review

We review the Circuit Court's grant of summary judgment
de novo. See Allstate Ins. Co. v. Pruett, 118 Hawai#i 174, 178,
186 P.3d 609, 613 (2008) (citing State ex. rel. Anzai v. City and
Cnty. of Honolulu, 99 Hawai#i 508, 514, 57 P.3d 433, 439 (2002);
Bitney v. Honolulu Police Dep't, 96 Hawai#i 243, 250, 30 P.3d
257, 264 (2001)).

[S]ummary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and

11
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to
judgment as a matter of law. A fact is material if
proof of that fact would have the effect of
establishing or refuting one of the essential elements
of a cause of action or defense asserted by the
parties. The evidence must be viewed in the light
most favorable to the non-moving party. In other
words, we must view all of the evidence and inferences
drawn therefrom in the light most favorable to the
party opposing the motion.

Pruett, 118 Hawai#i at 178-79, 186 P.3d at 613-14 (quoting Kahale
v. City and Cnty. of Honolulu, 104 Hawai#i 341, 344, 90 P.3d 233,
236 (2004)).

III. Discussion

Tiki's contends that the Circuit Court erred in
granting summary judgment in DTRIC's favor. Tiki's argues that:
(1) the Policy provides coverage for loss of business income due
to the "suspension" of business operations "caused by direct
physical loss of or damage to property at premises which are
described in the Declarations"; (2) "[t]he coverage clause
reasonably encompasses the inability to physically access and
physically use premises and all the property therein caused by a
third party nailing wooden boards over access points, thus
physically destroying the access points and blocking all physical
access to the premises"; (3) "[b]ecause [Tiki's] loss of income
and suspension of operations was caused by the physical placement
of barriers by a third party that physically eliminated all
physical access to and use of the premises and the property
within them, [Tiki's] suffered a loss of income 'caused by
physical loss of or damage to property at premises which are
described in the [D]eclarations'"; (4) "[t]he loss thus fell
within the reasonable meaning of the Policy's coverage clause,"
and the Circuit Court's conclusion that it did not was wrong; and
(5) no alternative ground exists to affirm the Circuit Court's
decision, because no exclusion in the Policy applies to defeat
coverage.
In response, DTRIC contends that the Circuit Court did
not err, because Tiki's did not suffer a "direct physical loss of
or damage to" its property as required by the Policy. DTRIC

12
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

argues: "Tiki's does not allege that the Coronavirus was ever
present on the insured premises (including the areas of the hotel
prov[id]ing ingress and egress to Tiki's restaurant). Instead,
Tiki's alleges a loss of use, which absent direct physical loss
or damage does not trigger coverage under a property insurance
policy." (Footnote omitted.) Relying on certain cases
construing the phrase "direct physical loss or damage" or
otherwise involving government COVID orders, DTRIC asserts: "The
fact that Tiki's claims its loss is the result of its landlord
shutting down and boarding up the hotel in which [Tiki's]
business is located — and not the direct result of a government
shutdown order — does not materially distinguish this case from
[others] involving claims arising from COVID shutdown orders.
The common denominator for all these cases is still a loss of
business income caused by a loss of access to clientele,
unaccompanied by permanent dispossession or physical damage to
property." DTRIC further argues that in any event, the Policy
expressly excludes from coverage loss or damage caused by or
resulting from "loss of use" and loss or damage caused by or
resulting from "any virus . . . that induces or is capable of
inducing physical distress, illness or disease."
Because the parties' arguments require us to interpret
the terms of an insurance policy, we discuss applicable
principles before analyzing the specific terms at issue.

A. Principles Concerning the Interpretation of Insurance
Policies

Insurance policies are contracts; their construction is
a question of law. See Tri-S Corp. v. Western World Ins. Co.,
110 Hawai#i 473, 489, 135 P.3d 82, 98 (2006). And because they
are contracts, "[i]nsurance policies . . . are interpreted using
the general rules of contract construction." Aloha Petroleum,
Ltd. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 155 Hawai#i 108,
118, 557 P.3d 837, 847 (2024) (citing St. Paul Fire and Marine
Ins. Co. v. Bodell Constr. Co., 153 Hawai#i 381, 383, 538 P.3d
1049, 1051 (2023)). "[T]he terms of the policy should be
interpreted according to their plain, ordinary, and accepted

13
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

sense in common speech unless it appears from the policy that a
different meaning is intended. Moreover, every insurance
contract shall be construed according to the entirety of its
terms and conditions as set forth in the policy." Dairy Rd.
Partners v. Island Ins. Co., 92 Hawai#i 398, 411, 992 P.2d 93,
106 (2000) (brackets, quotation marks, and citations omitted);
see Hawaiian Ins. & Guar. Co. v. Fin. Sec. Ins. Co., 72 Haw. 80,
87, 807 P.2d 1256, 1260 (1991) ("[W]e must look to the language
of the insurance policies themselves to ascertain whether
coverage exists, consistent with the insurer and insured's intent
and expectations." (citing Globe Indem. Co. v. Texeira, 230 F.
Supp. 451 (D. Haw. 1964))).
The Hawai#i Supreme Court has also recognized:

[I]nsurance contracts are particularly one-sided contracts.
Power dynamics shape this court's interpretation. Insurance
policies are considered contracts of adhesion. Dairy Rd.
Partners v. Island Ins. Co., Ltd., 92 Hawai #i 398, 411-12,
992 P.2d 93, 106-07 (2000). They often (like here) use
insurance industry standard forms. Id. Thus, we construe
any ambiguity in the policy for the policyholder and against
the insurer. St. Paul, 153 Hawai#i at 383, 538 P.3d at
1051. We read the contract to the policyholder's advantage.
Id.

Aloha Petroleum, 155 Hawai#i at 118, 557 P.3d at 847; see
Pruett, 118 Hawai#i at 182, 186 P.3d at 617 ("[B]ecause insurance
policies are contracts of adhesion and are premised on standard
forms prepared by the insurer's attorneys, we have long
subscribed to the principle that they must be construed liberally
in favor of the insured and the ambiguities must be resolved
against the insurer." (quoting Dairy Rd. Partners, 92 Hawai#i at
411-12, 992 P.2d at 106-07)). Relatedly, "[insurance] policies
are to be construed in accord with the reasonable expectations of
a layperson." Pruett, 118 Hawai#i at 182, 186 P.3d at 617
(quoting Dairy Rd. Partners, 92 Hawai#i at 412, 992 P.2d at 107).

B. The Policy's Coverage Clause

We begin with the operative language of the Policy's
coverage clause (Coverage Clause). As stated in Business Income
Form paragraph A.1., supra, the Policy provides coverage for "the
actual loss of Business Income [the insured] sustain[s] due to

14
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

the necessary 'suspension' of [its] 'operations' during the
'period of restoration'. The 'suspension' must be caused by
direct physical loss of or damage to property at premises which
are described in the Declarations . . . ."
DTRIC moved for and obtained summary judgment on the
ground that Tiki's claim for lost business income was not covered
by the Policy, in that Tiki's would be unable to show that its
suspension of operations was "caused by direct physical loss of
or damage to property" at the relevant "premises." The parties
do not appear to dispute the meaning of the term "premises."
For purposes of coverage requirements, the Policy plainly makes
no distinction between Tiki's leased premises and the areas of
the Hotel that "service[]," or are used "to gain access to"
Tiki's. Instead, the primary focus of the parties' briefs, and
therefore this court's analysis, is the meaning of the phrase
"caused by direct physical loss of or damage to property."
We first examine the phrase "direct physical loss of or
damage to property." It is not defined in the Policy. Tiki's
contends that "the phrase 'loss of or damage to' can reasonably
be construed to mean that 'loss' is separate and distinct from
'damage,' and loss thus can occur even in the absence of damage,
although here [Tiki's] contends there is both 'physical damage'
(existing physical structures physically altered by having wooden
boards nailed to them) and 'physical loss' (the inability to
physically enter and use the premises because of a physical
barrier, whether that barrier is considered 'damage' or not)."
In response, DTRIC argues that, assuming "loss" and "damage" mean
different things, "courts addressing this argument in the COVID-
19 coverage context have explained that while 'direct physical
damage' refers to property that has been physically damaged but
can be repaired, 'direct physical loss' refers to the permanent
dispossession of property that has been destroyed or stolen and
thus cannot be repaired." DTRIC asserts that "a loss of access
to clientele, unaccompanied by permanent dispossession or
physical damage to property" does not constitute direct physical
loss or damage to property.

