McGuireWoods partner Kirk Pasich analyzed three California Supreme Court decisions regarding the approach to interpreting insurance policies in a Jan. 9, 2025, column in the Daily Journal.
Pasich, co-leader of McGuireWoods’ insurance recovery team, reviewed the following 2024 cases:
- Another Planet Ent., LLC v. Vigilant Ins. Co., in which the California Supreme Court concluded “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 policy.” However, as Pasich stated, the court reaffirmed the principles governing insurance policy interpretation, many of which are favorable to insureds.
- Truck Insurance Exchange v. Kaiser Cement & Gypsum Corp., in which the court considered “the interplay of insurance policies in effect over multiple years when an insured faces claims of long-term injury or damage.” The court held that “the first-level excess insurers’ indemnity obligations to [the insured] attach upon exhaustion of the directly underlying primary policies,” meaning the insured can ask an excess insurer to pay even if the insured has primary policies available in other years, Pasich wrote.
- John’s Grill, Inc. v. Hartford Financial Services Group, Inc., which addressed whether a policy’s “Limited Fungi, Bacteria or Virus Coverage” endorsement covered losses from an insured restaurant’s closure during the COVID-19 pandemic. Though the court rejected coverage in these circumstances, its holding applies only when limitations are “explicit and unambiguous,” Pasich explained.