Last month, a Pennsylvania federal court rejected the notion that a dispute over whether an admittedly covered occurrence necessitated repair of certain discrete portions of the damaged structure was a coverage dispute, characterizing it instead as merely a dispute over the extent of loss. As a result, Currie v. State Farm Fire & Cas. Co., 2014 WL 4081051, 2014 U.S. Dist. LEXIS 117970 (E.D.Pa., Aug. 19, 2014) held that the insurer could not refuse appraisal and stated that it was being “disingenuous” in arguing otherwise.
The Curries were the owners of a home in Langhorne, Pennsylvania. When Superstorm Sandy struck on October 29, 2012, the structure took a direct hit from a tree on the property. The insurer, State Farm Fire & Casualty Company, conducted an inspection and then tendered its repair estimate to the policyholders together with a check for $56,940.54 – the actual cash value of the estimate less the policy’s deductible. The Curries responded by submitting their own repair estimate in the amount of $363,804.98. State Farm then conducted a new inspection and made a supplemental payment of $9,502.09.
The insureds asserted that State Farm’s payments were insufficient, and they made a written demand for appraisal. The carrier rejected that, stating:
This claim involves certain items for which State Farm has not admitted liability. These items include, but are not necessarily limited to, sanding and refinishing of the wood floors. Since the dispute goes beyond the amount of loss, appraisal is not an appropriate method of resolution.
A lawsuit for both breach of contract and bad faith followed. State Farm moved for summary judgment on the extra-contractual count, arguing that the Curries had failed to produce evidence that it had acted in bad faith in denying their request for appraisal “when there was a clear coverage dispute.” Read more ›
Effective March 16, 2010, Colony Insurance Company issued a commercial property policy providing $4.5 million in coverage for a vacant, 95,000 sq. ft. building in Montezuma, Georgia. In light of the vacancy, the insurer insisted that the policy include a protective safeguards endorsement requiring that the policyholders maintain an automatic sprinkler system, fire extinguishers, and functioning utilities and reciting that Colony would “not pay for loss or damage caused or resulting from fire if, prior to the fire, [the insureds] [f]ailed to maintain any protective safeguard . . . in complete working order.” The policyholders’ application for coverage also recited that the utilities in the building were on. When the insurer had the structure inspected in early April, however, the utilities were all found to be shut off.
The case arose after Lewayne Greene moved into a retirement community, vacating her home in Irving, Texas and placing the structure on the market. She notified her insurer of the move, but she did not purchase an endorsement offered by the carrier, Farmers Insurance Exchange, that would covered an extended vacancy. Four months later, fire from a neighboring house spread to her home and damaged it. Farmers denied the subsequent insurance claim because the structure had been vacant for over sixty days, and the policyholder brought suit. She prevailed in the trial court, but the Court of Appeals reversed and rendered judgment for Farmers. On appeal, a unanimous Texas Supreme Court affirmed.
Plaintiff Hamilton Properties acquired the Dallas Plaza Hotel in 2006 and mothballed the structure in February of 2009. The hotel was insured by American Insurance Company (AIC) from February through September of 2009. In 2012, the policyholder notified AIC that it was making claim for roof and water damage allegedly sustained during a July 8, 2009 storm that dumped ping-pong sized hailstones on the city. After investigating the loss, the insured denied liability, and Hamilton Properties brought suit.
In July of 2007, the insured, Helena Murphy, reported damage to the roof of her house and interior water damage to her homeowner’s carrier, Patriot Insurance Company. The insurer promptly had the structure inspected by a claims adjuster, and it paid $3,553.05 for the loss. The policyholder then proceeded to make a series of additional claims over the course of the next few months, and Patriot ultimately tendered over $30,000 to Ms. Murphy, including the full policy limit of $10,000 for damage from mold and rot.
The insured, Caribbean Beach Club Association, owned a time-share condominium building in Fort Myers that was heavily damaged by fire in April 2003. It had property insurance coverage with Axis Surplus Insurance Company, and it had paid an additional premium for an Ordinance or Law Coverage Endorsement that provided up to $2.5 million for any increased cost of reconstruction incurred as a result of the enforcement of local ordinances or laws. The endorsement recited that the insured could not recover, however, until after the property was actually repaired or replaced and that reconstruction had to take place within two years’ time.
The insured, Amish Connection, Inc., leased space in a mall in Waterloo, Iowa, and its merchandise was damaged after a 4” cast iron drain pipe above the ceiling burst during a rainstorm. The pipe carried water from the roof drains to a storm sewer. The policyholder reported the loss on the day after the storm, and its commercial property insurer, State Farm Fire & Casualty Company, denied by letter on the same afternoon, stating that the loss was “caused by rain.” The contract of insurance excluded loss “to the interior of any building or structure, or the property inside any building or structure, caused by rain, snow, sleet, ice, sand or dust, whether driven by wind or not[.]” Rain itself was not a defined term.
The first decision was 