15
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

We conclude that the phrases "physical loss of" and
"[physical] damage to," as used in the Policy, must have separate
meanings, even if those meanings overlap. To conclude otherwise
would render one or the other phrase superfluous. We must give
effect to every term of the Policy and avoid rendering any term
meaningless. See Stanford Carr Dev. Corp. v. Unity House, Inc.,
111 Hawai#i 286, 297, 141 P.3d 459, 470 (2006); see also In re
Soc'y Ins. Co. COVID-19 Bus. Interruption Prot. Ins. Litig., 521
F. Supp. 3d 729, 741 (N.D. Ill. 2021) (construing the phrase
"direct physical loss of or damage to" in a policy containing
business interruption coverage: "The disjunctive 'or' in that
phrase means that 'physical loss' must cover something different
from 'physical damage.'"); Nautilus Grp., Inc. v. Allianz Glob.
Risks US, No. C11-5281BHS, 2012 WL 760940, at *7 (W.D. Wash.
Mar. 8, 2012) (construing similar phrase in commercial insurance
policy: "[I]f 'physical loss' was interpreted to mean 'damage,'
then one or the other would be superfluous. The fact that they
are both included in the grant of coverage evidences an
understanding that physical loss means something other than
damage.").
Next, we focus on the meaning of the phrase "direct
physical loss of . . . property." The Policy does not define
this phrase or any of its component terms.5/ Under our governing
principles of construction, we must give these terms their plain
and ordinary meaning unless it appears that a different meaning
was intended; we must construe these terms as a layperson would
reasonably expect. Pruett, 118 Hawai#i at 182, 186 P.3d at 617
(quoting Dairy Rd. Partners, 92 Hawai#i at 412, 992 P.2d at 107).
Merriam-Webster provides several definitions of the adjective
"direct," the most relevant being "characterized by close
logical, causal, or consequential relationship." Direct,
Merriam-Webster Online Dictionary, https://www.merriam-webster.
com/dictionary/direct (accessed Oct. 17, 2025). This definition
spills over to the Policy's requirement that the suspension of
operations be "caused by" direct physical loss of property. See

5/
Similarly, the Policy does not define the phrase "direct physical
. . . damage to property" or any of its component terms.

16
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Acorn Inv. Co. v. Mich. Basic Prop. Ins. Ass'n, No. 284234, 2009
WL 2952677, at *2 (Mich. Ct. App. Sept. 15, 2009) (defining
"direct" in "direct physical loss" as "'immediate' or 'proximate'
cause, as distinct from remote or incidental causes").
"Physical" in this context is defined as "having material
existence: perceptible especially through the senses and subject
to the laws of nature." Physical, Merriam-Webster Online
Dictionary, https://www.merriam-webster.com/dictionary/physical
(accessed Oct. 17, 2025). "Loss" in this context can mean "the
act or fact of being unable to keep or maintain something," or
"the harm of privation resulting from losing or being separated
from . . . something."6/ Loss, Merriam-Webster Online Dictionary,
https://www.merriam-webster.com/dictionary/loss (accessed
Oct. 17, 2025); see also Webster's Encyclopedic Unabridged
Dictionary 1137 (1996 ed.) (defining loss as "detriment,
disadvantage, or deprivation from failure to keep, have, or
get"). Accordingly, the phrase "direct physical loss of . . .
property" at the premises can reasonably be construed to mean the
deprivation of physical access to property at the premises due to
the imposition of a physical barrier. This construction is
reinforced by the Policy's definition of "premises," which
includes "[a]ny area within the building . . . at which the
described premises are located, if that area . . . is used to
gain access to, the described premises." (Emphasis added.)
The Policy's Coverage Clause further provides that
"[t]he loss . . . must be caused by or result from a Covered
Cause of Loss[,]" which under the Causes of Loss Form (see supra)
means a "Risk[] Of Direct Physical Loss . . . ." The latter
phrase is not defined in the Policy. Merriam-Webster defines
"risk" in the first instance as "possibility of loss or injury."
Risk, Merriam-Webster Online Dictionary, https://www.merriam-
webster.com/dictionary/risk (accessed Oct. 17, 2025). Putting
the coverage text together with this definition, a covered

6/
"Loss" can also mean "destruction, ruin." Loss, Merriam-Webster
dictionary, www.merriam-webster.com/dictionary/loss (accessed Oct. 17, 2025)
(capitalization altered). To the extent the term "loss," as used in the
Policy, is ambiguous, it must be construed in favor of the insured. See Aloha
Petroleum, 155 Hawai#i at 118, 557 P.3d at 847.

17
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

business suspension must be caused by "direct physical loss of
. . . property" at the premises, and then the loss itself must be
caused by or result from the possibility of a direct physical
loss — a seemingly circular requirement in this context. There
would appear to be no dispute that the loss of physical access to
property that is blocked by a barrier can result from the
possibility of such a loss. To the extent the phrase "Risk[] Of
Direct Physical Loss" is ambiguous, it must be construed in favor
of the insured. See Aloha Petroleum, 155 Hawai#i at 118, 557
P.3d at 847. So construed, the Policy's Coverage Clause can
reasonably be read to cover the suspension of operations caused
by the deprivation of physical access to property due to the
imposition of a physical barrier.
In resisting coverage, DTRIC relies in part on the
phrase "Period of Restoration" in the Coverage Clause, which
states the time period during which lost business income is
covered, and which "[e]nds on the earlier of" "[t]he date when
the property at the described premises should be repaired,
rebuilt[,] or replaced with reasonable speed and similar quality"
or "[t]he date when business is resumed at a new permanent
location." DTRIC contends that this phrase implies that covered
physical loss or damage is tangible, requiring a physical injury
to property rather than solely loss of use.
We are not persuaded. As defined in the Policy, the
"Period of Restoration" merely describes the time period of
coverage; it does not state what is and is not covered. The
Policy explicitly covers lost business income due to a suspension
of operations caused by direct physical loss of property, not
just damage to property. See supra. Morever, the phrase "[t]he
date when the property at the described premises should be
repaired," when read with the definition of "premises," can
reasonably be construed in this context to refer to the date when
the nailed planks blocking the entrance to the Hotel should have
been (or were) physically removed to restore access. Again, any
ambiguity in this language must be resolved in favor of the
insured. See Aloha Petroleum, 155 Hawai#i at 118, 557 P.3d at
847.

18
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Other courts have held that tangible damage such as
physical alteration or destruction is not required to trigger
coverage under insurance policies that use the phrase "physical
loss of or damage to" property or similar language. See, e.g.,
Soc'y Ins., 521 F. Supp. 3d at 742-43 (applying the law of
Illinois and several other states in ruling that "direct physical
loss of property" can include the loss of physical use of the
covered property); Prudential Prop. & Cas. Ins. Co. v.
Lillard-Roberts, No. CV-01-1362-ST, 2002 WL 31495830, at *9 (D.
Or. June 18, 2002) (applying Oregon law in ruling that the
inability to inhabit a house may be a "direct" and "physical"
loss covered by insurance"); American Guar. & Liab. Ins. Co. v.
Ingram Micro, Inc., No. 99-185 TUC ACM, 2000 WL 726789, at *6 (D.
Ariz. April 18, 2000) (ruling that "'physical damage' is not
restricted to the physical destruction or harm of computer
circuitry but includes loss of access, loss of use, and loss of
functionality"). Moreover, here, Tiki's maintains there was in
fact a physical alteration of the premises that blocked access to
its leased space.
In granting DTRIC's motion for summary judgment, the
Circuit Court relied on two cases that we find of limited
persuasive value given the rather unique circumstances of this
case: Ass'n of Apartment Owners of Imperial Plaza v. Fireman's
Fund Ins. Co., 939 F. Supp. 2d 1059 (D. Haw. 2013), and Water
Sports Kauai, Inc. v. Fireman's Fund Ins. Co., 499 F. Supp. 3d
670 (N.D. Cal. 2020).
In AOAO Imperial Plaza, the court, applying Hawai#i
law, ruled that the plaintiff owners' association established
insurance coverage for arsenic damage to its real property under
policy language requiring that the property suffer "direct
physical loss or damage." 939 F. Supp. 2d at 1068-69. In
reaching this conclusion, the court stated:

The term "direct physical loss or damage" is not defined in
the Policy. Black's Law Dictionary defines "Damage" as
"Loss or injury to a person or property." Black's Law
Dictionary 445 (9th ed. 2009). The term "direct loss" is
defined as "a loss that results immediately and proximately
from an event." Black's Law Dictionary 1030 (9th ed. 2009).
While the term "immediate" may be defined differently
depending on the context; the Court adopts the following

19
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
definition: "Having a direct impact; without an intervening
agency." Id. at 816. "Physical" means "of or relating to
natural or material things." Merriam–Webster, Webster's
Third New International Dictionary 1706 (3rd ed. 2002).
"Material" is defined as "[o]f or relating to matter;
physical." Black's Law Dictionary 1066 (9th ed. 2009).
Based on these terms, Plaintiff must demonstrate that an
event had a direct impact and proximately caused a loss
related to the physical matter of the Property.

