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Courts continue grappling with the application of California insurance law to COVID-19 business interruption claims. After three years of insurance claims and litigation, the California Supreme Court has agreed to provide guidance as to whether the actual or potential presence of SARS-CoV-2 on insured property can qualify as physical loss of or damage to property in Another Planet Entertainment, LLC v. Vigilant Insurance Company.

District court proceedings

Another Planet operates and promotes concerts, events, and festivals in California and Nevada. After its insurer denied coverage for business income losses incurred, Another Planet filed suit in California federal court seeking coverage under its “all-risk” property insurance policy.

In its amended complaint, Another Planet alleged that the virus was present or would have been present had it not closed its venues in compliance with government orders. The insured further alleged that droplets of the COVID-19 virus physically altered the air and property surfaces, constituting physical loss or damage and rendering the property unusable for its intended purpose and function. The pleading further asserted that minimizing the spread of COVID-19 requires physical alterations, including physical distancing, regular disinfection, air filtration, and installation of physical barriers.      

Vigilant Insurance moved to dismiss on the basis that Another Planet had not sufficiently alleged direct physical loss or damage to property. On June 21, 2021, the District Court granted the insurer’s motion and dismissed the case with prejudice. Continue Reading California Supreme Court to offer guidance for COVID-19 coverage cases

At Reed Smith, we pride ourselves on forming true partnerships with our clients to find creative and unexpected solutions to the most challenging insurance coverage issues. As part of this commitment, we have authored a column for Thomson Reuters to provide advice, strategies, and information on the full range of insurance coverage issues affecting commercial…

More than a year has passed since COVID-19 first plagued the United States and impinged on the health of more than 34 million Americans. Hundreds of thousands of businesses have shuttered due to the pandemic. Policyholders have relied, and will continue to rely on their business interruption insurance policies to respond to their pandemic-related losses. In these unprecedented times, trillions are at stake with many policyholders calling on the courts to protect their rights.

Reed Smith’s Insurance Recovery Group recently launched a Thomas Reuters column covering cutting-edge topics in insurance from the policyholder perspective. The first column article titled “The appeal of COVID-19 business interruption appeals” discusses the current appellate landscape of COVID-19 business interruption cases.

Brief overview of appellate landscape

The only appellate court that has issued a ruling is the 8th U.S. Circuit Court of Appeals in Oral Surgeons v. Cincinnati Insurance. There, the 8th Circuit affirmed the Iowa district court’s decision to dismiss the insured’s complaint, reasoning that dismissal was warranted where the policy required direct “accidental physical loss or accidental physical damage” and the complaint did not allege any physical alteration of property. The complaint, rather, only pled “generally that Oral Surgeons suspended non-emergency procedures due to the COVID-19 pandemic and the related government-imposed restrictions.” Given the particular policy language, allegations of that complaint, and lack of a “physical alteration” requirement under the law of most states, the decision is not expected to have a significant impact (if any) on pending appeals.

Appeals remain pending in California, District of Columbia, Florida, Illinois, Indiana, Massachusetts, Michigan, New Jersey, New York, Ohio, Oklahoma, Pennsylvania and Wisconsin. No state appellate court has yet rendered a decision.

The article flags five pending appeals for policyholders to keep an eye on, as they will likely shape the future of the law surrounding insurance coverage for COVID-19 business interruption losses.
Continue Reading Five COVID-19 business interruption appeals to keep an eye on