The April 8, 2015 decision of the California Court of Appeals in Ass’n. of Cal. Insurance Companies v. Jones, 2015 WL 1569669, 2015 Cal. App. LEXIS 298 (Cal.Ct.App., Apr. 8, 2015) held that the state’s Insurance Commissioner overstepped his authority in attempting to regulate the content and format of replacement cost estimates under homeowners’ insurance policies. Although the legislature may choose to provide such a definition, it has not done so. While the sufficiency of policy limits remains a concern in the insurance industry and there are other valid statutes in effect that address replacement cost, pending a potential appeal of the decision the Regulation at issue, Title 10, Cal. Code of Regulations, §2695.183, is therefore no longer effective.
Fire victims, whose homes have been lost in any number of Southern California wildfires, have repeatedly argued that their replacement cost limits were insufficient to cover their rebuilding costs. Historically, many such homeowners filed lawsuits against their brokers or their insurers, alleging negligence and misrepresentation in policy placement. Insurers, community activists, and others have held numerous public hearings on the subject, and agencies have conducted studies to assess the adequacy of replacement cost limits in homeowners’ policies over the last decade. Attempting to remedy some of these concerns, effective in June 2011, the Insurance Commissioner issued §2695.183. Entitled “Standards for Estimates of Replacement Value,” this elaborate Regulation set forth requirements for establishing replacement cost limits for homeowner’s policies. Read more ›
The case was a proposed class action by a West Liberty, Kentucky dentist whose office was damaged by a tornado and an Owingsville, Kentucky homeowner whose residence was hit by a fire. In both cases, the State Farm policies afforded replacement cost coverage but authorized the carrier to make its initial payment on an ACV basis. In the two cases, the insurer calculated ACV by determining replacement costs and then depreciating both materials and labor. The policyholders argued that labor, unlike construction materials which logically age and wear and tear, was not subject to depreciation.
The policyholder had a rental property in a “relatively isolated location” that was vacated by the last tenant in February 2010. On December 20, 2011 the home was damaged by a fire. Subsequent investigation indicated that it was a “warming fire” set by a transient that got out of hand when he attempted to kick the burning firewood out the back door.
Oklahoma has experienced a remarkable rise in earthquake activity in recent years. According to the Oklahoma Geological Survey, the state had 567 quakes of Magnitude 3.0 or greater in 2014. That was a five-fold increase over 2013, a 14-fold increase over the 2008-2012 average, and a 100-fold increase over earlier years. The 2014 number exceeded the total number of earthquakes in Oklahoma during the preceding 30 years combined; no state in the lower 48 states, including California, saw more quakes last year.
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 
The insured was a law firm with offices on John Street in lower Manhattan. On October 28, 2012, the Mayor of New York City issued an executive order evacuating all homes and business located in the area. Superstorm Sandy made landfall the next day, and parts of lower Manhattan – though not the area around the policyholder’s offices – quickly experienced “never-before-seen flood levels.” On October 31st, a second executive order continued the evacuation and directed that buildings could only be reoccupied after being inspected and declared safe; 14 more orders were subsequently issued extending those restrictions. The law firm’s offices were ultimately declared available for occupancy on Christmas Eve, and the policyholder moved back in on January 4, 2013.
Eight large PSEG generating stations and a number of smaller distribution facilities were damaged when Superstorm Sandy came ashore in New Jersey on October 29, 2012. The utility’s current estimate of the loss exceeds $500 million. It was undisputed that a storm surge – which the court described as “a hurricane-generated inundation of water” – of “record-breaking height” caused the lion’s share of the damage.
The insured operated the Amish Connection Store in Crossroads Shopping Mall in Waterloo, Iowa. Rooftop drains discharged into a 4” cast-iron drainpipe that ran above the store’s ceiling tiles and then down the back wall of the space and into a storm sewer. The pipe was leaky and extensively-corroded, and it burst during a rainstorm on June 14, 2010, flooding the store and causing substantial damage to the policyholder’s inventory, office supplies, and records.
On February 6th, an intermediate level California appellate court held that a product contamination policy only covered contamination that occurs during or after manufacturing operations by the insured, meaning that there was no coverage where the policyholder’s product was found to be adulterated because it used an ingredient that had been contaminated by a third-party supplier. The decision is 
The insured was Broome County, the owner of a building in a government complex. During the construction of a parking garage below the structure, silica dust migrated up an elevator shaft and disbursed throughout all floors of the building. It was undisputed that inadequate dust barriers were what allowed the silica to infiltrate the shaft – it was “a flawed process on the part of the contractors that led to the loss at issue.” Broome County made claim for the resulting property damage, but its insurer, Travelers Indemnity, denied the claim, invoking the two exclusions discussed above.