Id. (footnotes and record citations omitted).
Here, Tiki's alleges and has 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.
The ruling in AOAO Imperial Plaza thus supports Tiki's argument.
In Water Sports, the court, applying Hawai#i law,
ruled that "the mere threat of coronavirus cannot cause a 'direct
physical loss of or damage to' covered property as required
under" the 'lost business income' and 'civil authority'
provisions of a commercial insurance policy. 499 F. Supp. 3d at
673. There, the plaintiff "assert[ed] that it adequately alleged
closure [of its businesses] because of the 'imminent' threat of
coronavirus at [its] properties." Id. at 674. The court
concluded that the plaintiff had "not alleged any direct physical
anything that happened to or at its specific properties.
Moreover, it has not been dispossessed or deprived of any
specific property[.]" Id. at 677.
Here, in contrast, Tiki's alleged and presented
evidence that the boarding up of the Hotel caused a "direct
physical loss of" property at the premises, resulting in Tiki's
inability to engage in any business within its space, including
carry out and delivery service to guest rooms, poolside and other
locations within the Hotel building. In other words, Tiki's
presented evidence that it was effectively deprived or
dispossessed of its leased premises. The Water Sports ruling is
readily distinguished on this basis.
DTRIC cites a number of cases from other jurisdictions
purportedly holding that an insured's loss of business as a
result of the COVID pandemic (or related government closure
orders) does not constitute "direct physical loss of or damage
to" property within the meaning of a property insurance policy.

20
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

But none of these cases addresses a situation comparable to what
we have here. 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, including carry out and delivery service allegedly
permitted under government orders. 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.
Causation in the coverage context is generally an issue of fact.
See Advanced Indicator & Mfg., Inc. V. Acadia Ins. Co., 50 F.4th
469, 476 (5th Cir. 2022); see also Great Am. All. Ins. Co. v. Sir
Columbia Knoll Assocs. Ltd. P'ship, 484 F. Supp. 3d 946, 965 (D.
Or. 2020) ("Generally, if the facts are disputed, or different
inferences may be drawn from undisputed facts, the question of
the 'efficient proximate cause' of a loss is for the jury."
(quoting Naumes, Inc. v. Landmark Ins. Co., 849 P.2d 554, 555
(1993))). Here, Tiki's presented a genuine issue of material
fact as to whether its suspension of operations was "caused by
direct physical loss of or damage to property" at the premises
described in the Declarations. (Emphasis added.) The Circuit
Court therefore 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.7/

C. The Policy's Exclusions

DRTIC contends that the Policy excludes from coverage
loss or damage caused by or resulting from an insured's "loss of
use" of its premises in the absence of physical loss or damage to
those premises. DTRIC further contends that the Policy –
specifically the Virus Exclusion – excludes loss or damage caused
by or resulting from "any virus . . . that induces or is capable

7/
Because Tiki's presented a genuine issue of material fact as to
whether its suspension of operations was caused by direct physical loss of
property, we need not decide whether it presented a genuine issue of material
fact as to direct physical damage to property within the meaning of the
Policy.

21
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

of inducing physical distress, illness or disease." In response,
Tiki's argues that neither exclusion applies to defeat coverage.
The Hawai#i Supreme Court has made clear that the
insurer carries the burden of proof that an exclusionary clause
applies:

We think the better rule is that whenever the insurer relies
on an exclusionary clause of a policy as a defense to
liability, it has the burden of proving facts which bring
the case within the exclusion. This rule is not only
consistent with the general rules of pleading and evidence,
but also appears to be the general rule elsewhere.

Quinn v. Wilshire Ins. Co., 53 Haw. 19, 21, 486 P.2d 59, 60
(1971) (citing several cases); Webb v. OSF Inernational, Inc.,
156 Hawai#i 28, 36, 569 P.3d 447, 455 (2025) (quoting Quinn, 53
Haw. at 21, 486 P.2d at 60). "In addition, any ambiguity in an
exclusionary clause is construed in favor of the insured and
'strictly construed against the insurer.'" C. Brewer & Co. v.
Marine Indem. Ins. Co. of Am., 135 Hawai#i 190, 196, 347 P.3d
163, 169 (2015) (quoting Retherford v. Kama, 52 Haw. 91, 470 P.2d
517 (1970)).
DTRIC relies on the following language in the Causes of
Loss Form as excluding from coverage loss or damage caused by or
resulting from "loss of use":

B. Exclusions
. . . .

2. We will not pay for loss or damage caused by or
resulting from any of the following:
. . . .

b. Delay, loss of use or loss of market.

The Policy does not define the phrase "loss of use" or
otherwise specify the loss of use of what property by what means
the Policy seeks to exclude. Relatedly, the phrase "caused by or
resulting from . . . loss of use" is ambiguous, when the Policy
is viewed as a whole. (Emphasis added.) At multiple places in
the Policy, the phrase "caused by or resulting from" is expanded
to include the terms "directly or indirectly" and "[s]uch loss or
damage is excluded regardless of any other cause or event that
contributes concurrently or in any sequence to the loss."

22
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

(Emphasis added.) For example, the exclusion immediately
preceding the exclusion for "[d]elay, loss of use or loss of
market" states:

B. Exclusions
1. We will not pay for loss or damage caused
directly or indirectly by any of the following.
Such loss or damage is excluded regardless of
any other cause or event that contributes
concurrently or in any sequence to the loss.

(Emphases added.) The emphasized language in this exclusion and
other similarly worded exclusions in the Policy does not appear
in the exclusion for loss or damage caused by "[d]elay, loss of
use or loss of market." See supra. In context, a reasonable
reading of this omission is that the phrase "caused by or
resulting from . . . loss of use" is not intended to cover
situations in which loss of use is an "indirect" cause of loss or
damage, or where the loss of use acts concurrently with or in
sequence with a covered cause.
Here, Tiki's presented evidence that the suspension of
its operations was directly caused by the imposition of a
physical barrier that deprived Tiki's of physical access to its
leased space. If such causation is proven, the imposition of the
barrier could be considered a covered cause of loss (see supra),
and the loss of use of Tiki's space could be considered an
indirect cause of loss that would not trigger the loss-of-use
exclusion to bar coverage. In other words, construed in favor of
the insured, the loss-of-use exclusion would be triggered only
when loss of use is the cause of loss. Given this construction,
DTRIC did not establish that the Policy's loss-of-use exclusion
precluded coverage of Tiki's claimed loss as a matter of law.
DTRIC also relies on the following language in the
Policy's separate Virus Exclusion as precluding coverage of the
claimed loss:

B. We will not pay for loss or damage caused by or
resulting from any virus, bacterium or other
microorganism that induces or is capable of inducing
physical distress, illness or disease.

Like the similarly worded phrase in the loss-of-use
exclusion, the phrase "caused by or resulting from any virus" is

23
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

ambiguous, when the Policy is viewed as a whole. (Emphasis
added.) The Virus Exclusion likewise omits the language of other
exclusions, emphasized in the example above, that further
modifies the terms "caused by or resulting from." In context, a
reasonable reading of this omission is that the phrase "caused by
or resulting from any virus" is not intended to cover situations
in which a virus is an "indirect" cause of loss or damage, or
where a virus acts concurrently with or in sequence with a
covered cause.
Here, again, Tiki's presented evidence that the
suspension of its operations was directly caused by the
imposition of a physical barrier that blocked its access to its
leased space. Based on the same reasoning we applied to the
loss-of-use exclusion (see supra), we conclude that DTRIC did not
establish that the Policy's Virus Exclusion precluded coverage of
Tiki's claimed loss as a matter of law.

IV. Conclusion

For the reasons discussed above, we vacate the Circuit
Court's January 25, 2022 "Order Granting DTRIC Insurance Company,
Limited's Motion for Summary Judgment" and January 26, 2022 Final
Judgment. This case is remanded to the Circuit Court for further
proceedings consistent with this Opinion.

On the briefs: /s/ Clyde J. Wadsworth
Presiding Judge
James J. Bickerton
(Bickerton Law Group)
for Plaintiff-Appellant /s/ Sonja M.P. McCullen
Associate Judge
Richard B. Miller and
David R. Harada-Stone
(Tom Petrus & Miller, LLLC) /s/ Kimberly T. Guidry
for Defendant-Appellee Associate Judge

24

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
29-OCT-2025
07:49 AM
Dkt. 71 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

–––O0O–––

TIKI'S GRILL & BAR, LLC, Plaintiff-Appellant, v.
DTRIC INSURANCE COMPANY, LIMITED, Defendant-Appellee

NO. CAAP-XX-XXXXXXX

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 1CCV-XX-XXXXXXX)

OCTOBER 29, 2025

WADSWORTH, PRESIDING JUDGE, AND McCULLEN AND GUIDRY, JJ.

OPINION OF THE COURT BY WADSWORTH, J.

