Owners of Hotel Erwin in Los Angeles scored a major victory when a California state appellate court reversed the dismissal of their COVID-19 coverage suit alleging losses caused by the presence of the virus. In an interview with Law360, Partner Peter Halprin explained why the court determined the policyholders should have been given a chance to present evidence to support their contention that their insurer should pay for losses.

“A big takeaway in the ruling was discussion of courts improperly deciding the staying power of the virus and the effectiveness of cleaning at the pleadings stage, said Halprin. “The court’s conclusion that ‘the duration of exposure may be relevant to the measure of policy benefits; it does not negate coverage.’”

“Another sticking point was the reference to the absence of a virus exclusion and how that influences the interpretation of the coverage provided,” Halprin added.

This ruling indicated that policyholders could continue with a business interruption suit if they allege the virus physically transformed their property.

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