ArcView Group, which tracks the legal marijuana markets, recently estimated that legal U.S. pot sales could reach $6.7 billion in 2016. As the legal marijuana economy has grown, insurance coverage for this emerging industry has become a hot topic. The U.S. District Court for the District of Colorado in The Green Earth Wellness Center, LLC v. Atain Specialty Insurance Company, No. 13-cv-03452-MSK-NYW, 2016 WL 632357 (D. Colorado Feb. 17, 2016) was recently faced with determining the extent of coverage under a commercial property policy for damage sustained to marijuana plants at a growing facility and addressing whether legal marijuana was even insurable. Green Earth operates a retail medical marijuana business and an adjacent growing facility in Colorado Springs, Colorado. Green Earth contended…
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Colorado Court Finds Legal Marijuana Insurable Under Commercial Property Policy and Orders Trial on Claim for Damaged Buds
Common Sense Prevails: State of Collapse Nonexistent Thirteen Years before Discovery of Decay
For years, property insurance policies that exclude rot damage have been called upon to cover rot because the policies extend coverage to “collapse”—an undefined term—caused by hidden decay, even if the structure remains standing and in use. The Homeowners Association of the Queen Anne Park Condominium in Seattle discovered decay within the walls of its buildings in 2011. State Farm insured the Association with policies effective between 1992 and 1998. The policies excluded coverage for rot, but covered “collapse” caused by hidden decay. The Association argued that its buildings were in a state of collapse in or before 1998 and that State Farm covered the decay damage. State Farm denied the claim and the Association sued in federal court in…
“Insanity Defense” Fails To Preserve Coverage For Insured’s Arson
Missouri resident James Roller set fire to his garage in an attempt to commit suicide. When smoke and fumes surrounded him he changed his mind, fled the garage, and alerted his wife of the fire. Mrs. Roller called 911. A sheriff’s deputy escorted Mr. Roller to “protective custody” and obtained a 96-hour mental health detention order from the court. Mr. Roller was treated at a hospital. The garage sustained severe fire damage. Mrs. Roller notified the Rollers’ homeowners’ insurer, American Modern Home Insurance Company (AMHIC). An independent adjuster inspected the damage, took photographs, obtained a statement from Mrs. Roller, and estimated the replacement cost of the garage to be $21,240. AMHIC’s adjuster reserved the company’s rights and continued to investigate. …
Texas Rule Change: Supreme Court Holds Loss of Use Damages Are Recoverable Where Property Total Loss
In J & D Towing, LLC v. American Alternative Insurance Corporation, No. 14-0574, 2016 WL 91201 (Tex. Jan. 8, 2016), the Texas Supreme Court considered J & D Towing, LLC’s (“J & D”) claim for loss of use damages under its underinsured motorist insurance policy, after J & D’s only towing vehicle was totally destroyed in an accident. After discussing decades of Texas case law limiting loss of use damages to cases involving partial destruction, the Court held that the owner of totally destroyed personal property may recover loss of use damages, in addition to the property’s fair market value immediately before the injury. The Court’s holding reverses over 60 years of prior case law prohibiting recovery of loss of…
California Court Adopts Expansive Reading of Contamination and Product Recall Coverage
Two weeks ago in Foster Poultry Farms, Inc. v. Certain Underwriters at Lloyd’s, London, 2015 U.S. Dist. LEXIS 138609, 2015 WL 5920289 (E.D.Cal., Oct. 9, 2015), a California Court applying New York law found coverage under a product contamination insurance policy for a loss of poultry caused by salmonella. The Court allowed the recovery of decontamination expenses as “accidental contamination,” holding that the policyholder need only prove that there was a “reasonable probability” that consumption of its processed chicken would lead to bodily injury or sickness. In addition, the Court rejected the insurers’ arguments that the undefined term “recall” was only applicable if the loss involved the of destruction of product already in the hands of customers, and it thereby…
Posted in Ambiguity, Contamination, Contamination and Product Recall, Product Recall, Uncategorized
Florida Courts Differ On Whether The Undefined Term “Structural Damage” In A Sinkhole Case Should Be Given A Broad Or A Narrow Interpretation
Since 2005, Florida law has defined “sinkhole loss” as “structural damage to the building, including the foundation, caused by sinkhole activity.” The term “structural damage” was long-undefined, however, leading numerous Florida courts to interpret that phrase broadly as meaning nothing more than “damage to the structure.” In 2011, however, the Florida Legislature adopted a much narrower five-part definition of “structural damage” for application when construing policies affording coverage for sinkhole loss. Fla. Stat. §627.706(2)(k) (2011). The state’s federal courts have now split on the issue of whether that definition automatically applies to contracts of insurance issued after the statute’s effective date. The question came to the forefront in Juan Pinzon and Jaqueline Espitia v. The First Liberty Ins. Corp., 2013…
