Most property insurance policies condition the payment of replacement cost value (RCV) on the property first being replaced or repaired, and courts typically enforce that requirement. Replacement cost is not owed until the insured completes repair or replacement. Yet what property adjuster has never encountered an insured who attempts to claim reimbursement for items not damaged in the loss on the theory that such items are within the RCV estimate and are a part of the property’s “restoration”? A recent Washington Court of Appeals decision illustrates. In Mount Zion Lutheran Church v. Church Mutual Ins. Co., 2019 WL 2177893 Wash. App. (filed March 18, 2019; ordered published May 14, 2019), a fire damaged the interior of a church sanctuary. Church…
Monthly Archives: May 2019
Free Ride on RCV? Not So Fast!
Posted in Direct Physical Loss or Damage, Uncategorized
Texas Federal Court Holds that Named Storm Deductible Applies Even in the Absence of Wind Damage
Judge Nancy Atlas of the Southern District of Texas cut through competing arguments to resolve a high-profile dispute involving a Hurricane Harvey claim through Contract Interpretation 101. Lexington Insurance Company issued a policy to Pan Am Equities, Inc. (Pan Am) covering a property development in downtown Houston, Texas. The development sustained more than $6.7 million in flood damage due to Hurricane Harvey, a disaster that flooded homes and buildings across the city, but often left the structures undamaged by wind. This was the case with Pan Am’s downtown property development. The policy contained several different deductibles. As an exception to the general deductible, the policy had a $100,000.00 per occurrence Windstorm Deductible. The Windstorm Deductible was itself subject to an…
Collapse Coverage: Second Circuit Holds That Cracking Walls Do Not Constitute “Collapse”
Most homeowners’ policies – and property insurance policies in general – contain a limited coverage extension for “collapse.” The interpretation of that collapse coverage has been litigated around the country for decades, with different jurisdictions reaching considerably different results. The latest of these decisions, Valls v. Allstate Insurance Company, No. 17-3495-cv (2d Cir. 2019), comes out of the Second Circuit, deciding the case under Connecticut law. The case presented a single substantive question: does the “collapse” provision afford coverage for basement walls which had significant cracking but remain standing? Both the district court (D. Conn.) and the Second Circuit Court of Appeal concluded that it does not. In Valls, the plaintiffs owned a home in Connecticut which was insured by…
