The Supreme Court of California recently weighed in on conflicting conclusions reached by California Courts of Appeal regarding insurance coverage for COVID-19 related losses, in its May 23, 2024 decision in Another Planet Entertainment, LLC, v. Vigilant Insurance Company, S277893.

As we expected, the court held that “allegations 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.” The court noted that “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.”