Another Planet Entertainment, LLC v. Vigilant insurance Co. (2024)
Another Planet, an event promoter and venue operator, sued Vigilant Insurance Company, after the carrier denied coverage for Another Planet’s business interruption losses sustained during the COVID-19 pandemic. Another Planet sought coverage under several provisions of its commercial property insurance policy that require actual or imminent “direct physical loss or damage to property.” After a federal district court granted Vigilant’s motion to dismiss, the Ninth Circuit certified the following issue to the California Supreme Court for decision: “Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute ‘direct physical loss or damage to property’ for purposes of coverage under a commercial property insurance policy?”
The California Supreme Court, noting that Another Planet’s factual allegations “represent the most common allegations in support of pandemic-related property insurance coverage,” answered that “the actual or potential presence of COVID-19 on an insured’s premises generally does not constitute direct physical loss or damage to property within the meaning of a commercial property insurance policy under California law.” The court further explained: “[A]llegations of the actual or potential presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy. Under California law, direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury to or impairment of the property as property.”
