The California Supreme Court docket concluded yesterday that the mere presence or potential presence of COVID-19 on a property doesn’t meet the brink for “direct bodily loss or injury” beneath property insurance coverage insurance policies. 1 The court docket clarified that beneath California regulation, there should be a definite, demonstrable, bodily alteration to the property. The court docket famous that whereas the virus is bodily and attaches to surfaces, these elements alone don’t translate to bodily injury or alteration of the property’s traits in a means that might impair its use.
The policyholder, One other Planet Leisure (APE), operates stay leisure venues and was considerably impacted when the pandemic pressured closures and operational restrictions. APE filed a declare beneath its insurance coverage coverage, which typically covers “direct bodily loss or injury” to the insured property. The insurance coverage firm, Vigilant, denied the declare, arguing that the presence of the virus didn’t lead to any bodily alteration to the properties that might qualify beneath the phrases of the coverage.
The dispute moved by the courts, beginning with the federal district court docket, which dismissed APE’s lawsuit for failing to state a declare. APE then appealed to the Ninth Circuit, which ultimately sought steering from the California Supreme Court docket on whether or not the presence or potential presence of COVID-19 may represent direct bodily loss or injury beneath California regulation, given the conflicting selections at decrease ranges.
APE argued that the virus made their properties unsafe and unusable for his or her meant functions, which needs to be thought-about bodily injury. Nevertheless, the court docket held that the shortcoming to make use of a property as meant, with out bodily alteration, doesn’t qualify as direct bodily loss or injury. Moreover, the court docket distinguished this state of affairs from circumstances the place a property turns into uninhabitable because of bodily elements like contamination that bodily alters the atmosphere of the property.
The choice additionally touched on the broader implications of this interpretation, emphasizing that whereas the court docket’s holding relies on the specifics of APE’s coverage and allegations, it doesn’t rule out the likelihood that in several circumstances, the presence of COVID-19 may represent direct bodily loss if there’s tangible injury to the property.
Finally, the California Supreme Court docket’s determination displays a broader consensus in the USA judiciary relating to the constraints of business property insurance coverage in overlaying pandemic-related losses except there’s clear, bodily injury to the properties insured. This holding forecloses any hope for policyholders within the overwhelming majority of California COVID-related circumstances which are nonetheless pending. I have no idea of another insurance coverage protection litigation the place policyholders have misplaced so badly on a closely litigated problem.
Thought For The Day
It’s good to have an finish to journey towards; however it’s the journey that issues, ultimately.
—Ernest Hemingway
1 One other Planet Leisure v. Vigilant Ins. Co., — P.2nd —, 2024 WL 2339132 (Cal. Might 23, 2024).