Insurers should be nervous that policyholders will discover additional proof that the insurers' understanding of "physical loss or damage" contradicts their claims in courts. (Credit: Neptunestock/Shutterstock)
One of the Ten Commandments is "You shall not bear false witness against thy neighbor." Basically, don't lie. That's not only a key tenet of religious traditions around the world, it's also a simple principle we teach children. It's becoming evident, however, that insurers haven't followed it with regard to COVID-19 insurance claims. More evidence now available to the public shows insurers did not actually believe the central theme to the sermon they've preached when defending pandemic-related business interruption claims.
The meaning of "physical loss or damage" is the centerpiece of virtually every such case. Insurers have consistently argued that a loss of function due to the presence of a dangerous substance does not satisfy this language or that a virus can never cause damage. The insurers often cite Section 148:46 of the Couch on Insurance, 3d treatise as gospel, claiming it is a "widely held" rule that there must be some physical or structural alteration to property. When shown its flaws, as discussed in Richard P. Lewis's article Couch's 'Physical Alteration' Fallacy: Its Origins and Consequences (2021), insurers exclaim: "Heresy! It's Couch."
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