The physical damage requirement to property at an insured premise has become the raging debate in many of the Covid-19 business interruption disputes. I noted a Florida case1 in a blog about “physical damage,” which I wrote about in 2009 while working on Hurricane Ike roof damage claims: “Physical Direct Loss” Caselaw and TWIA’s Roofing Memo. Given that the Azalea, Ltd. v. American States Insurance Company decision is now being cited frequently in briefs regarding businesses being shut down, it seems appropriate to have a more in-depth discussion.
Continue Reading “Physical Damage” Can Occur From An Unknown Substance That Shuts Down a Business or Conditions That Make a Structure Useless

Small business owners are having a devastating time with the COVID-19 pandemic. Most are either shut down or severely hemorrhaging with lost profits. I am frequently asked whether business owners have insurance coverage for this shut down and what they should do.
Continue Reading What Should a Small Business Owner Do Regarding Business Interruption Caused by COVID-19? And Understanding What Physical Damage Means Under a Property Insurance Policy—Do Not Miss Tuesday’s At 2 with Chip Merlin

Pennsylvania has followed five other states to propose legislation eradicating the “virus” exclusion for small businesses having commercial business income policies. Insurance company lobbyists are fighting this legislation in numerous ways. One is the argument that such legislation, if passed, would be unconstitutional.
Continue Reading Coronavirus Insurance Coverage Update April 8—Pennsylvania Files Proposed Legislation, An Official “Trickle” of Lawsuits is Filed and Is There A Test That Finds Covid-19 on Property?

The first coronavirus lawsuit filed was in Louisiana. The subject policy has no ISO virus exclusion which was discussed in, Coronavirus Insurance Coverage Update—The ISO Circular Regarding the Virus Exclusion. Louisiana attorney John Houghtaling filed the lawsuit, and he will undoubtedly be relying upon a Louisiana case, Widder v. Louisiana Citizens Property Insurance Corporation,1 for the proposition that the coronavirus caused physical damage.
Continue Reading Corona Virus and Physical Damage—The Louisiana Case Law That Will Be Relied Upon in the First Coronavirus Case Filed

Judges should be aware of the extreme and aberrant arguments being made by a few insurance company lawyers about physical damage requiring damage to be “functional” damage. These lawyers argue that property insurance policies contemplate this “functional damage” requirement.
Continue Reading Insurance Company Lawyers Argue Physical Damage Requires Functional Damage—Can This Be True?

In the recent case of Rainforest Chocolate, LLC v. Sentinel Insurance Company, Ltd.,1 the Supreme Court of Vermont found coverage for Rainforest where Sentinel’s “false pretense” exclusion turned out to be ambiguous as there were at least two reasonable interpretations of what constituted “physical loss or physical damages.”2
Continue Reading Case Highlights How Writing and Interpreting Policies Can Be Challenging in Today’s Technological World

Insurance companies have turned the property insurance world upside down by denying claims based on engineers who claim that no "functional damage" occurred and only "cosmetic damage" was sustained at the insured property. Most of us in the property insurance claims business have been taught that any "physical damage" is covered by a property insurance policy. This concept of "physical damage" as the bell weather proof of the type of damage covered under property insurance policies is changing and challenged by some insurers and their forensic vendors who claim that "cosmetic damage" is not really the type of "physical damage" covered under insurance policies.


Continue Reading Cosmetic and Functional Damage – An Academic Discussion by Neil Hall

I’ve lived all over the country and prior to making my way to the East coast, I was lucky enough to live in the Rogue Valley in Southern Oregon, home of Harry and Davids, Jackson and Perkins, and—for you craft beer aficionados—Rogue Brewery. One of my favorite things in the Rogue Valley is the Shakespeare Festival in Ashland, Oregon, which runs from February through October every year.


Continue Reading Poor Air Quality Can Be Physical Damage

Many of you might have either read or heard about the massive gas leak that affected thousands of residents of Porter Ranch, a suburb of Los Angeles. The gas leak emanating from a nearby underground gas storage facility (operated by the Southern California Gas Co.) purportedly has stopped after a fix, but not before causing an estimated 100,000 tons of methane to be emitted into the atmosphere. Many scientists are calling the Porter Ranch gas leak the biggest in U.S. history.


Continue Reading The Biggest Gas Leak in U.S. History: Homeowner Property Insurance Issues

Only insurance company claims managers and their paid for lawyers could argue that a hail dented roof is not a covered loss under a property insurance policy which specifically covers hail damage. A federal appellate court decision issued last week1 helps put an end to these crazy attempts by insurance company lawyers that argue virtually anything to get out of the contractual promise.


Continue Reading A Hail Dented Roof is Covered Direct Physical Damage and Loss