This appeal stems from an insurance coverage dispute
between Plaintiff-Appellant Tiki's Grill & Bar, LLC (Tiki's) and
Defendant-Appellee DTRIC Insurance Company, Limited (DTRIC).
Tiki's had a commercial insurance policy with DTRIC (Policy) that
covered lost business income due to the suspension of operations
"caused by direct physical loss of or damage to property at
premises." In late March 2020, following the start of the COVID-
19 pandemic, the owner of the hotel in which Tiki's restaurant
was located nailed wooden boards across the hotel's entrances and
exits, blocking physical access to the restaurant. Tiki's
submitted a claim to DTRIC under the Policy. DTRIC denied the
claim, asserting that Tiki's business interruption was caused by
the government's COVID-related orders and not by direct physical
loss of or damage to the premises, and, in any event, a "virus
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

exclusion" in the Policy precluded coverage for the claimed loss
or damage. Tiki's sued DTRIC, seeking a declaratory judgment
that DTRIC was obligated to cover Tiki's claim. The Circuit
Court of the First Circuit (Circuit Court) ruled in favor of
DTRIC, granting its motion for summary judgment.1/
Tiki's appeals from the Circuit Court's Final Judgment,
entered on January 26, 2022. Tiki's also challenges the Circuit
Court's "Order Granting . . . DTRIC['s] Motion for Summary
Judgment" (Summary Judgment Order), entered on January 25, 2022.
On appeal, Tiki's contends that the Circuit Court erred
in granting summary judgment in DTRIC's favor. Specifically,
Tiki's argues that the Circuit Court "erroneously construed the
Policy as not providing coverage where [Tiki's] business
interruption was caused by the direct physical loss of or damage
to the physical access points of premises because it was caused
by the placement of physical barriers at those points by a third
person."
We hold that the Circuit Court erred in concluding that
Tiki's claim for lost business income was not covered by the
Policy as a matter of law. The relevant language of the Policy
can reasonably be read to cover the insured's suspension of
operations caused by the loss of physical access to its property
due to the imposition of a physical barrier. Here, Tiki's
presented evidence that its business interruption was caused by a
third party's imposition of physical barriers that blocked Tiki's
access to its leased space, thus preventing it from engaging in
any business within its space, including permitted carry out and
delivery service. Tiki's thus presented a genuine issue of
material fact as to whether its business interruption was "caused
by direct physical loss of or damage to property" at the
premises. In these circumstances, DTRIC also failed to establish
that any exclusion in the Policy precluded coverage as a matter
of law. Accordingly, we vacate the Final Judgment and the
Summary Judgment Order and remand the case to the Circuit Court.

1/
The Honorable James H. Ashford presided.

2
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

I. Background

Based on the parties' respective summary judgment
submissions, and unless otherwise indicated, the following facts
appear to be uncontroverted.

A. Tiki's Business Interruption

Tiki's operates a restaurant and bar in the Aston
Waikiki Beach Hotel (the Hotel) known as "Tiki's Grill & Bar."
Tiki's leases third-floor indoor and outdoor commercial space
within the Hotel, overlooking Waikiki Beach. Tiki's also offers
service throughout the Hotel by room service and at poolside and
other open space venues within the Hotel. All of Tiki's ingress
and egress points are within the structure of the Hotel.
On March 4, 2020, then-Governor David Y. Ige issued a
Proclamation declaring a state of emergency relating to the
COVID-19 pandemic. The same day, then-Honolulu Mayor Kirk W.
Caldwell issued a similar proclamation.
On March 16, 2020, Governor Ige issued a Supplementary
Proclamation, which, among other things, directed "[a]ll
residents . . . to heed any orders and guidance of federal and
state public health officials, including but not limited to, the
imposition of social distancing measures, to control the spread
of COVID-19." On March 20, 2020, Mayor Caldwell issued an
emergency order requiring, among other things, that all
restaurants close for 15 calendar days, "except solely for
drive-thru, pickup, or delivery service[.]"
On March 26, 2020, Governor Ige issued a Second
Supplementary Proclamation relating to the COVID-19 pandemic.
With certain exceptions, all persons entering the state were
subject to a mandatory 14-day self-quarantine period.
On or about March 25, 2020, the owner of the Hotel
boarded up all entries and ground floor windows to the Hotel
building, thus blocking all ingress to (and egress from) Tiki's,
by both Tiki's employees and the public. With these barriers in
place, Tiki's could not access its leased premises, including its
kitchen and bar areas, and was unable to engage in any business,

3
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

including carry out and delivery service to guest rooms, poolside
and other locations within the Hotel building. The board
barriers remained in place from March 25, 2020, until July 31,
2020, when the boards were removed. The Hotel reopened on
August 2, 2020, and Tiki's reopened on August 6, 2020.
Tiki's asserts that neither the Hotel closure nor the
boarding up of the premises was required by any governmental
order, and that hotels were actually encouraged to remain open
under various orders by Governor Ige and Mayor Caldwell
throughout the Spring and Summer of 2020. Tiki's further asserts
that it was permitted by law to resume indoor table service
dining from June 5, 2020,2/ and bar service from June 19, 2020.

B. The Policy

Tiki's maintained a commercial insurance policy issued
by DTRIC for the relevant time period. The Policy provided
coverage for personal property and business income, including
extra expense, at Tiki's Waikiki location.
As relevant here, the Policy's "BUSINESS INCOME (AND
EXTRA EXPENSE) COVERAGE FORM" (Business Income Form) states in
pertinent part:

A. Coverage

1. Business Income

Business Income means the:
a. Net Income (Net profit or Loss before
income taxes) that would have been earned
or incurred; and

b. Continuing normal operating expenses
incurred, including payroll.
For manufacturing risk, Net Income includes the
net sales value of production.

. . . .

We will pay for the actual loss of Business Income you
sustain due to the necessary "suspension" of your

2/
On June 3, 2020, Mayor Caldwell amended his previous orders to
permit table service dining beginning June 5, 2022, subject to capacity
limitations and social distancing requirements.

4
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
"operations" during the "period of restoration". 3/
The "suspension" must be caused by direct physical
loss of or damage to property at premises which are
described in the Declarations and for which a Business
Income Limit of Insurance is shown in the
Declarations. The loss or damage must be caused by or
result from a Covered Cause of Loss. . . .

3/
The Business Income Form defines the terms in quotation marks in
relevant part, as follows:
F. Definitions
. . . .

2. "Operations" means:
a. Your business activities occurring at the
described premises; and
b. The tenantability of the described
premises, if coverage for Business Income
including "Rental Value" or "Rental Value"
applies.

3. "Period of Restoration" means the period of time
that:

a. Begins:
(1) 72 hours after the time of direct
physical loss or damage for Business
Income coverage; or

(2) Immediately after the time of direct
physical loss or damage for Extra
Expense coverage;

caused by or resulting from any Covered
Cause of Loss at the described premises;
and
b. Ends on the earlier of:

(1) The date when the property at the
described premises should be
repaired, rebuilt or replaced with
reasonable speed and similar
quality; or

(2) The date when business is resumed at
a new permanent location.
. . . .
6. "Suspension" means:

a. The slowdown or cessation of your business
activities; or
b. That a part or all of the described
premises is rendered untenantable, if
coverage for Business Income including
"Rental Value" or "Rental Value" applies.

5
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
With respect to the requirements set forth in the
preceding paragraph, if you occupy only part of the
site at which the described premises are located, your
premises means:
a. The portion of the building which you
rent, lease or occupy; and

b. Any area within the building or on the
site at which the described premises are
located, if that area services, or is used
to gain access to, the described premises.

. . . .
3. Covered Causes Of Loss, Exclusions And
Limitations
See applicable Causes of Loss Form as shown in
the Declarations.

. . . .
5. Additional Coverages
. . . .

b. Alterations And New Buildings

We will pay for the actual loss of
Business Income you sustain and necessary
Extra Expense you incur due to direct
physical loss or damage at the described
premises caused by or resulting from any
Covered Cause of Loss to:

(1) New buildings or structures, whether
complete or under construction;

(2) Alterations or additions to existing
buildings or structures;

. . . .
If such direct physical loss or damage
delays the start of "operations", the
"period of restoration" for Business
Income Coverage will begin on the date
"operations" would have begun if the
direct physical loss or damage had not
occurred.

