After three years of ambiguous insurance claims and litigation, the California Supreme Court is prepared to provide guidance on a controversial insurance law that insurers have relied on to deny COVID-19 business interruption claims.
The question is whether the actual or potential presence of the virus on insured property can qualify as physical loss of or damage to property, Reuters reported. The case, which dates back to 2020, involves a claim made by a concert venue for business income losses incurred when the company closed its venues in compliance with government orders.
Vigilant Insurance denied the claim, and the case was dismissed in its favor by the District Court. The 9th Circuit Court of Appeals ultimately referred the case to the state Supreme Court for clarity.
“A ruling by the final arbiter of California law that the actual or potential presence of SARS-CoV-2 is ‘direct physical loss or damage to property’ would be a landmark decision for countless California policyholders.” Reuters reported.
Businesses and insurers across the country are watching closely for the state Supreme Court to rule. Appeals also are currently pending before the Nevada and Pennsylvania supreme courts.
“Policyholders are well-advised to keep an eye on activity at the state level, as the high courts continue providing clarity for COVID-19 coverage cases,” according to Reuters.
