Someday the editors of this blog will have to create a “Hall of Shame” for most witheringly wrong-headed pieces of first-party property insurance jurisprudence, and a clear contender is a federal decision out of Illinois that came down early last month. In Streit v. Metropolitan Cas. Ins. Co., 2015 WL 6736677, 2015 U.S. Dist. LEXIS 149904 (N.D.Ill., Nov. 4, 2015), the court determined that there was coverage for a fire set by one of the insureds because the intentional acts exclusion in the contract of insurance was void. The state’s Standard Fire Policy did not exclude intentional acts, and the judge held that that meant that fires caused by intentional conduct, “including arson, . . . must be covered.”
The insureds owned a home in Lake in the Hills. On August 5, 2014, a fire rendered the dwelling uninhabitable, and the policyholders’ 19-year-old son, who resided with his parents, subsequently admitted to setting the blaze. The boy was sentenced to prison for the crime of aggravated arson. The carrier denied the insurance claim of the husband and wife in reliance on an intentional loss exclusion reciting that the policy did not cover “any loss arising out of any intentional or criminal act committed . . . by you or at your direction . . . with the intent to cause a loss.” The terms “you” and “your” were defined by the contract of insurance as meaning “the person or persons named in the Declarations and if a resident of the same household . . . the relatives of either[.]” Read more ›
The insured owned a home in Madison that suffered water damage from a malfunctioning dishwasher, and he brought suit against the carrier and its independent adjuster, alleging that they had underpaid the loss. The allegations included negligence; the policyholder contended, inter alia, that the adjuster had prepared a negligent estimate and neglected to include damage to the homeowner’s personal property in his scope of loss. The adjuster moved to dismiss the negligence count, and Judge Victor Bolden granted the motion on November 24th. 
The insureds owned a two-unit residential building in Galveston that was “left in shambles” after Hurricane Ike in September 2008. An appraiser had estimated the market value to be $195,000 the year before. The policyholders had both a SFIP and a separate contract of wind insurance, and they made claim under both. The wind carrier paid $66,766 and the SFIP insurer paid $76,968 for building damage, bringing the total recovery to $143,734. The insureds then sold the property, unrepaired, for an additional $58,000. The policyholders still “felt shortchanged,” however, and they sued the flood carrier, seeking to recover the full limit of liability under that policy. 
Three years out, Superstorm Sandy litigation continues to wend its way through New Jersey’s courts. Last weekend, a federal judge in the state handed a victory to the insurer in 
The ultimate risk is enormous. Computerized industrial control systems run the world’s financial institutions, its manufacturing and chemical facilities, its transportation systems, and its energy infrastructure, including the electrical grid and power and water treatment plants. These control systems are composed of devices such programmable logic controllers (PLCs) and supervisory control and data acquisition (SCADA) equipment that were originally designed to be open systems, which is to say systems focused on interoperability and ease of communication and repair. Security was a secondary consideration at best. If hijacked by a piece of malware, such systems could cause property damage and business interruption loss on a literally catastrophic scale. 
Two of its policyholder’s employees sought reimbursement under the D&O policy for attorney’s fees and costs after successfully defending against federal criminal charges. The carrier denied liability based on a “change in control” exclusion that barred coverage if the alleged wrongful acts occurred after new management had taken control of the insured, and it filed a declaratory judgment action seeking to vindicate that position. On cross-motions for summary judgment, the district court found the exclusion to be ambiguous, and it interpreted it in favor of coverage pursuant to Texas’ contra proferentem doctrine – a rule of contractual interpretation that provides that an ambiguous term is to be construed against the draftsman. It also rejected the insurer’s invitation to apply a sophisticated insured exception to that doctrine. 
The first case was 
Carriers routinely resist efforts to compel production of the underwriting and claims files on other policyholders on the basis of relevance. Early last month in 
The policyholder owned a 25-story condominium building in Miami. There was a tiled elevator landing on each floor separating the east and west hallways, and those portions of the structure on floors three through twenty-five had a uniform appearance by design. On February 11, 2013, a valve broke in an air conditioning unit on the east side of the 11th floor, and cascading water damaged the hallways on the east side of the building all the way down to the third floor. 
While not as prolonged and torturous as Dickens’ Jarndyce v. Jarndyce, the case litigated in one form or another for fifteen years. After a garage collapse in lower Manhattan in early 1999, the policyholder retained the PA and executed a retainer agreement that set the adjuster’s fee at 7% “of the amount of loss and salvage . . . when adjusted or otherwise recovered.” Efforts to settle with the insurer were unsuccessful, however, and the insured brought suit in 2001. Two trials, three trips to the Appellate Division, and ten years later, a settlement was reached in May of 2010. 