(Footnote added.)
The "applicable Causes of Loss Form," referenced above
in Paragraph A.3., appears to be a form entitled "CAUSES OF LOSS
- SPECIAL FORM" (Causes of Loss Form). That form states in
relevant part:

A. Covered Causes Of Loss
When Special is shown in the Declarations, Covered

6
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Causes of Loss means Risks Of Direct Physical Loss 4/
unless the loss is:
1. Excluded in Section B., Exclusions; or

2. Limited in Section C., Limitations;
that follow.
B. Exclusions

1. We will not pay for loss or damage caused
directly or indirectly by any of the following.
Such loss or damage is excluded regardless of
any other cause or event that contributes
concurrently or in any sequence to the loss.

a. Ordinance Or Law

The enforcement of any ordinance or law:
(1) Regulating the construction, use or
repair of any property; or

. . . .
This exclusion, Ordinance Or Law, applies
whether the loss results from:
(1) An ordinance or law that is enforced
even if the property has not been
damaged; or

(2) The increased costs incurred to
comply with an ordinance or law in
the course of construction, repair,
renovation, remodeling or demolition
of property, or removal of its
debris, following a physical loss to
that property.

. . . .

2. We will not pay for loss or damage caused by or
resulting from any of the following:

. . . .
b. Delay, loss of use or loss of market.

The Policy also contains an "EXCLUSION OF LOSS DUE TO
VIRUS OR BACTERIA" (Virus Exclusion), which provides in relevant
part:

A. The exclusion set forth in Paragraph B. applies to all
coverage under all forms and endorsements that
comprise this Coverage Part or Policy, including but
not limited to forms or endorsements that cover
property damage to buildings or personal property and
forms or endorsements that cover business income,

4/
The phrase "Risks Of Direct Physical Loss" is not defined in the
Policy.

7
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
extra expense or action of civil authority.
B. We will not pay for loss or damage caused by or
resulting from any virus, bacterium or other
microorganism that induces or is capable of inducing
physical distress, illness or disease.

However, this exclusion does not apply to loss or
damage caused by or resulting from "fungus", wet rot
or dry rot. Such loss or damage is addressed in a
separate exclusion in this Coverage Part or Policy.
C. With respect to any loss or damage subject to the
exclusion in Paragraph B., such exclusion supersedes
any exclusion relating to "pollutants".
. . . .
E. The terms of the exclusion in Paragraph B., or the
inapplicability of this exclusion to a particular
loss, do not serve to create coverage for any loss
that would otherwise be excluded under this Coverage
Part or Policy.

C. The Claim and Denial

On June 18, 2020, Tiki's, through its insurance agent,
submitted a claim (Claim) to DTRIC under the Policy. The Claim
was described as a "Business Interupption [sic] claim due to
hotel closing doors and limited operating service." An attached
email from Tiki's managing member, William Tobin (Tobin),
explained that "the hotel has been closed and boarded up - since
approximately March 25, 2020"; "[t]ake out and delivery have been
allowed during this entire time"; "[f]ull-service dine-in has
been allowed since June 5, 2020"; and "[b]ecause we are known for
having outdoor seating, we are currently missing out on the pent
up demand . . . ."
DTRIC denied the Claim in a letter dated July 9, 2020.
The letter stated in part:

From the information provided to date, it appears the Claim
arises out of guidelines and orders issued by state and
local authorities to encourage "social distancing" and
minimize person-to-person contact during the COVID-19
pandemic. While this appears to have resulted in the
closure of your business or curtailment of your regular
business activity, there has been no showing, at the present
time, of direct physical loss of or damage to the Property
described in the Declarations of your Policy. To the extent
there has been any loss, it does not appear to have been
caused by direct physical loss of or damage to property at
premises which are described in the Declarations, as
required for coverage under the Policy.
Further, it also appears that the "EXCLUSION OF LOSS DUE TO
VIRUS OR BACTERIA" is applicable to your Claim. This

8
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
exclusion precludes coverage for loss or damage caused by or
resulting from any virus that induces or is capable of
inducing physical distress, illness or disease. This
exclusion applies to all forms and endorsements that
comprise the Policy's Commercial Property coverage.

D. Proceedings in the Circuit Court

Tiki's filed the operative First Amended Complaint
against DTRIC on September 3, 2020. Tiki's alleged, among other
things, that: (1) on or about March 25, 2020, it "was excluded
from the insured premises located within the . . . Hotel . . . ,
and thereafter prevented from conducting any business on the
premises and within other areas of the [H]otel"; (2) "[t]he
[H]otel . . . was . . . closed down and boarded up thereby
preventing [Tiki's] from physically accessing its business
premises"; (3) "[Tiki's] was thus prevented, by the physical
closure of the building by a third party, from using its premises
and generating business income thereby, including . . . from
outside dining and/or take-out service during times when indoor
dining was not permitted by government regulation"; (4) Tiki's
submitted the Claim to DTRIC; (5) DTRIC informed Tiki's that
DTRIC would not cover the Claim under the Policy; and (6)
"[t]here is an actual and continuing controversy between [Tiki's]
and DTRIC as to the coverage available to [Tiki's] under the
[P]olicy . . . ." Tiki's sought "[a] declaratory judgment
finding and declaring that DTRIC is obligated to cover [Tiki's]
for its Claim in whole or in part[,]" as well as other
appropriate relief.
DTRIC answered the Complaint on September 24, 2020.
DTRIC denied that the Policy covers the loss claimed by Tiki's
and further denied Tiki's allegation that it "has suffered a
direct 'physical loss' of the covered premises" or that it "has
suffered loss of business revenue as a direct and proximate cause
of such physical loss."
On July 16, 2021, DTRIC filed its motion for summary
judgment. DTRIC sought summary judgment on two grounds: (1)
Tiki's business income claim was not covered under the Policy
because there was no direct physical loss or damage to Tiki's
property or any other relevant property; and (2) the Policy's

9
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Virus Exclusion precluded coverage of Tiki's claim. DTRIC
requested that the Circuit Court take judicial notice of certain
COVID-related proclamations and orders issued by Governor Ige and
Mayor Caldwell at the start of the COVID pandemic, and relied on
cases in other jurisdictions purportedly concluding there was no
"direct physical loss of or damage to property" "where business
losses stem from shutdowns or a decline in business caused by the
COVID-19 pandemic[.]" As to the Virus Exclusion, DTRIC argued:
"[Tiki's] contends its loss flows from the decision of the
[H]otel . . . to shut down and board up its premises during the
early months of the COVID pandemic in response to government
orders and the dramatic drop in visitor arrivals. However,
because the . . . Hotel's temporary shutdown was clearly
precipitated by the COVID pandemic, which in turn was caused by a
virus, the exclusion plainly applies."
On September 13, 2021, Tiki's filed its opposition to
the summary judgment motion. Tiki's argued that: (1) the Policy
covered Tiki's claimed loss because it resulted from a physical
loss of the premises when ingress and egress were physically cut
off by the boarding up of the Hotel; and (2) the Virus Exclusion
was inapplicable because, at most, the virus was a remote or
concurrent cause of Tiki's loss, and such causes were not
included in the exclusion. Tiki's submitted the declaration of
Tobin, who stated, among other things:

10. Neither the Hotel closure nor the physical
boarding up of the premises was required by any governmental
order; in fact, hotels were actually encouraged to remain
open under various orders by Governor Ige and Mayor Caldwell
throughout the Spring and Summer, 2020. No government law
or ordinance, and no virus, required the Hotel completely to
shutter its business and board up, causing Tiki's to lose
its property and base of operations. Importantly,
from June 5, 2020, Tiki's was permitted by law to resume
table service dining within the premises, and bar service
from June 19, 2020.
11. Although there were some limitations placed upon
various businesses by Covid-related orders, such orders did
not require the Hotel or Tiki's to cease all business
activity. Indeed, Tiki's, like the Hotel, was identified as
an "essential business." Restaurant operators in Honolulu
have been permitted to prepare and provide food by carry out
and delivery throughout the pandemic.
12. Even when the restaurant's indoor dining was
prohibited under certain government orders, Tiki's was

10
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
permitted to continue serving customers by carry out
(takeout) and delivery.
13. However, as a consequence of the Hotel's
boarding up, Tiki's was prevented from accessing its
premises, including its kitchen and bar areas, and thus was
physically prevented from engaging in any business within
its leased premises, including carry out and delivery
service to guest rooms, poolside, and other locations within
the Hotel building. Even when there were limitation under
various Covid-related orders -- for example indoor dining
restrictions -- substantial components of Tiki's operations
were always permitted lawfully to continue.

Tiki's attached photos of the boards affixed to the Premises.
Tobin's declaration also described Tiki's claim, as
follows:

18. Tiki's made the business loss claim under the
Policy to recover the income of those parts of Tiki's
business that were permitted, if not encouraged, by the
State and City orders to continue in operation. Tiki's does
not claim that Tiki's business operations, or any part of
them, were interrupted by the presence of Covid virus on the
insured premises or that Tiki's should be compensated for
losses on business that government orders would not have
permitted to carry out even if the Hotel was not boarded up.

The motion was heard on September 21, 2021.
On January 25, 2022, the Circuit Court issued the
Summary Judgment Order. It stated in relevant part:

[T]he Court GRANTS [DTRIC's] Motion.

