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Court in Montana Applies Anti-Concurrent Causation Clause to Earth Movement Exclusion

A district court in Montana recently applied an anti-concurrent clause in a property insurance policy to preclude coverage based on an earth movement exclusion. In Ward v. Safeco Ins. Co. of Amer., No. 1:19-CV-0133-SPW, 2021 WL 3492294 (D. Mont. Aug. 9, 2021), the insured’s tenant reported that water was leaking from a main pipe serving the insured’s property, and the leak caused some soft spots to form in the floor of the kitchen. The insurer and agent’s subsequent inquiries led to the understanding that a leak under a slab affected the soil, which caused the house to settle, which then caused damage to the house. About The Authors

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Posted in Anti-Concurrent Causation

Eleventh Circuit Becomes Second Federal Appellate Court To Hold No Coverage For COVID-19 Business Losses

In the second federal appellate ruling on Covid-19 business losses, the Eleventh Circuit has joined the Eighth Circuit in holding that they do not trigger coverage because they do not involve “physical loss” or “physical damage” to property. In Gilreath Family & Cosmetic Dentistry Inc. v. Cincinnati Insurance Co., No. 21-11046, Slip. Op. (11th Cir. Aug. 31, 2021), the insured dentistry practice canceled routine and elective dental procedures at the beginning of the Covid-19 pandemic in response to state orders and CDC recommendations. Because these procedures made up the bulk of its business, the insured lost a substantial portion of its usual income. To recover that lost income, the insured filed a claim for business interruption coverage with its insurer.

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Posted in Federal Appeals

No Bad Faith When Insurer Relied on Opinion of Independent Consultant

The Court of Appeals of Georgia recently held that an insurer’s reliance on the report of an independent consultant creates a presumption that it did not act in bad faith in denying coverage. In Montgomery v. Travelers Home and Marine Ins. Co., 859 S.E.2d 130 (Ga. Ct. App. 2021), the insured made a claim under her homeowners insurance policy for water damage to her basement that she asserted had been caused by a ruptured garden hose. The insurer’s claims adjuster inspected the property two days later and saw damage that appeared to be from ground water rather than the ruptured hose. The adjuster sought input from his supervisor, who suggested that he hire an independent engineer to determine the cause

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Posted in Bad Faith

Claim Investigation Not Necessarily Protected by Work Product Doctrine in Illinois

In determining when the work product doctrine is triggered, the Northern District of Illinois recently held that, rather than adopting a bright-line rule, the issue should be decided on a case-by-case basis at the court’s discretion. In Club Gene and Georgetti, LP v. XL Insurance America, Inc., No. 20 C 652, 2021 WL 1239197 (N.D. Ill. Apr. 2, 2021), the insured’s steakhouse was damaged in a fire. When the insured sued for coverage, the insurer refused to produce documents prepared in the course of its investigation of the claim on the basis of the work product doctrine. The issue of contention was: at what point in an insurer’s claim investigation can the insurer claim that litigation was reasonably anticipated? In

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Posted in Claim Investigation

Wind Before Storm May Blow Away Flood Exclusions

Flood exclusions may not apply when floods are preceded by winds strong enough to independently cause the loss, according to a recent decision issued by the Western District of Louisiana. In Doxey v. Aegis Security Ins. Co., No. 2:21-CV-00825, 2021 WL 2383834 (W.D. La. Jun. 10, 2021), an insured sought coverage for wind damage sustained to his home by Hurricane Laura under a property insurance policy that excluded coverage for damage “caused by, contributed to or aggravated by” flooding. The policy also contained an anti-concurrent causation clause, which excluded losses caused by excluded perils “regardless of any other cause or event contributing concurrently or in any sequence to the loss.” The insurer denied coverage under the flood exclusion on the

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Posted in Causes of Loss, Windstorm

Reasonableness of Insurer’s Coverage Decision Determined by Evidence Available at Time of Decision

The Eighth Circuit Court of Appeals recently held that, under Iowa law, an insurer is not liable for breach of contract or bad faith if its coverage decision was objectively reasonable at the time it was made. In Hallmark Specialty Ins. Co. v. Phoenix C & D Recycling, Inc., No. 20-1339, 2021 WL 2197068 (8th Cir. June 1, 2021), a fire originated from a pile of biofuel material on an insured’s power plant, causing alleged damage to buildings, wiring, equipment, and other materials. The insurer paid for a portion of the insured’s equipment losses, but not for removal and installation of wiring and equipment because the policy did not require such payment until damaged property had been repaired or replaced.

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Posted in Coverage

Appraisal Process Tolls Contractual Suit Limitation Period Even For Non-Covered Claims

The Eleventh Circuit Court of Appeals recently held that, under Georgia law, an appraisal process tolled a commercial property policy’s two-year contractual suit limitation period even for non-covered claims. In Omni Health Solutions, LLC v. Zurich Am. Ins. Co., No. 19-12406, 2021 WL 2025146 (11th Cir. May 21, 2021) (unpublished), the insured filed a property insurance claim with its insurer, reporting hail damage to the roof of its medical facility in Macon, Georgia, and water intrusion. The policy required the insurer to give notice of its intentions with respect to a claim within 30 days of receiving a sworn proof of loss. Following a protracted appraisal process, the insured sued the insurer in Georgia superior court for breach of contract

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Posted in Bad Faith, Proof of Loss

Florida Court Holds Rust and Corrosion is “Act of Nature”

A Florida court recently held that rust and corrosion of water pipes is an “act of nature,” and, thus, was excluded from coverage under a homeowner’s insurance policy. In Dodge v. People’s Trust Insurance Company, 2021 WL 2217299 (4th DCA Jun. 2, 2021), Florida’s Fourth District Court of Appeals defined “act of nature” as a naturally occurring force that does not require an uncontrollable or unpreventable event. About The Authors

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Posted in Act of Nature

South Carolina Allows Depreciation of Labor Costs In ACV Calculation

Insurers in South Carolina may now depreciate both labor costs and material costs when determining the “actual cash value” (ACV) owed to policyholders for property damage. In Miriam Butler et al. v. Travelers Home and Marine Insurance Co. et al., Case No. 2020-001285 (S.C. May 12, 2021), the South Carolina Supreme Court held that insurers may depreciate labor costs to determine the ACV of a damaged property when an insurance policy does not define ACV and the “cost to repair or replace the damaged property at issue includes both materials and embedded labor components.” Id. About The Authors

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Posted in Actual Cash Value

Southern District of New York Holds Contamination Exclusion is Ambiguous as Applied to Covid-19 Business Losses

The Southern District of New York recently held that a contamination exclusion was ambiguous in the context of Covid-19-related business interruption losses. Accordingly, the court held that the issue was inappropriate to decide at the summary judgment stage and denied both parties’ cross-motions for summary judgment.    In Thor Equities LLC v. Factory Mut. Ins. Co., No. 1:20-cv-03380 (S.D.N.Y. Mar. 31, 2021), an insured commercial property owner sought business interruption coverage under its property insurance policy. The parties filed cross-motions for summary judgment, asking the court to determine the applicability of two exclusions, one of which was a contamination exclusion. The exclusion excluded “contamination, and any cost due to contamination including the inability to use or occupy property or any

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Posted in Contamination
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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