For years, Florida courts have been seesawing between two different doctrines to determine whether there is coverage under a property policy when two perils – one excluded and one included — combine to cause a loss. Two districts of the state’s intermediate level appellate court have applied one test and a third has applied another, with the most recent decision being American Home Assur. Co. v. Sebo, 141 So.3d 195 (Fla.Ct.App., Sep. 18, 2013). On October 7th of last year, the state’s highest court accepted review in the Sebo matter, and oral argument was conducted on September 2, 2015. Some clarity will finally emerge in the Sunshine State with respect to this issue. When multiple perils combine to cause a…
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Tennessee Court: Requirement that Insurers “Make Available” Sinkhole Coverage Does Not Require Policyholders Be Notified
Since 2007, Tennessee statutes have required that homeowners carriers “make available” insurance coverage for sinkhole losses. Last Friday in Patterson v. Shelter Mut. Ins. Co., 2015 Tenn. App. LEXIS 734, 2015 WL 5320231 (Tenn.Ct.App., Sep. 11, 2015), a unanimous panel of the state’s intermediate level appellate court rejected arguments that this required that policyholders be notified of that fact, however, finding that the term meant only that such coverage must be “accessible or obtainable” upon request. The insureds alleged that their home was damaged by sinkhole activity in March of 2011. The insurer denied, contending, inter alia, that while the contract of insurance did not expressly include or exclude sinkhole loss, it did bar coverage for damage caused by “the…
Tagged with: Sinkhole Insurance, Tennessee
Posted in Earth Movement, Homeowners Coverage, Regulation, Sinkhole
Posted in Earth Movement, Homeowners Coverage, Regulation, Sinkhole
New Jersey Judge Writes a Primer on How Not to Draft a Denial Letter
Last month, a federal trial court in New Jersey shot down an insurer’s arguments that it had unambiguously denied coverage for Superstorm Sandy damage in a letter to the insured. In Liguori v. Certain Underwriters at Lloyds, 2015WL 4402851. 2015 U.S. Dist. LEXIS 93090 (D.N.J., Jul. 17, 2015), the judge found that correspondence announcing that the carrier was “pleased to inform you” that wind damage was covered while flood was “expressly excluded” and concluding with what he called an “open-ended statement that the letter could be amended should new information become available” simply did not pass muster as a formal denial. The insureds owned a home in Seaside Heights that was demolished by the storm on October 29, 2012, and…
Tagged with: New Jersey
Posted in Homeowners Coverage, Hurricane, Loss Adjustment, Suit Limitation, Superstorm Sandy
Posted in Homeowners Coverage, Hurricane, Loss Adjustment, Suit Limitation, Superstorm Sandy
Kansas Court Sanctions Depreciation of Labor to Determine Actual Cash Value
Two of our previous posts reported that Arkansas and Kentucky courts have now barred insurers from depreciating labor—as opposed to materials—when arriving at actual cash value (ACV). Last Wednesday in Graves v. American Family Mut. Ins. Co., 2015 WL 4478468, 2015 U.S. Dist. LEXIS 95127 (D.Kan., Jul. 22, 2015), a federal court in Kansas reached the opposite result in a case of first impression in that state, holding that ACV entails depreciating both materials and labor. A storm damaged the insured’s roof in December 2013, and she made claim under her homeowners policy. The contract of insurance called for payment on an ACV basis unless the damage had been completely repaired or replaced, and it defined ACV as “[t]he amount…
Tagged with: Kansas, Labor
Posted in Actual Cash Value, Depreciation, Homeowners Coverage, Loss Adjustment, Replacement Cost
Posted in Actual Cash Value, Depreciation, Homeowners Coverage, Loss Adjustment, Replacement Cost
Oklahoma Holds Question of Whether Fracking Causes Earthquakes is for the Courts to Decide.
