In a case of first impression in the Nutmeg State, an intermediate level court in Connecticut recently held that reinstatement of coverage after a lapse for non-payment of premiums does not operate to restore coverage retroactively. In Brown v. State Farm Fire & Casualty Co., 150 Conn.App. 405 (May 27, 2014), the court held that coverage is only restored on a prospective basis, and it barred the insured from recovering for a fire loss that took place between the time of the lapse and the reinstatement. The insured, Ralston Brown, owned a home in Bridgeport, and he purchased a homeowner’s insurance policy from State Farm on September 16, 2004. One year later, the policyholder secured a business policy from the…
Blog Archives
Failure to File a Proof of Loss is Fatal, and the Defense Does Not Require a Showing of Prejudice
On June 3, Connecticut’s intermediate level appellate court held that the failure of a policyholder to file a sworn statement in proof of loss was fatal to his claim. Palkimas v. State Farm Fire & Casualty Co., 150 Conn.App. 655, 2014 Conn.App. LEXIS 244 (June 3, 2014) rejected the insured’s arguments that prejudice need be shown, holding that while the insurance company may well need to make a showing of prejudice in cases involving the belated submission of a proof, its burden to make such a showing never arises in cases in which the insured has never submitted such a document. Richard Palkimas was insured under a homeowner’s policy issued by State Farm Fire & Casualty Company, and he sustained…
New York Holds Water Which Backs Up Is Covered If It Originated On The Insured Premises
Last week, in Pichel v. Dryden Mutual Ins. Co., — N.Y.S. 2d —, 2014 WL 1923736 (May 15, 2014), an intermediate level appellate panel in New York brought the state into line with the interpretation of water backup adopted by a number of other jurisdictions. The decision held that policy references to a “plumbing system” mean the plumbing system on the insured premises itself. As a result, a loss caused by water which backs up through sewers and drains is covered if the overflow originated within the insured’s property but excluded if the backup originated off site, as from a clogged municipal sewer system for example. The policyholder owned an apartment complex that was insured by Dryden Mutual. The structure…
Congress Moves Towards Reauthorization of TRIA
Congress returned last week from an extended spring recess with few legislative days left on the calendar before the mid-term elections and a long list of must-do legislation. One piece of legislation that seems certain to get attention will be a bill reauthorizing the Terrorism Risk Insurance Act (TRIA). In testimony presented over the last year before committees in the House of Representatives and the Senate, insurance industry representatives have made it clear that the federal backstop provided under TRIA is still relevant and essential to ensuring that terrorism risk insurance is both widely available and affordable. This has led to bipartisan and bicameral support for a reauthorization of TRIA that now seems certain to happen. Only two questions remain:…
A New York Court Bars Coverage for a Power Outage Caused by Superstorm Sandy
This week saw a New York court bar a policyholder’s claim for business interruption occasioned by the loss of off-site power after Superstorm Sandy. In Johnson Gallagher Magliery, LLC v. Charter Oak Fire Ins. Co., 2014 WL 1041831 (S.D.N.Y., March 18, 2014), the federal court held that a law firm could not recover for the six-day period during which one of Consolidated Edison’s networks was out-of-service. The network was shut down preemptively several hours before the storm, and the contract of insurance’s “acts or decisions” exclusion was held to bar coverage for that period of time. In addition, a “water” exclusion operated to preclude coverage for the time necessary to clean, repair, and re-energize the system after the flooding where…
Tagged with: New York
Posted in Acts or Decisions, Business Interuption, Direct Physical Loss or Damage, Flood, Superstorm Sandy
Posted in Acts or Decisions, Business Interuption, Direct Physical Loss or Damage, Flood, Superstorm Sandy
The Fourth Circuit Clarifies Who Is A Direct Supplier Under Contingent Business Interruption Coverage
