David Goodwin's commentary was included in an article in Claims Journal on COVID-19 business interruption claims. Most federal circuit courts in the country have ruled against policyholders who filed business interruption claims for losses caused by COVID-19 shutdowns, with courts holding that SARS-CoV-2 cannot cause direct physical damage or loss to property.
On the other hand, California appellate courts have been more willing to accept the argument that the COVID virus can cause a loss of property by preventing its use, David said. He noted that there is a long line of cases in California that have held that coverage is owed for intangible factors that caused the loss of use of a property.
A majority of California's intermediate appellate courts have ruled that COVID-19 can cause a covered loss in at least some instances, although they didn’t necessarily rule in favor of the policyholder, he said.
David was optimistic that the California Supreme Court will take a fresh look at arguments for coverage. As David noted, unlike federal court judges, who tend to rule based on what they feel is right, the high court justices in California look carefully at policy language and tend to reject general rules about what types of perils are covered by insurance.
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