Calif. Appellate Court Rejects ‘Loss of Use’ Theory in COVID-19 Coverage Case

SAN FRANCISCO — A California appellate court has upheld dismissal of a restaurant owner’s COVID-19 coverage action against Oregon Mutual Insurance Co., ruling that government shutdown orders issued in response to the pandemic do not cause “direct physical loss of or damage to” property.

In a Sept. 2 published opinion, the California Court of Appeals, 1st Dist., Div. 2, rejected Apple Annie LLC’s argument that “loss of use,” even if temporary, triggers coverage, explaining that the property must be physically altered.

Apple Annie LLC operates restaurants in three California counties. In March 2020, the company was required to suspend in-person …