In Millennium Inorganic Chemicals, Ltd. v. National Union Fire Ins. Co. et al., — F.3d. — , 2014 WL 642993 (4th Cir., Feb. 20, 2014), the United States Court of Appeals for the Fourth Circuit recently clarified who constitutes a direct supplier of goods and services under contingent business interruption (CBI) insurance, and it specifically rejected arguments that the undefined term “direct” in the coverage grants of the CBI endorsements at issue was ambiguous in nature. The policyholder, Millennium Inorganic Chemicals, Ltd., processed titanium dioxide at its facility in Western Australia, using natural gas that it received via a pipeline. It purchased the gas from Alinta Sales Pty Ltd., a retail gas supplier. Alinta, in turn, purchased the gas it…
Tagged with: Maryland
Posted in Ambiguity, Business Interuption, Contingent Business Interruption, Explosion
Posted in Ambiguity, Business Interuption, Contingent Business Interruption, Explosion
Federal Courts In New York and New Jersey Explore Streamlining Superstorm Sandy Discovery
Despite opposition by both many attorneys and the Federal Emergency Management Agency (“FEMA”), the federal court for the Eastern District of New York has now taken the first steps towards grouping some of the hundreds of pending Superstorm Sandy cases and expediting discovery in all of the them, and the District of New Jersey appears very likely to follow suit. Superstorm Sandy is now officially the second most costly storm in United States history, having caused over $50 billion in damages, and one of the most heavily-impacted jurisdictions was the United States District Court for the Eastern District of New York. The Eastern District comprises Staten Island and all of Long Island, including the New York City boroughs of Brooklyn…
Florida Property Manager’s Insurable Interest Is Limited To Its Fees
In Banta Properties, Inc. v. Arch Specialty, Ins. Co., —Fed. Appx.— , 2014 WL 274478 (11th Cir., January 24, 2014), the Eleventh Circuit recently held that a property manager’s insurable interest in the apartment complexes that it managed was limited to the income that it was entitled to receive under its contracts with the buildings’ owners. Under Florida statutes, the measure of insurable interest is the loss that the policyholder might sustain from damage to the property, and that was held to preclude the property manager from asserting such an interest and recovering on its own behalf for the property damage that the apartments sustained from Hurricane Wilma. In October of 2005, Hurricane Wilma damaged three apartment complexes in Broward…
Wisconsin Adds “Septage” To The List Of Substances Deemed To Be Pollutants
In Preisler v. Kuettel’s Septic Service, LLC, et al., 2014 WL 114325 (Wisc.App., Jan. 14, 2014), the intermediate level of appellate court in Wisconsin recently held that “septage” – a combination of water, urine, feces, and chemicals that is used as a fertilizer – was “unambiguously a pollutant.” The case involved the scope of comprehensive general liability (“CGL”) coverage, but the CGL policy exclusions at issue were virtually identical to pollution exclusions commonly found in first-party contracts of insurance. The decision is important to property carriers as a result, and it also rejects a number of arguments that first-party insureds frequently make in an effort to limit or avoid the application of such language. The Preislers owned a dairy farm…
Tagged with: Septage, Wisconsin
Posted in Efficient Proximate Cause, Exclusions, Pollution, Reasonable Expectations
Posted in Efficient Proximate Cause, Exclusions, Pollution, Reasonable Expectations
Under Texas Law, The Policyholder’s Rights to Recover For A Loss Are Not Necessarily Extinguished By A Subsequent Foreclosure
On November 27, 2013, an intermediate level Texas court handed down an opinion addressing the extent to which a policyholder’s claims for a covered loss survive foreclosure. Peacock Hospitality, Inc. v. Association Casualty Ins. Co., 2013 WL 6188597 (Tex.App. San Antonio) arose after the policyholder Peacock Hospitality (“Peacock”) made claim against its property insurance carrier, Association Casualty Insurance Company (“Association Casualty”), for water damage from frozen pipes at a Holiday Inn. The loss occurred on January 9, 2010. The policyholder had gone into default on its mortgage several months earlier, and the mortgagee (the “Bank”) sent Peacock a notice of acceleration and foreclosure on January 28th. On February 11th, Association Casualty tendered a check made payable to Peacock and the Bank…