The issue of whether hydraulic fracturing or “fracking” causes earthquakes has first-party insurance implications because policies typically exclude damage from tremors attributable to man-made causes as opposed to purely unnatural ones. We’ve discussed the issue in two recent posts after Insurance Commissioners in Oklahoma and Pennsylvania publicly warned carriers against denying earthquake claims on the basis that they were attributable to oil and gas drilling. The jury is still out on the issue, but scientific evidence linking fracking to the tremors is accumulating rapidly. At the present time, Oklahoma is at the “sharp end of the spear” with respect to this issue because the state experienced fully 567 quakes of Magnitude 3.0 or greater in 2014. That is the more…
Tagged with: Fracking, Hydraulic Fracturing, Oklahoma
Posted in Causation, Earthquake, Homeowners Coverage, Regulation
Posted in Causation, Earthquake, Homeowners Coverage, Regulation
Georgia Court: Policy Does Not Require Insured to Produce Recordings of Her Conversations With the Carrier
On May 20th, a federal court in Georgia held that the standard “requirements in case of loss” language compelling the insured to turn over her books and records during the adjustment process did not require the production of recordings that she had secretly made of her telephone calls with the insurer’s representatives. In Armstead v. Allstate Prop. & Cas. Ins. Co., 2015 WL 2408049, 2015 U.S. Dist. LEXIS 66030 (N.D. Ga., May 20, 2015), the court rejected arguments that the policyholder’s refusal to disgorge the tapes was a violation of the “no action” clause that precluded her breach of contract and bad faith action because it held that the carrier had not shown that they were material to the adjustment…
Tagged with: Georgia, No Action Clause, Requirements in Case of Loss
Posted in Cooperation, Discovery, Examinations Under Oath, Fire, Homeowners Coverage, Investigation, Loss Adjustment
Posted in Cooperation, Discovery, Examinations Under Oath, Fire, Homeowners Coverage, Investigation, Loss Adjustment
Oklahoma Court Holds the Policyholder Can Also Be the Vandal
Earlier this week an Oklahoma federal court addressed a mortgagee’s claim for vandalism loss – a topic we also discussed in Wednesday’s post. In American Modern Home Ins. Co. v. Tulsa Fed. Credit Union, 2015 WL 2372549, 2015 U.S. Dist. LEXIS 64491 (E.D.Okla., May 18, 2015), the court rejected an insurer’s argument that because the vandalism was done by the insured, it could not constitute the covered peril of “vandalism” in a situation in which the policy neglected to define that term. The insured owned a house and secured a homeowners policy that also extended coverage to his mortgagee. The mortgage company instituted foreclosure proceedings and the policyholder vacated the dwelling, but only after removing fixtures and damaging property to…
Tagged with: Mortgage Clause, Oklahoma
Posted in Ambiguity, Homeowners Coverage, Loss Payees, Mortgagees, Theft or Dishonesty, Vandalism
Posted in Ambiguity, Homeowners Coverage, Loss Payees, Mortgagees, Theft or Dishonesty, Vandalism
Pennsylvania Joins Oklahoma, Bans Homeowners Insurers From Attributing Earthquakes to Fracking
Last month we reported that the Oklahoma Insurance Commissioner had issued a bulletin cautioning earthquake insurers against denying claims on the basis that the quake was attributable to a man-made cause, which is to say oil and gas production, rather than to a purely natural one. Recently, Pennsylvania’s Acting Insurance Commissioner Teresa Miller followed suit, “instructing” homeowners carriers that earthquake endorsements “should cover all earthquakes, whether believed to be ‘naturally occurring’ or caused by ‘human activity.’ ” The Keystone State has not seen the dramatic uptick in earthquake activity that has shattered both nerves and property in Oklahoma in recent years. Because of the hydrocarbon-rich Marcellus Shale formation, however, it remains a jurisdiction with more oil and gas drilling than…
Tagged with: Fracking, Hydraulic Fracturing, Pennsylvania
Posted in Causation, Earthquake, Homeowners Coverage, Regulation
Posted in Causation, Earthquake, Homeowners Coverage, Regulation
Smelly Cat – Closely-Divided New Hampshire Supreme Court Addresses Whether Cat Urine Is a Pollutant
Last Friday, New Hampshire’s highest court unanimously held that the pungent aroma of cat urine could constitute physical loss or damage under a property policy. In Mellin v. Northern Security Ins. Co., 2015 WL 1869572, 2015 N.H. LEXIS 32 (N.H., Apr. 24, 2015), it split on whether such a loss was barred by standard pollution exclusion language, however. Three of the five justices (including a specially-appointed retiree) held that the exclusion was ambiguous in nature. The Chief Justice and another member of the court disagreed, labeling the provision “plain and unambiguous” and clearly applicable to preclude coverage for a pervasive cat odor problem. On the TV show “Friends,” Phoebe Buffay used to entertain patrons at the Central Perk coffee shop…
Tagged with: Ammonia, Cat Urine, New Hampshire
Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution
Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution
Eleventh Circuit: Sinkhole Loss in Florida Must Impair the Property’s Structural Integrity to be Covered
Effective in 2005, Florida statutes defined “sinkhole loss” to mean “structural damage to the building, including the foundation, caused by sinkhole activity,” and they left the all-important term “structural damage” undefined. Homeowner’s policies issued in the state employed that formulation until May 17, 2011, when Florida adopted a much narrower five-part definition of structural damage that applied to policies affording coverage for sinkhole loss, and many courts construing the 2005 language held that the term “structural damage” meant nothing more than “damage to the structure.” Several weeks ago in Hegel v. First Liberty Ins. Corp., 778 F.3d 1214 (11th Cir., Feb. 27, 2015), a unanimous Eleventh Circuit panel held: (1) that defining structural damage to mean any “damage to the…
Tagged with: Eleventh Circuit, Florida, Structural Damage
Posted in Direct Physical Loss or Damage, Homeowners Coverage, Sinkhole
Posted in Direct Physical Loss or Damage, Homeowners Coverage, Sinkhole
