Last week, the Vermont Supreme Court firmly rejected the notion that an insured can bring a cognizable claim for negligence against his or her carrier in connection with the inspection and handling of a first-party property insurance claim. In Helena G. Murphy v. Patriot Ins. Co., 2014 VT 96, 2014 WL 3965639, 2014 Vt. LEXIS 101 (Vt., Aug. 14, 2014), the court recognized that the relationship was “fundamentally contractual” in nature and that a policyholder’s rights flowed solely from the insurance policy and the covenant of good faith and fair dealing implied in that instrument. In July of 2007, the insured, Helena Murphy, reported damage to the roof of her house and interior water damage to her homeowner’s carrier, Patriot…
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Florida Insurer Waives Two-Year Requirement by Waiting That Long to First Raise It
In Axis Surplus Ins. Co. v. Caribbean Beach Club Assn., 2014 WL 2900930 (Fla.Dist.Ct.App., June 27, 2014), a Florida court recently held that the insurer could not rely on a policy requirement that conditioned recovery of the cost of complying with current building codes during reconstruction on having completed the work within two years of the loss. The insurer waived the two-year requirement by failing to raise it until the entire two years had elapsed and choosing to spend that time cooperating with the policyholder’s efforts to determine the necessary scope of repair instead. The insured, Caribbean Beach Club Association, owned a time-share condominium building in Fort Myers that was heavily damaged by fire in April 2003. It had property…
In Iowa, Rain is What Gene Kelly Sang In – Not Water From a Burst Drain Pipe
Earlier this year, an Iowa court recognized that rain becomes rainwater once it has fallen, and it held that policy language excluding loss caused by “rain” – without more – will not operate to bar coverage for water from a burst drain pipe that ruptured during a rainstorm. The decision is reported at Amish Connection, Inc. v. State Farm Fire & Cas. Co., 847 N.W.2d 237, 2014 WL 1234161 (Iowa Ct. App., March 26, 2014). The insured, Amish Connection, Inc., leased space in a mall in Waterloo, Iowa, and its merchandise was damaged after a 4” cast iron drain pipe above the ceiling burst during a rainstorm. The pipe carried water from the roof drains to a storm sewer. The…
Insurers Say “Over My Dead Body” to Claims for Damage From Decomposition
Last April saw decisions handed down in Pennsylvania and Florida that addressed the ghoulish question of whether first-party policies cover property damage from a decomposing body, and the courts in both jurisdictions held that the answer in no. A word of warning – the balance of this post is not for the squeamish. The first decision was Certain Underwriters at Lloyds of London v. Creagh, — Fed.Appx. —, 2014 WL 1408868 (3rd Cir. , April 14, 2014). The insured owned a building in Philadelphia where a tenant died in the bathroom of a second floor apartment. The body went undiscovered for two weeks, by which time bodily fluids had seeped through the floor, contaminating both the apartment itself and parts…
Tagged with: Corpses, Florida, Pennsylvania
Posted in Decomposition, Explosion, Microorganisms, Seepage or Leakage
Posted in Decomposition, Explosion, Microorganisms, Seepage or Leakage
Sixth Circuit Holds That Declines in Market Value are Not a Factor in Determining Actual Cash Value
In a case of first impression in Michigan, the federal Court of Appeals determined last month that general market conditions could not be considered when calculating actual cash value. In Whitehouse Condominium Group, LLC v. Cincinnati Ins. Co., — Fed.Appx. —, 2014 WL 2743480 (6th Cir., June 17, 2014), the contract of insurance defined ACV as replacement cost less a number of factors including “obsolescence .” The Sixth Circuit held that the word connoted only functional obsolescence as opposed to both functional and economic obsolescence. The policyholder owned a condominium building in Flint, Michigan that was heavily damaged by fire in November of 2010. The policy afforded coverage for ACV, which was defined in the contract of insurance to mean…
