The California Court of Appeal has reversed the trial court's granting of demurrer and found that an insured adequately pled a claim of direct physical loss or damage due to the presence of the COVID-19 virus on an insured property. The case is Marina Pacific Hotel & Suites, LLC v. Fireman's Fund Ins. Co., No. B316501, 2022 Cal. Ct. App. (Ct. App. July 13, 2022).

Fireman's Fund insurance company issued a commercial property policy to Mariana Pacific Hotel and Suites for the time period between July 1, 2019, and July 1, 2020, that provided coverage for direct physical loss or damage to the insured property. The policy provided business interruption coverage with a $22 million limit for the "actual loss of business income and necessary extra expense you sustain due to necessary suspension of your operation during the period of restoration arising from direct physical loss or damage to property."

Fireman's paid out for the actual loss of business income due to the necessary suspension of operations during the period of restoration arising from direct physical loss or damage to the property. The Hotel filed an amended complaint alleging that "the presence of COVID-19 on property, including on and within Insured Properties, caused and continues to cause physical loss and/or damage to property by causing, among other things, a distinct, demonstrable or physical alteration to property."