The Court is persuaded by and agrees with the analysis
in Ass'n of Apartment Owners of Imperial Plaza v. Fireman's
Fund Ins. Co., 939 F. Supp. 2d 1059 (D. Haw. 2013)[,] and
Waikiki Sports Hawai#i Inc. dba Sand People v. Fireman's
Fund Ins. Co., 2020 WL 6562332 (N.D. Cal.[] Nov. 9, 2020),
cited by [DTRIC]. The Court finds that the shutdown that is
the basis for [Tiki's] claim is not covered by the insurance
policy at issue.

This appeal followed.

II. Standard of Review

We review the Circuit Court's grant of summary judgment
de novo. See Allstate Ins. Co. v. Pruett, 118 Hawai#i 174, 178,
186 P.3d 609, 613 (2008) (citing State ex. rel. Anzai v. City and
Cnty. of Honolulu, 99 Hawai#i 508, 514, 57 P.3d 433, 439 (2002);
Bitney v. Honolulu Police Dep't, 96 Hawai#i 243, 250, 30 P.3d
257, 264 (2001)).

[S]ummary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and

11
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to
judgment as a matter of law. A fact is material if
proof of that fact would have the effect of
establishing or refuting one of the essential elements
of a cause of action or defense asserted by the
parties. The evidence must be viewed in the light
most favorable to the non-moving party. In other
words, we must view all of the evidence and inferences
drawn therefrom in the light most favorable to the
party opposing the motion.

Pruett, 118 Hawai#i at 178-79, 186 P.3d at 613-14 (quoting Kahale
v. City and Cnty. of Honolulu, 104 Hawai#i 341, 344, 90 P.3d 233,
236 (2004)).

III. Discussion

Tiki's contends that the Circuit Court erred in
granting summary judgment in DTRIC's favor. Tiki's argues that:
(1) the Policy provides coverage for loss of business income due
to the "suspension" of business operations "caused by direct
physical loss of or damage to property at premises which are
described in the Declarations"; (2) "[t]he coverage clause
reasonably encompasses the inability to physically access and
physically use premises and all the property therein caused by a
third party nailing wooden boards over access points, thus
physically destroying the access points and blocking all physical
access to the premises"; (3) "[b]ecause [Tiki's] loss of income
and suspension of operations was caused by the physical placement
of barriers by a third party that physically eliminated all
physical access to and use of the premises and the property
within them, [Tiki's] suffered a loss of income 'caused by
physical loss of or damage to property at premises which are
described in the [D]eclarations'"; (4) "[t]he loss thus fell
within the reasonable meaning of the Policy's coverage clause,"
and the Circuit Court's conclusion that it did not was wrong; and
(5) no alternative ground exists to affirm the Circuit Court's
decision, because no exclusion in the Policy applies to defeat
coverage.
In response, DTRIC contends that the Circuit Court did
not err, because Tiki's did not suffer a "direct physical loss of
or damage to" its property as required by the Policy. DTRIC

12
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

argues: "Tiki's does not allege that the Coronavirus was ever
present on the insured premises (including the areas of the hotel
prov[id]ing ingress and egress to Tiki's restaurant). Instead,
Tiki's alleges a loss of use, which absent direct physical loss
or damage does not trigger coverage under a property insurance
policy." (Footnote omitted.) Relying on certain cases
construing the phrase "direct physical loss or damage" or
otherwise involving government COVID orders, DTRIC asserts: "The
fact that Tiki's claims its loss is the result of its landlord
shutting down and boarding up the hotel in which [Tiki's]
business is located — and not the direct result of a government
shutdown order — does not materially distinguish this case from
[others] involving claims arising from COVID shutdown orders.
The common denominator for all these cases is still a loss of
business income caused by a loss of access to clientele,
unaccompanied by permanent dispossession or physical damage to
property." DTRIC further argues that in any event, the Policy
expressly excludes from coverage loss or damage caused by or
resulting from "loss of use" and loss or damage caused by or
resulting from "any virus . . . that induces or is capable of
inducing physical distress, illness or disease."
Because the parties' arguments require us to interpret
the terms of an insurance policy, we discuss applicable
principles before analyzing the specific terms at issue.

A. Principles Concerning the Interpretation of Insurance
Policies

Insurance policies are contracts; their construction is
a question of law. See Tri-S Corp. v. Western World Ins. Co.,
110 Hawai#i 473, 489, 135 P.3d 82, 98 (2006). And because they
are contracts, "[i]nsurance policies . . . are interpreted using
the general rules of contract construction." Aloha Petroleum,
Ltd. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 155 Hawai#i 108,
118, 557 P.3d 837, 847 (2024) (citing St. Paul Fire and Marine
Ins. Co. v. Bodell Constr. Co., 153 Hawai#i 381, 383, 538 P.3d
1049, 1051 (2023)). "[T]he terms of the policy should be
interpreted according to their plain, ordinary, and accepted

13
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

sense in common speech unless it appears from the policy that a
different meaning is intended. Moreover, every insurance
contract shall be construed according to the entirety of its
terms and conditions as set forth in the policy." Dairy Rd.
Partners v. Island Ins. Co., 92 Hawai#i 398, 411, 992 P.2d 93,
106 (2000) (brackets, quotation marks, and citations omitted);
see Hawaiian Ins. & Guar. Co. v. Fin. Sec. Ins. Co., 72 Haw. 80,
87, 807 P.2d 1256, 1260 (1991) ("[W]e must look to the language
of the insurance policies themselves to ascertain whether
coverage exists, consistent with the insurer and insured's intent
and expectations." (citing Globe Indem. Co. v. Texeira, 230 F.
Supp. 451 (D. Haw. 1964))).
The Hawai#i Supreme Court has also recognized:

[I]nsurance contracts are particularly one-sided contracts.
Power dynamics shape this court's interpretation. Insurance
policies are considered contracts of adhesion. Dairy Rd.
Partners v. Island Ins. Co., Ltd., 92 Hawai #i 398, 411-12,
992 P.2d 93, 106-07 (2000). They often (like here) use
insurance industry standard forms. Id. Thus, we construe
any ambiguity in the policy for the policyholder and against
the insurer. St. Paul, 153 Hawai#i at 383, 538 P.3d at
1051. We read the contract to the policyholder's advantage.
Id.

Aloha Petroleum, 155 Hawai#i at 118, 557 P.3d at 847; see
Pruett, 118 Hawai#i at 182, 186 P.3d at 617 ("[B]ecause insurance
policies are contracts of adhesion and are premised on standard
forms prepared by the insurer's attorneys, we have long
subscribed to the principle that they must be construed liberally
in favor of the insured and the ambiguities must be resolved
against the insurer." (quoting Dairy Rd. Partners, 92 Hawai#i at
411-12, 992 P.2d at 106-07)). Relatedly, "[insurance] policies
are to be construed in accord with the reasonable expectations of
a layperson." Pruett, 118 Hawai#i at 182, 186 P.3d at 617
(quoting Dairy Rd. Partners, 92 Hawai#i at 412, 992 P.2d at 107).

B. The Policy's Coverage Clause

We begin with the operative language of the Policy's
coverage clause (Coverage Clause). As stated in Business Income
Form paragraph A.1., supra, the Policy provides coverage for "the
actual loss of Business Income [the insured] sustain[s] due to

14
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

the necessary 'suspension' of [its] 'operations' during the
'period of restoration'. The 'suspension' must be caused by
direct physical loss of or damage to property at premises which
are described in the Declarations . . . ."
DTRIC moved for and obtained summary judgment on the
ground that Tiki's claim for lost business income was not covered
by the Policy, in that Tiki's would be unable to show that its
suspension of operations was "caused by direct physical loss of
or damage to property" at the relevant "premises." The parties
do not appear to dispute the meaning of the term "premises."
For purposes of coverage requirements, the Policy plainly makes
no distinction between Tiki's leased premises and the areas of
the Hotel that "service[]," or are used "to gain access to"
Tiki's. Instead, the primary focus of the parties' briefs, and
therefore this court's analysis, is the meaning of the phrase
"caused by direct physical loss of or damage to property."
We first examine the phrase "direct physical loss of or
damage to property." It is not defined in the Policy. Tiki's
contends that "the phrase 'loss of or damage to' can reasonably
be construed to mean that 'loss' is separate and distinct from
'damage,' and loss thus can occur even in the absence of damage,
although here [Tiki's] contends there is both 'physical damage'
(existing physical structures physically altered by having wooden
boards nailed to them) and 'physical loss' (the inability to
physically enter and use the premises because of a physical
barrier, whether that barrier is considered 'damage' or not)."
In response, DTRIC argues that, assuming "loss" and "damage" mean
different things, "courts addressing this argument in the COVID-
19 coverage context have explained that while 'direct physical
damage' refers to property that has been physically damaged but
can be repaired, 'direct physical loss' refers to the permanent
dispossession of property that has been destroyed or stolen and
thus cannot be repaired." DTRIC asserts that "a loss of access
to clientele, unaccompanied by permanent dispossession or
physical damage to property" does not constitute direct physical
loss or damage to property.

