Calif. Panel Says Virus Dining Orders Can Be Physical Loss

David Goodwin's commentary appeared in a Law360 article about a California appellate panel ruling holding that a restaurant owner sufficiently argued government COVID-19 pandemic orders could cause a "direct physical loss" by restricting in-person dining services. However, the court found exclusions in its policy barred coverage. Covington represented United Policyholders, which filed an amicus brief.

While the panel did not address the amicus brief by United Policyholders that argued the virus itself can cause direct physical loss, the ruling is very important for policyholders, David said.

"The big thing in the decision is the issue of whether a government order can cause physical loss or damage: They're absolutely crystal clear that yes, it can," David said. "When the government tells you to close down because of COVID-19, that's a direct physical loss. I think that's a very well-reasoned ruling."

The California Supreme Court has agreed to review questions in a smattering of cases that could decide where state law ultimately stands on COVID-19 coverage issues. Whatever position the high court reaches, David said he's fairly confident it will be the right one.