Facts: A tenant in occupancy of improved real estate covered by a commercial liability and property insurance policy suspends operations during the COVID-19 lockdown, incurring a loss of income. The insurance policy covers lost income due to damage to the covered property. The tenant makes a demand on the insurer to cover the lost income, which the insurer denies.

 Claim: The tenant seeks recovery of money losses caused by the COVID-19 lockdown since the insurer’s coverage of lost income is triggered by damage inflicted on the covered property due to COVID-19.

Counterclaim: The insurer claims they are not liable for the tenant’s loss of business income since the presence of the COVID-19 virus did not result in any physical damage to property.

Holding: The California Supreme Court holds the insurer is not liable for the loss of income the tenant incurred due to the COVID-19 lockdown since the presence of the COVID-19 virus does not constitute physical loss or damage to property as required for coverage to be implemented. [Another Planet Entertainment, LLC v. Vigilant Insurance Co. (2024) 15 C5th 1106]

Another Planet Entertainment, LLC v. Vigilant Insurance Co.

 

Related RCDs
Is an owner of commercial property entitled to insurance coverage for loss of the functional use of their property caused by a pandemic-related government closure order when the insurance policy excludes coverage for loss caused by a virus?

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