Tagged with: Michigan, New York, Obsolescence
Posted in Actual Cash Value, Depreciation, Fire, Loss Adjustment
Posted in Actual Cash Value, Depreciation, Fire, Loss Adjustment
Argument That Rain Alone Can’t Cause a Flood “Would be News to Noah” Says a California Court
Last month an appellate court in California looked to the Bible, citing the Book of Genesis when rejecting the argument that an inundation caused solely by heavy rain was not an excluded flood. The opinion was handed down in Horvath v. State Farm General Ins. Co., 2014 WL 2931049 (Cal.App., June 30, 2014). The insureds, Peter and Susan Horvath, owned a home at the end of a cul-de-sac at the bottom of Bell Canyon Drive. On December 22, 2010, severe rainstorms led to what the husband described as a “river of water coming down the street.” The town’s drainage systems were overwhelmed, and the cul-de-sac quickly filled up, ultimately inundating the first floor of the insureds’ home with 18” of…
New York Court: Storm Surge is a Species of Excluded Flood
One of the most litigated issues in the Gulf States in the wake of Hurricane Katrina was whether flood exclusions bar coverage for loss by storm surge. The courts ultimately decided that the answer was yes. The Superstorm Sandy jurisdictions have yet to address that question, but a recent federal case in New York suggests that the matter will ultimately be resolved in the same fashion in the Empire State. The decision is New Sea Crest Healthcare Center, LLC, et al. v. Lexington Ins. Co., — F.Supp.2d —, 2014 WL 2879839 (E.D.N.Y., June 24, 2014). At present, the issue will not crop up nearly as frequently as it did in the wake of the 2005 storm because Katrina taught a…
New York Court: All Sandy Losses, Including “Downstream” Financial Ones, Capped By Annual Aggregate Limit For Flood
Superstorm Sandy jurisprudence is starting to shed light on some unresolved issues in the effected states. In El-Ad 250 West LLC v. Zurich American Ins. Co., — N.Y.S.2d —, 2014 WL 2931058 (N.Y.Cty., June 27, 2014), a New York court held last week that a $5 million annual aggregate limit of liability for losses caused by flood capped any recovery for all such loss, without regard to whether it was physical damage to property or a “downstream” financial loss such as delay in completion. It was a case of first impression in New York. On October 29, 2012, the policyholder, El-Ad 250 West LLC, was converting an 11-story office building into a 12-story luxury condominium complex in lower Manhattan. Superstorm…
Waiver of Attorney-Client and Work-Product – You Can’t Be Just a Little Bit Pregnant
A recent Mississippi opinion dramatically underscores the dangers of an advice-of-counsel defense. In Willis v. Allstate Ins. Co., — F.Supp.2d —, 2014 WL 1882387 (S.D.Miss., May 12, 2014), the court held that the insurer had waived both the attorney-client privilege and the work-product doctrine with respect to coverage counsel’s entire file – and not just that portion of it that the carrier was willing to produce – when its representatives testified that they relied on the attorney’s advice to deny liability. As the saying goes, in for a penny, in for a pound. The policyholder Sandra Willis’ home was damaged by a fire on June 14, 2012, and she made a claim under her homeowner’s policy with Allstate Insurance Company. …
California Court: An Insurance Claim for Feng Shui Is Not Harmonious Qi
Feng shui is a Chinese philosophical system that supposedly orients buildings and their contents in an auspicious manner. Last month in Patel v. American Economy Ins. Co., — F.Supp.2d —, 2014 WL 1862211 (N.D. Cal., May 8, 2014), however, a California court rejected the notion that it was compensable under a first-party property insurance policy as either a legitimate expense to repair direct physical loss or damage or a necessary extra expense to avoid additional business income loss. On October 14, 2009, a fire filled the dental offices of Dr. Namrata Patel with smoke. Dental and electronic equipment was damaged, and she incurred costs for cleaning and repair, inventory replacement, and lost business income during a one-month closure after the…
