South Carolina has become the most recent state whose Supreme Court has refused to allow property insurance coverage for COVID-19 losses. The case is Sullivan Mgmt. v. Fireman's Fund Ins. Co., No. 28105, 2022 S.C. LEXIS 90 (Aug. 10, 2022).

Sullivan Management operated restaurants in South Carolina and filed suit to recover for business interruption losses during the COVID-19 pandemic under a commercial property policy issued by Fireman's Fund and Allianz Global Risks US Insurance Company, (Fireman's). The South Carolina Supreme Court accepted five certified questions from the federal district court stemming from the litigation but elected to only answer one of the five questions.

Does the presence of COVID-19 in or near Sullivan's properties, and/or related governmental orders, which allegedly hinder or destroy the fitness, habitability or functionality of property, constitute "direct physical loss or damage" or does "direct physical loss or damage" require some permanent dispossession of the property or physical alteration to the property?