15
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

We conclude that the phrases "physical loss of" and
"[physical] damage to," as used in the Policy, must have separate
meanings, even if those meanings overlap. To conclude otherwise
would render one or the other phrase superfluous. We must give
effect to every term of the Policy and avoid rendering any term
meaningless. See Stanford Carr Dev. Corp. v. Unity House, Inc.,
111 Hawai#i 286, 297, 141 P.3d 459, 470 (2006); see also In re
Soc'y Ins. Co. COVID-19 Bus. Interruption Prot. Ins. Litig., 521
F. Supp. 3d 729, 741 (N.D. Ill. 2021) (construing the phrase
"direct physical loss of or damage to" in a policy containing
business interruption coverage: "The disjunctive 'or' in that
phrase means that 'physical loss' must cover something different
from 'physical damage.'"); Nautilus Grp., Inc. v. Allianz Glob.
Risks US, No. C11-5281BHS, 2012 WL 760940, at *7 (W.D. Wash.
Mar. 8, 2012) (construing similar phrase in commercial insurance
policy: "[I]f 'physical loss' was interpreted to mean 'damage,'
then one or the other would be superfluous. The fact that they
are both included in the grant of coverage evidences an
understanding that physical loss means something other than
damage.").
Next, we focus on the meaning of the phrase "direct
physical loss of . . . property." The Policy does not define
this phrase or any of its component terms.5/ Under our governing
principles of construction, we must give these terms their plain
and ordinary meaning unless it appears that a different meaning
was intended; we must construe these terms as a layperson would
reasonably expect. Pruett, 118 Hawai#i at 182, 186 P.3d at 617
(quoting Dairy Rd. Partners, 92 Hawai#i at 412, 992 P.2d at 107).
Merriam-Webster provides several definitions of the adjective
"direct," the most relevant being "characterized by close
logical, causal, or consequential relationship." Direct,
Merriam-Webster Online Dictionary, https://www.merriam-webster.
com/dictionary/direct (accessed Oct. 17, 2025). This definition
spills over to the Policy's requirement that the suspension of
operations be "caused by" direct physical loss of property. See

5/
Similarly, the Policy does not define the phrase "direct physical
. . . damage to property" or any of its component terms.

16
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Acorn Inv. Co. v. Mich. Basic Prop. Ins. Ass'n, No. 284234, 2009
WL 2952677, at *2 (Mich. Ct. App. Sept. 15, 2009) (defining
"direct" in "direct physical loss" as "'immediate' or 'proximate'
cause, as distinct from remote or incidental causes").
"Physical" in this context is defined as "having material
existence: perceptible especially through the senses and subject
to the laws of nature." Physical, Merriam-Webster Online
Dictionary, https://www.merriam-webster.com/dictionary/physical
(accessed Oct. 17, 2025). "Loss" in this context can mean "the
act or fact of being unable to keep or maintain something," or
"the harm of privation resulting from losing or being separated
from . . . something."6/ Loss, Merriam-Webster Online Dictionary,
https://www.merriam-webster.com/dictionary/loss (accessed
Oct. 17, 2025); see also Webster's Encyclopedic Unabridged
Dictionary 1137 (1996 ed.) (defining loss as "detriment,
disadvantage, or deprivation from failure to keep, have, or
get"). Accordingly, the phrase "direct physical loss of . . .
property" at the premises can reasonably be construed to mean the
deprivation of physical access to property at the premises due to
the imposition of a physical barrier. This construction is
reinforced by the Policy's definition of "premises," which
includes "[a]ny area within the building . . . at which the
described premises are located, if that area . . . is used to
gain access to, the described premises." (Emphasis added.)
The Policy's Coverage Clause further provides that
"[t]he loss . . . must be caused by or result from a Covered
Cause of Loss[,]" which under the Causes of Loss Form (see supra)
means a "Risk[] Of Direct Physical Loss . . . ." The latter
phrase is not defined in the Policy. Merriam-Webster defines
"risk" in the first instance as "possibility of loss or injury."
Risk, Merriam-Webster Online Dictionary, https://www.merriam-
webster.com/dictionary/risk (accessed Oct. 17, 2025). Putting
the coverage text together with this definition, a covered

6/
"Loss" can also mean "destruction, ruin." Loss, Merriam-Webster
dictionary, www.merriam-webster.com/dictionary/loss (accessed Oct. 17, 2025)
(capitalization altered). To the extent the term "loss," as used in the
Policy, is ambiguous, it must be construed in favor of the insured. See Aloha
Petroleum, 155 Hawai#i at 118, 557 P.3d at 847.

17
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

business suspension must be caused by "direct physical loss of
. . . property" at the premises, and then the loss itself must be
caused by or result from the possibility of a direct physical
loss — a seemingly circular requirement in this context. There
would appear to be no dispute that the loss of physical access to
property that is blocked by a barrier can result from the
possibility of such a loss. To the extent the phrase "Risk[] Of
Direct Physical Loss" is ambiguous, it must be construed in favor
of the insured. See Aloha Petroleum, 155 Hawai#i at 118, 557
P.3d at 847. So construed, the Policy's Coverage Clause can
reasonably be read to cover the suspension of operations caused
by the deprivation of physical access to property due to the
imposition of a physical barrier.
In resisting coverage, DTRIC relies in part on the
phrase "Period of Restoration" in the Coverage Clause, which
states the time period during which lost business income is
covered, and which "[e]nds on the earlier of" "[t]he date when
the property at the described premises should be repaired,
rebuilt[,] or replaced with reasonable speed and similar quality"
or "[t]he date when business is resumed at a new permanent
location." DTRIC contends that this phrase implies that covered
physical loss or damage is tangible, requiring a physical injury
to property rather than solely loss of use.
We are not persuaded. As defined in the Policy, the
"Period of Restoration" merely describes the time period of
coverage; it does not state what is and is not covered. The
Policy explicitly covers lost business income due to a suspension
of operations caused by direct physical loss of property, not
just damage to property. See supra. Morever, the phrase "[t]he
date when the property at the described premises should be
repaired," when read with the definition of "premises," can
reasonably be construed in this context to refer to the date when
the nailed planks blocking the entrance to the Hotel should have
been (or were) physically removed to restore access. Again, any
ambiguity in this language must be resolved in favor of the
insured. See Aloha Petroleum, 155 Hawai#i at 118, 557 P.3d at
847.

18
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Other courts have held that tangible damage such as
physical alteration or destruction is not required to trigger
coverage under insurance policies that use the phrase "physical
loss of or damage to" property or similar language. See, e.g.,
Soc'y Ins., 521 F. Supp. 3d at 742-43 (applying the law of
Illinois and several other states in ruling that "direct physical
loss of property" can include the loss of physical use of the
covered property); Prudential Prop. & Cas. Ins. Co. v.
Lillard-Roberts, No. CV-01-1362-ST, 2002 WL 31495830, at *9 (D.
Or. June 18, 2002) (applying Oregon law in ruling that the
inability to inhabit a house may be a "direct" and "physical"
loss covered by insurance"); American Guar. & Liab. Ins. Co. v.
Ingram Micro, Inc., No. 99-185 TUC ACM, 2000 WL 726789, at *6 (D.
Ariz. April 18, 2000) (ruling that "'physical damage' is not
restricted to the physical destruction or harm of computer
circuitry but includes loss of access, loss of use, and loss of
functionality"). Moreover, here, Tiki's maintains there was in
fact a physical alteration of the premises that blocked access to
its leased space.
In granting DTRIC's motion for summary judgment, the
Circuit Court relied on two cases that we find of limited
persuasive value given the rather unique circumstances of this
case: Ass'n of Apartment Owners of Imperial Plaza v. Fireman's
Fund Ins. Co., 939 F. Supp. 2d 1059 (D. Haw. 2013), and Water
Sports Kauai, Inc. v. Fireman's Fund Ins. Co., 499 F. Supp. 3d
670 (N.D. Cal. 2020).
In AOAO Imperial Plaza, the court, applying Hawai#i
law, ruled that the plaintiff owners' association established
insurance coverage for arsenic damage to its real property under
policy language requiring that the property suffer "direct
physical loss or damage." 939 F. Supp. 2d at 1068-69. In
reaching this conclusion, the court stated:

The term "direct physical loss or damage" is not defined in
the Policy. Black's Law Dictionary defines "Damage" as
"Loss or injury to a person or property." Black's Law
Dictionary 445 (9th ed. 2009). The term "direct loss" is
defined as "a loss that results immediately and proximately
from an event." Black's Law Dictionary 1030 (9th ed. 2009).
While the term "immediate" may be defined differently
depending on the context; the Court adopts the following

19
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
definition: "Having a direct impact; without an intervening
agency." Id. at 816. "Physical" means "of or relating to
natural or material things." Merriam–Webster, Webster's
Third New International Dictionary 1706 (3rd ed. 2002).
"Material" is defined as "[o]f or relating to matter;
physical." Black's Law Dictionary 1066 (9th ed. 2009).
Based on these terms, Plaintiff must demonstrate that an
event had a direct impact and proximately caused a loss
related to the physical matter of the Property.

