California Court Holds that No Insurance Coverage for Hotel’s Loss of Income Claims During Covid
California Court Holds that No Insurance Coverage for Hotel’s Loss of Income Claims During Covid
By: Jose L. Parra, Esq.
November 30, 2021
The California Court of Appeal, Fourth Appellate District recently held in The Inns By The Sea v. California Mutual Insurance Company (Super. Ct. No. 20CV001274) that a California Hotel would not be provided insurance coverage for the loss of income sustained during the COVID-19 pandemic.
The case appears to be limited to the specific language of the insurance policy at play; however, the nature of the holding appears to send more uncertainty for the many businesses in our state that may face unprecedented levels of loss brought by COVID.
The court determined that loss of income caused by governmental orders that limited the operation of the hotel was not a covered scenario under the insurance policy in question; principally, the policy required a finding of direct physical loss. Accordingly, the court concluded that the suspension of business’ operations was due to orders issued by a governmental body and not by physical loss or damage as required per the policy.
The decision issued by the court raises many questions about the uncertain predicaments that many businesses in our state face. In particular, how can a business be prepared for the wake of increasing governmental orders issued during the age of COVID, when it appears that insurance companies are hesitant to cover for loss brought about by a pandemic?
It is not surprising that many commercial policies have different sets of exclusions for coverage; some exclusions deal with acts of God, wars, riots, etc. Therefore, when dealing with the large myriad of business insurance policies, it is crucial that a proper review of the coverage clauses be undertaken.
With the alarming impact that COVID has had on our business community, it is important for every business to prepare for the future. The hope is that our legislative representatives act diligent in enacting policies that help our business community thrive during these unprecedented levels of economic loss brought by COVID.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
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California Court Holds that No Insurance Coverage for Hotel’s Loss of Income Claims During Covid
By: Jose L. Parra, Esq.
November 30, 2021
The California Court of Appeal, Fourth Appellate District recently held in The Inns By The Sea v. California Mutual Insurance Company (Super. Ct. No. 20CV001274) that a California Hotel would not be provided insurance coverage for the loss of income sustained during the COVID-19 pandemic.
The case appears to be limited to the specific language of the insurance policy at play; however, the nature of the holding appears to send more uncertainty for the many businesses in our state that may face unprecedented levels of loss brought by COVID.
The court determined that loss of income caused by governmental orders that limited the operation of the hotel was not a covered scenario under the insurance policy in question; principally, the policy required a finding of direct physical loss. Accordingly, the court concluded that the suspension of business’ operations was due to orders issued by a governmental body and not by physical loss or damage as required per the policy.
The decision issued by the court raises many questions about the uncertain predicaments that many businesses in our state face. In particular, how can a business be prepared for the wake of increasing governmental orders issued during the age of COVID, when it appears that insurance companies are hesitant to cover for loss brought about by a pandemic?
It is not surprising that many commercial policies have different sets of exclusions for coverage; some exclusions deal with acts of God, wars, riots, etc. Therefore, when dealing with the large myriad of business insurance policies, it is crucial that a proper review of the coverage clauses be undertaken.
With the alarming impact that COVID has had on our business community, it is important for every business to prepare for the future. The hope is that our legislative representatives act diligent in enacting policies that help our business community thrive during these unprecedented levels of economic loss brought by COVID.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
Recent and Popular Articles From Our Blog:
2020 Blogs:
- April 28 – A New Reality – Temporary or Permanent – Virtual Showings and Disclosures
- May 22 – Servant Leadership
- June 8 – Paycheck Protection Program Flexibility Act is Enacted
- June 10 – Impact to Credit Score After Filing Chapter 7 Bankruptcy
- June 26 – SBA Rolls Out Updated PPP Loan Forgiveness Application
- July 2 – Understanding the Home Equity Sales Contract Act 2020
- July 14 – Governor Rolls Back Re-Opening
- August 4 – August 2020 COVID-19 Update
- August 18 – Status Of Selected California State Operations re: COVID-19
- September 1 – COVID Update on Foreclosures and Evictions
- September 3 – State Passes AB 3088
- September 15 – Update on PPP Forgiveness and Impacts
- November 10 – Changes to the Fair Housing and Discrimination Advisory CAR Form
- November 24 – In a Season of Difficulty – We Choose Gratitude
- December 15 – Cal/OSHA Issues New COVID Prevention Rule
2021 Blogs:
- January 5 – Introduction to New Laws 2021
- January 26- Rain and the Prevalence of Failure to Disclose Claims
- February 2 – California Enacts COVID Tenant Relief Act (SB 91)
- March 9 – Understanding the Trust Exception to Real Estate Disclosures
- April 20 – Cash for Keys and SB 91
- May 4 – Help! Tenant Won’t Cooperate with Sale of Home
- May 11 – California Passes AB 80
- June 15 – Pinhole Leaks in Copper Pipes in Folsom