Blog Archives

Federal Court Holds that the Voluntary Payment of an Appraisal Award Plus Penalty Interest Defeats TPPCA Claims Under Texas Law

Posted on November 15, 2021 by Donnie Mike Apodaca, II

In 2019, the Supreme Court of Texas issued a pair of decisions that allowed policyholders to prosecute claims under the Texas Prompt Payment of Claims Act (“TPPCA”) even after the insurers paid appraisal awards. The decisions were a modification of law and so post-appraisal litigation has and continues to evolve. One such example is a recent decision from District Judge Tipton of the Southern District of Texas in White v. Allstate Vehicle and Property Insurance Company, which has provided a potential road map for insurers looking to curb post-appraisal demands and litigation after the payment of an appraisal award.[1] About The Author

Tagged with: appraisal, Insurance, litigation, Prompt Payment of Claims, Texas, TPPCA
Posted in Uncategorized

Ninth Circuit Holds COVID-19 Business Interruption Losses Require Direct Physical Damage To The Property

Posted on November 09, 2021 by Michael W. Melendez, Alicia Gurries

In March 2020, Mudpie Inc.—a San Francisco children’s store—ceased operations when California Governor Gavin Newsom ordered all “non-essential” businesses to close due to the COVID-19 pandemic. Because of the shut-down, Mudpie sought coverage for loss of “business income” and “extra expense” under a commercial property policy issued by Travelers Casualty Insurance Company of America (“Travelers”). The Travelers policy provided coverage during the “period of restoration” for loss of business income due to the necessary suspension of the insured’s operations caused by “direct physical loss of or damage to the [insured’s] property.” About The Authors

Tagged with: Actual Damage, business interruption, COVID Coverage, Insurance, shutdown order
Posted in Uncategorized

Tenth Circuit Rules Against Insurer and Decides That Appraisers Can Decide Causation

Posted on October 12, 2021 by Karl A. Schulz

In the continuing saga of what can and cannot be appraised in a property insurance appraisal, the Tenth Circuit, in contrast to many other courts, has ruled appraisers can determine coverage issues. In Bonbeck Parker, LLC v. Travelers Indem. Co. of Am., 2021 U.S. App. LEXIS 29607 (10th Cir. October 1, 2021), a hailstorm damaged three buildings covered under a commercial property insurance policy. A dispute between the insured and insurer arose over whether the hailstorm caused all of the damage claimed. The insurer paid some of the claimed damage, but denied coverage for other claimed damage, asserting that it was caused by non-covered causes such as wear and tear. The insured invoked appraisal. About The Author

Tagged with: appraisal, appraiser, Causation, cause, Colorado, declaratory judgment, determine, loss, Tenth, Texas, umpire
Posted in Causation, Coverage, Uncategorized

Court’s Opinion Provides Guidance on Protecting a Claims Handling Manual as a Trade Secret

Posted on November 10, 2020 by Karl A. Schulz

In Chavez v. Std. Ins. Co., 2020 U.S. Dist. LEXIS 203610 (N.D. Tex. Oct. 30, 2020), Judge David C. Godbey considered a variation on a common scenario that arises in first party cases. Typically, the insured/plaintiff wants an insurer’s claims handling manual to use against the insurer in proving claims under Texas Insurance Code Chapter 541 and the DTPA. However, as Judge Godbey explained, such manuals are not automatically discoverable. Also, insurers can significantly increase the chances that a court will protect such manuals from unrestricted discovery and use in litigation by providing certain affidavit evidence. The plaintiff in Chavez was receiving long-term disability benefits from Standard Insurance Company (“Standard”). Standard terminated Chavez’s benefits after a medical examination. Litigation ensued. …

Correlation or Causation for Coronavirus-Related Business Income Losses

Posted on March 24, 2020 by Chad A. Pasternack, John David Dickenson

In the wake of the Coronavirus (COVID-19) pandemic, countless businesses have reduced or closed operations—some permanently. Flights have been canceled, hotels and restaurants have closed, and employees have been told to stay home. Naturally, businesses will seek to offset their financial losses during this period. Some businesses may file insurance claims under their Business Income coverage. Common Business Income (and Extra Expense) Coverage Forms might state: “We will pay for the actual loss of Business Income you sustain due to the necessary ‘suspension’ of your ‘operations’ during the ‘period of restoration’. The ‘suspension’ must be caused by direct physical loss of or damage to [covered] property ….” There has been much discussion of what constitutes “physical loss” and of policy…

Tagged with: business income, coronavirus, covid-19, economic, Insurance, physical loss, suspension
Posted in Hurricane Ike, Uncategorized

Free Ride on RCV? Not So Fast!

