Hunton Insurance Team Alerts California Supreme Court to “Physical Alteration” Fallacy
Time 2 Minute Read

On February 6, 2023, The Claims Journal highlighted a letter by members of Hunton’s insurance team, submitted on behalf of United Policyholders, to the California Supreme Court, which alerts the Court to the fundamental infirmities in the “standard” expounded by the insurance industry in COVID-19 business interruption litigations nationwide. The letter was issued to assist the Court in addressing a question certified from the US Court of Appeals for the Ninth Circuit, in Another Planet Entertainment, LLC v. Vigilant Insurance Co, asking whether the actual or potential presence of the COVID-19 virus on an insured’s premises “constitute direct physical loss or damage to property” for purposes of coverage under a commercial property insurance policy.

The letter analyzes the fundamental errors that combine to support the so-called “standard” espoused by the authors of Couch on Insurance Third, which has often been accepted blindly by courts in COVID-19 insurance disputes. The letter is premised on a well-reasoned article co-authored by Hunton insurance partner Lorie Masters, titled Couch’s “Physical Alteration” Fallacy: Its Origins and Consequences, in which the authors trace the origin of the Couch Third “standard” and demonstrate its infirmity. Despite the authors’ invitation to open up their viewpoint to debate in an effort to simply ensure that courts get the law right, no well-reasoned merits-based response has been offered in over a year since the article was first published. “That silence speaks for itself.”

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