Id. (footnotes and record citations omitted).
Here, Tiki's alleges and has 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.
The ruling in AOAO Imperial Plaza thus supports Tiki's argument.
In Water Sports, the court, applying Hawai#i law,
ruled that "the mere threat of coronavirus cannot cause a 'direct
physical loss of or damage to' covered property as required
under" the 'lost business income' and 'civil authority'
provisions of a commercial insurance policy. 499 F. Supp. 3d at
673. There, the plaintiff "assert[ed] that it adequately alleged
closure [of its businesses] because of the 'imminent' threat of
coronavirus at [its] properties." Id. at 674. The court
concluded that the plaintiff had "not alleged any direct physical
anything that happened to or at its specific properties.
Moreover, it has not been dispossessed or deprived of any
specific property[.]" Id. at 677.
Here, in contrast, Tiki's alleged and presented
evidence that the boarding up of the Hotel caused a "direct
physical loss of" property at the premises, resulting in Tiki's
inability to engage in any business within its space, including
carry out and delivery service to guest rooms, poolside and other
locations within the Hotel building. In other words, Tiki's
presented evidence that it was effectively deprived or
dispossessed of its leased premises. The Water Sports ruling is
readily distinguished on this basis.
DTRIC cites a number of cases from other jurisdictions
purportedly holding that an insured's loss of business as a
result of the COVID pandemic (or related government closure
orders) does not constitute "direct physical loss of or damage
to" property within the meaning of a property insurance policy.

20
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

But none of these cases addresses a situation comparable to what
we have here. 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, including carry out and delivery service allegedly
permitted under government orders. 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.
Causation in the coverage context is generally an issue of fact.
See Advanced Indicator & Mfg., Inc. V. Acadia Ins. Co., 50 F.4th
469, 476 (5th Cir. 2022); see also Great Am. All. Ins. Co. v. Sir
Columbia Knoll Assocs. Ltd. P'ship, 484 F. Supp. 3d 946, 965 (D.
Or. 2020) ("Generally, if the facts are disputed, or different
inferences may be drawn from undisputed facts, the question of
the 'efficient proximate cause' of a loss is for the jury."
(quoting Naumes, Inc. v. Landmark Ins. Co., 849 P.2d 554, 555
(1993))). Here, Tiki's presented a genuine issue of material
fact as to whether its suspension of operations was "caused by
direct physical loss of or damage to property" at the premises
described in the Declarations. (Emphasis added.) The Circuit
Court therefore 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.7/

C. The Policy's Exclusions

DRTIC contends that the Policy excludes from coverage
loss or damage caused by or resulting from an insured's "loss of
use" of its premises in the absence of physical loss or damage to
those premises. DTRIC further contends that the Policy –
specifically the Virus Exclusion – excludes loss or damage caused
by or resulting from "any virus . . . that induces or is capable

7/
Because Tiki's presented a genuine issue of material fact as to
whether its suspension of operations was caused by direct physical loss of
property, we need not decide whether it presented a genuine issue of material
fact as to direct physical damage to property within the meaning of the
Policy.

21
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

of inducing physical distress, illness or disease." In response,
Tiki's argues that neither exclusion applies to defeat coverage.
The Hawai#i Supreme Court has made clear that the
insurer carries the burden of proof that an exclusionary clause
applies:

We think the better rule is that whenever the insurer relies
on an exclusionary clause of a policy as a defense to
liability, it has the burden of proving facts which bring
the case within the exclusion. This rule is not only
consistent with the general rules of pleading and evidence,
but also appears to be the general rule elsewhere.

Quinn v. Wilshire Ins. Co., 53 Haw. 19, 21, 486 P.2d 59, 60
(1971) (citing several cases); Webb v. OSF Inernational, Inc.,
156 Hawai#i 28, 36, 569 P.3d 447, 455 (2025) (quoting Quinn, 53
Haw. at 21, 486 P.2d at 60). "In addition, any ambiguity in an
exclusionary clause is construed in favor of the insured and
'strictly construed against the insurer.'" C. Brewer & Co. v.
Marine Indem. Ins. Co. of Am., 135 Hawai#i 190, 196, 347 P.3d
163, 169 (2015) (quoting Retherford v. Kama, 52 Haw. 91, 470 P.2d
517 (1970)).
DTRIC relies on the following language in the Causes of
Loss Form as excluding from coverage loss or damage caused by or
resulting from "loss of use":

B. Exclusions

. . . .

2. We will not pay for loss or damage caused by or
resulting from any of the following:
. . . .
b. Delay, loss of use or loss of market.

The Policy does not define the phrase "loss of use" or
otherwise specify the loss of use of what property by what means
the Policy seeks to exclude. Relatedly, the phrase "caused by or
resulting from . . . loss of use" is ambiguous, when the Policy
is viewed as a whole. (Emphasis added.) At multiple places in
the Policy, the phrase "caused by or resulting from" is expanded
to include the terms "directly or indirectly" and "[s]uch loss or
damage is excluded regardless of any other cause or event that
contributes concurrently or in any sequence to the loss."

22
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

(Emphasis added.) For example, the exclusion immediately
preceding the exclusion for "[d]elay, loss of use or loss of
market" states:

B. Exclusions
1. We will not pay for loss or damage caused
directly or indirectly by any of the following.
Such loss or damage is excluded regardless of
any other cause or event that contributes
concurrently or in any sequence to the loss.

(Emphases added.) The emphasized language in this exclusion and
other similarly worded exclusions in the Policy does not appear
in the exclusion for loss or damage caused by "[d]elay, loss of
use or loss of market." See supra. In context, a reasonable
reading of this omission is that the phrase "caused by or
resulting from . . . loss of use" is not intended to cover
situations in which loss of use is an "indirect" cause of loss or
damage, or where the loss of use acts concurrently with or in
sequence with a covered cause.
Here, Tiki's presented evidence that the suspension of
its operations was directly caused by the imposition of a
physical barrier that deprived Tiki's of physical access to its
leased space. If such causation is proven, the imposition of the
barrier could be considered a covered cause of loss (see supra),
and the loss of use of Tiki's space could be considered an
indirect cause of loss that would not trigger the loss-of-use
exclusion to bar coverage. In other words, construed in favor of
the insured, the loss-of-use exclusion would be triggered only
when loss of use is the cause of loss. Given this construction,
DTRIC did not establish that the Policy's loss-of-use exclusion
precluded coverage of Tiki's claimed loss as a matter of law.
DTRIC also relies on the following language in the
Policy's separate Virus Exclusion as precluding coverage of the
claimed loss:

B. We will not pay for loss or damage caused by or
resulting from any virus, bacterium or other
microorganism that induces or is capable of inducing
physical distress, illness or disease.

Like the similarly worded phrase in the loss-of-use
exclusion, the phrase "caused by or resulting from any virus" is

23
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

ambiguous, when the Policy is viewed as a whole. (Emphasis
added.) The Virus Exclusion likewise omits the language of other
exclusions, emphasized in the example above, that further
modifies the terms "caused by or resulting from." In context, a
reasonable reading of this omission is that the phrase "caused by
or resulting from any virus" is not intended to cover situations
in which a virus is an "indirect" cause of loss or damage, or
where a virus acts concurrently with or in sequence with a
covered cause.
Here, again, Tiki's presented evidence that the
suspension of its operations was directly caused by the
imposition of a physical barrier that blocked its access to its
leased space. Based on the same reasoning we applied to the
loss-of-use exclusion (see supra), we conclude that DTRIC did not
establish that the Policy's Virus Exclusion precluded coverage of
Tiki's claimed loss as a matter of law.

IV. Conclusion

For the reasons discussed above, we vacate the Circuit
Court's January 25, 2022 "Order Granting DTRIC Insurance Company,
Limited's Motion for Summary Judgment" and January 26, 2022 Final
Judgment. This case is remanded to the Circuit Court for further
proceedings consistent with this Opinion.

On the briefs: /s/ Clyde J. Wadsworth
Presiding Judge
James J. Bickerton
(Bickerton Law Group)
for Plaintiff-Appellant /s/ Sonja M.P. McCullen
Associate Judge
Richard B. Miller and
David R. Harada-Stone
(Tom Petrus & Miller, LLLC) /s/ Kimberly T. Guidry
for Defendant-Appellee Associate Judge

24