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Couch’s “Physical Alteration” Fallacy: Its Origins and Consequences

Look at virtually any COVID-19 case favoring an insurer, and you will find a citation to Section 148:46 of Couch on Insurance. It is virtually ubiquitous: courts siding with insurers cite Couch as restating a “widely held rule” on the meaning of “physical loss or damage”—words typically in the trigger for property-insurance coverage, including business-income coverage. It has been cited, ad nauseam, as evidence of a general consensus that all property-insurance claims require some “distinct, demonstrable, physical alteration of the property.” Indeed, some pro-insurer decisions substitute a citation to this section for an actual analysis of the specific language before the court.

In a new article in the Tort, Trial & Insurance Practice Law Journal, colleague Scott Greenspan and co-authors address the history and development of the “physical loss” rule, Couch’s distortion of it, and its impact on contemporary litigation. They also explore the correct rule, as explained in pre-and post-Couch precedent and in other treatises that more accurately state the law. Finally, the authors articulate the severe consequences that will follow for policyholders—banks, businesses, and homeowners—if Couch’s rule, continues to be blindly followed by courts without knowledge of its origins in legal quicksand.