Blog Archives

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

The Supreme Court of Texas Finds that a Reasonable Payment of an Insurance Claim Does Not Satisfy the Texas Prompt Payment of Claims Act

In Hinojos v. State Farm Lloyds, the Supreme Court of Texas addressed liability under the Texas Prompt Payment of Claims Act (the “TPPCA”) when an insurer timely pays only part of a claim.[1] As demonstrated in Hinojos, disputes as to TPPCA liability typically arise in the context of appraisal and the payment of an award.   In a fairly short opinion, the Court held that timely payments less than the full amount of the ultimate insurance claim do not satisfy an insurer’s duties under the TPPCA. However, the Court also reiterated that payment of an appraisal award outside the TPPCA’s deadlines does not satisfy a policyholder’s burden to prove an actual TPPCA violation.   About The Author

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Posted in Causes of Loss

A Consequential Ruling: Florida Supreme Court Rejects Recovery of Consequential Damages in First-Party Breach of Contract Actions

In first-party breach of insurance contract actions, the parties oftentimes dispute whether the policyholder may seek damages that are not explicitly provided for in the policy, with the policyholder arguing such indirect damages flow from the alleged breach of contract. By doing so, policyholders blur the lines between breach of contract actions and bad faith actions. The Florida Supreme Court recently considered this issue in Citizens Property Insurance Corp. v. Manor House, LLC,[1]  and held that “extra-contractual, consequential damages are not available in a first-party breach of insurance contract action because the contractual amount due to the insured is the amount owed pursuant to the express terms and conditions of the insurance policy.” Manor House arose from a Hurricane Frances

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Posted in Hurricane

North Carolina Court Finds Coverage for Restaurants’ COVID-19 Business Income Losses

A trial level court in North Carolina recently found coverage under first-party property insurance policies for the insured restaurants’ COVID-19-related business income losses.  In North State Deli, LLC et al. v. Cincinnati Ins. Co., et al., Case No. 20-CVS-02569 in the General Court of Justice, Superior Court Division, County of Durham, Judge Orlando F. Hudson, Jr. granted partial summary judgment to the plaintiff-insureds, finding that plaintiffs’ business income losses resulting from the governmental shutdown of its business constituted a “loss” to property, sufficient to trigger coverage under the Cincinnati policies.  Although similarly situation insureds will undoubtedly rely on this decision in support of their claims for coverage, it is important to note that the North State Deli decision relies heavily

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Posted in Business Interuption, Causes of Loss, Coverage, Direct Physical Loss or Damage, Order of Civil Authority

Ensuing Loss Clause Does Not Create Coverage for “Collapse” Inseparable from Damage Caused by Excluded Perils

            In Jowite Limited Partnership v. Federal Insurance Company, the United States District Court for the District of Maryland issued a rare opinion addressing whether “collapse” is a covered “ensuing loss” under an all-risks insurance policy without a specific collapse coverage.  Case No. 1:18-cv-02413-DLB (D. Md. August 17, 2020).  In a win for insurers, the Court held that, under Maryland law, the ensuing loss exception to a construction defect exclusion did not apply to reinstate coverage where the purported “collapse” was to the defective property itself, regardless of whether the “collapse” was characterized as merely the damage caused by construction defects or a separate and distinct peril.             The insured, Jowite Limited Partnership (“Jowite”), owned an apartment complex constructed in

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Posted in Causes of Loss, Collapse, Coverage, Mold, Water

New Hurricane Harvey Opinion Provides a Roadmap to Defeating Common Policyholder Attorney Tactics

Policyholders attorneys often try to skip the threshold steps of bringing their client’s claim within coverage and allocating between covered and non-covered causes of loss.  Instead, the policyholder attorney would have the insurer first disprove coverage, or at least first justify its coverage position.  These tactics unfold in a familiar way. The policyholder attorney will engage a consultant to write up an Xactimate estimate.  Or, perhaps a public adjuster already wrote up the estimate and then brought the claim to the attorney.  Everything that is wrong with the structure will go into the estimate.  Every water-stained ceiling tile, bent AC condenser fin, and dent on the siding will go into the estimate regardless of causation.  The bigger estimate, the better

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Posted in Catastrophes, Coverage, Hurricane

New Texas Laws Take Aim at Common Practice in Storm-Related Repairs

Texas policyholders can no longer cut deals with storm repair contractors to pocket their deductibles for storm repairs.  The Texas Legislature has amended the Texas Insurance Code and Texas Business & Commerce Code, targeting construction companies that offer “free roofs” and “waived deductibles” as enticements to policyholders.  Previously, for example, contractors would reach an agreement to perform work for a policyholder, but waive or absorb the portion of the repair cost equal to the deductible.  This waiver or absorption could occur through numerous paperwork tricks.  Now, the policyholder must pay its deductible, otherwise the insurer can refuse to pay certain claims and the contractor can be charged with a crime.  About The Author

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Posted in Deductible, Flood, Hurricane, Waiver

Key Questions to Consider in Light of Operation Rubicon’s Investigation into Insurance Fraud in South Florida

Law enforcement in Miami-Dade County, Florida recently arrested nine individuals described by Florida Chief Financial Officer Jimmy Patronis as the “ringleaders of an elaborate fraud scheme” led by Barbara Maria Diaz de Villegas,[1] owner of the public adjusting company The Rubicon Group.[2]  The arrests were the result of a year-long investigation, known as “Operation Rubicon,” to investigate insurance fraud, and demonstrate that efforts are being made to curb insurance fraud in South Florida.  According to a February 2019 report from the Federal Trade Commission, Florida is ranked as the number one state for fraud and is home to 18 of the top 50 cities in the United States in terms of fraud reports.[3] The alleged fraud scheme involved public adjusters,

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Posted in Water

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

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Posted in Collapse

Eleventh Circuit Holds Attorneys’ Fees Are Not Warranted Where Policyholder Filed Suit Instead of Undergoing Appraisal

The Eleventh Circuit, in J.P.F.D. Investment Corp. v. United Specialty Insurance Co., recently affirmed a district court’s denial of statutory attorneys’ fees to a policyholder that, to resolve a disagreement over the amount of loss, filed suit against its insurer instead of participating in appraisal.[1] In Florida, policyholder attorneys are often quick to file lawsuits against insurers in order to trigger statutory fee shifting. Florida Statutes § 627.428 provides: (1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court . . .  shall adjudge or decree

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Posted in Water
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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