There have been a number of cases in the past few months addressing coverage issues arising out of the COVID-19 pandemic. Therefore, for purposes of brevity, we have set forth below the main facts and holding in each of those cases.
- In Shusha, Inc. v. Century-National Insurance Co., 87 Cal. App. 5th 250 (December 14, 2022), the California Second District Court of Appeal reversed the trial court's order sustaining Century-National Insurance Company's ("Century-National") demurrer to the insured's first amended complaint for declaratory judgment, breach of contract, bad faith, and unfair business practices. The insured sought coverage for its lost business income and the costs it incurred to mitigate the damage by reconfiguring its restaurant and increasing its sanitization procedures as a result of the COVID-19 virus. The court held the insured sufficiently stated causes of action for breach of contract and declaratory judgment based on alleged direct physical loss or damage to its property caused by the COVID-19 virus, which was required to trigger coverage under the policy's Business Income (and Extra Expense) coverage. In support of its holding, the Court of Appeal cited allegations in the first amended complaint that the virus was present at the restaurant on walls, floors, tables, chairs, silverware, dishes and others surfaces, and that alleged health authorities and medical scientists advised the virus "adheres to, attaches to and alters the surfaces of the property and surfaces" it comes into contact with. The Court of Appeal also found that the insured adequately pleaded causes of action for bad faith and unfair business practices based on allegations that Century-National...
