Watershed California Decision Finds for Policyholder in COVID-19 Business Interruption Appeal

In a huge victory for policyholders in the Golden State, Division Seven of California’s Second District Court of Appeal allowed by unanimous decision a COVID-19 business interruption dispute to go forward. The appellate court in Marina Pacific Hotel & Suites, LLC et al. v. Fireman's Fund Insurance Company reversed the trial court’s order, in which the trial court ruled that COVID-19 cannot, as a matter of law, cause direct physical loss or damage sufficient to trigger business interruption coverage under a commercial property policy. As the Court of Appeal itself recognized, this is one of the only decisions that rejected the insurance industry’s argument that COVID-19 business interruption claims are not covered under first-party all risk insurance policies.