Posted on May 29, 2019 by Craig Bennion

Most property insurance policies condition the payment of replacement cost value (RCV) on the property first being replaced or repaired, and courts typically enforce that requirement. Replacement cost is not owed until the insured completes repair or replacement. Yet what property adjuster has never encountered an insured who attempts to claim reimbursement for items not damaged in the loss on the theory that such items are within the RCV estimate and are a part of the property’s “restoration”? A recent Washington Court of Appeals decision illustrates. In Mount Zion Lutheran Church v. Church Mutual Ins. Co., 2019 WL 2177893 Wash. App. (filed March 18, 2019; ordered published May 14, 2019), a fire damaged the interior of a church sanctuary. Church…

Tagged with: RCV, Repair, Replace, Replacement Cost
Posted in Direct Physical Loss or Damage, Uncategorized

Contractors’ All Risks Insurance: Where are the limits? A lesson from the Bahamas

Posted on March 5, 2018 by Andrew Tobin

In a rare foray into insurance law, London’s Privy Council considered the interpretation of a Contractors’ All Risk (CAR) policy in Sun Alliance (Bahamas) Ltd v Scandi Enterprises Ltd (Bahamas),[1] and overturned the decision of the Court of Appeal of the Bahamas. The Judicial Committee of the Privy Council in London is the final court of appeal for several former British colonies. Its decisions are binding on those jurisdictions and are also considered to be of very persuasive authority in the UK and in former British jurisdictions now possessing their own final courts of appeal, such as Canada, Australia, Singapore, Hong Kong and many others. Its members are drawn mostly from the UK Supreme Court. In this case Scandi (the…

Posted in Uncategorized

Positive Signs in the Enforcement of Late Notice Provisions

Posted on July 18, 2017 by Stephen Kempa

This year was off to a positive start in the realm of property insurance with a decision out of the Second Circuit upholding an at times embattled policy provision that is found in nearly every property insurance policy: the late notice provision. Courts’ varying enforcement of such provisions has hindered insurers from enforcing rights vital to protecting their ability to start investigating a loss as quickly as possible. The opinion in Minasian v. IDS Prop. Cas. Ins. Co., 676 F. App’x 29 (2d Cir. 2017) was thus welcome news for the insurance industry, with the appeals court enforcing the late notice provision in a series of property policies which required that the insured provide its carrier prompt notice of a loss.…

Posted in Conditions, Coverage, Notice, Prejudice, Uncategorized

Texas Supreme Court Rules on Discoverability of an Insurer’s Attorney’s Fee Bills

Posted on June 13, 2017 by Karl A. Schulz

Are an insurer’s attorney’s fee bills discoverable in first party claims? In In re Nat’l Lloyds Ins. Co., 2017 Tex. LEXIS 522 (Tex. 2017), the Texas Supreme Court considered this question in a hail MDL dispute and answered “No” in a lengthy opinion. The opinion is the latest development in a long-running dispute over “storm chaser” claims that recently gave rise to another round of tort reform in the Texas legislature. National Lloyds challenged the reasonableness of the insureds’ attorney’s fee claims, but did not compare its own fees to the insureds’ or seek to recover its own fees. Shortly before trial, the insureds propounded sweeping discovery regarding the insurer’s hourly rates, expenses, billing invoices, and indicia of payment. The…

Tagged with: attorney’s fee
Posted in Uncategorized

Recent Washington Decisions Illustrate Need to Handle Property Claims in Timely Manner

Posted on April 7, 2016 by Sean Walton

An issue that often arises in the context of property insurance is whether a carrier’s delay in adjusting a claim can create a basis for a viable bad faith claim. The law in each state is different and the prudent practice is to consult a practitioner specializing in the law of the state in question. This article focuses on Washington law and discusses two recent cases which illustrate the need to adjust property claims promptly. Failure to do so may expose a carrier to viable bad faith allegations sufficient to survive summary judgment and permit the policyholder to get its case before a jury. First, in Hays v. State Farm Ins. Co., No. 46679–1–II, 191 Wn. App. 1053, 2015 WL…

Posted in Uncategorized