Earlier this month, an intermediate level California court rejected arguments that an insurance company’s adjuster owes no independent duty to the policyholders and cannot be liable even for “appalling” misconduct if he is acting within the course and scope of his employment. According to the panel, the adjuster occupies the same “special relationship” with the insured as the insurance carrier does, and he can, therefore, be independently liable for the tort of negligent misrepresentation during the adjustment.
In Bock v. Hansen, — Cal.Rptr.3d —, 2014 WL 1315314 (Cal. App. 1st Dist. Apr. 2, 2014), Michael and Lorie Bock submitted a claim to their insurerafter a 41-foot, 7,300 pound tree limb crashed onto their home. The insurer assigned an adjuster, Craig Hansen, to handle the loss. As the appellate court explained:
On Hansen’s first visit to the scene (which lasted no more than 15 minutes), he altered the scene before taking pictures, spoke derogatorily to Mr. Bock, and misrepresented the policy coverage, causing the Bocks to begin the clean up themselves, in the course of which Mrs. Bock was injured.
It was all downhill from there. According to the Bock’s complaint, Hansen subsequently revised an estimate to include a false statement by the Bocks and conspired with an unlicensed contractor to create a false report. Hansen’s conduct, as alleged by the Bocks and admitted by Hansen himself in his demurrer, was described by the court as “appalling.” The Bocks requested that their insurer replace Mr. Hansen, but this request was ignored.
The Bocks sued both the insurer and Hansen, alleging, inter alia, that both were guilty of negligent misrepresentation and intentional infliction of emotional distress. The negligent misrepresentation claim against the adjuster was based on Hansen’s statement that the policy did not cover the cost of cleanup, while the emotional distress claim was based on allegations that Hansen’s conduct was knowingly outrageous and extreme. Read more ›
On appeal, the District Court of Appeal completely rejected the lower court’s use of an order compelling an appraisal as a vehicle to make coverage determinations, finding that it was procedurally improper and violated due process. The court was clear that, under Florida law, such coverage determinations are only appropriate when based on competent evidence reviewed through either summary adjudication or at trial. Additionally, and in light of the insurer’s complete denial of the damage at issue, the District Court of Appeal held that a judicial determination on all coverage issues, including causation, must first be made by the court. In reaching its ruling, the court cited a Florida Supreme Court decision, Johnson v. National Mut. Ins. Co., 828 So.2d 1021, 1022 (Fla. 2002), which held that “causation is a coverage question for the court when an insurer wholly denies that there is a covered loss and an amount-of-loss question for the appraisal panel when an insurer admits that there is covered loss, the amount of which is disputed.”
Lyons notified Lexington of the water inflow in July 2010, after it had already spent $2.5 million on the problem. The insured sought coverage under six Lexington policies of “all risk” property insurance issued between March 2004 and April 2010. Suit was filed in the Spring of 2011 after Lexington refused to commit to reimbursement. The sworn statement in proof of loss that Lyons submitted in December of 2010 sought $7.5 million, and the policyholder was estimating that the total cost of investigating and fixing the intrusion would top $11 million as of last year.
Sandy struck several hours later, causing extensive flooding in lower Manhattan. The Bowling Green Network suffered “extensive water damage” from the flooding, and Con Edison spent the next several days pumping out the water and cleaning, testing, and – as necessary – replacing its equipment. The network was re-energized early in the morning on November 3.
In January, the Senate passed a bill which called for a four-year delay of the rate increases imposed by the Biggert-Waters. House leaders, however, wanted a more permanent fix, and they also wanted to avoid adding to the insolvency of the NFIP. Thus, the Homeowner Flood Insurance Affordability Act was born. The bill proposes, among other things: (1) to roll back certain rate increase “triggers” so that policyholders will no longer face rate increases as a result of the sale of a home or a lapse in coverage; (2) to provide a refund for those who already got hit under the foregoing provisions; (3) to restore “grandfathering” so that homes and businesses that were previously built to code and later remapped into a higher risk area by FEMA won’t face rate increases due to the remapping; and (4) to impose a cap on FEMA’s ability to raise annual insurance premium rates. Under the bill, FEMA can still increase premiums for owners of homes built before the flood insurance rate maps, but the increases have a hard cap of 18 percent per year (down from 20 percent under Biggert-Waters), and will typically range from only 5 percent to 15 percent.
The policyholder, Millennium Inorganic Chemicals, Ltd., processed titanium dioxide at its facility in Western Australia, using natural gas that it received via a pipeline. It purchased the gas from Alinta Sales Pty Ltd., a retail gas supplier. Alinta, in turn, purchased the gas it supplied to Millennium from others, including Apache Corporation.
Faced with what she described as “an onslaught” of lawsuits, the district’s Chief Judge Carol Bagley Amon ordered the clerk to open a miscellaneous civil case captioned “In Re: Hurricane Sandy Cases,” Docket No. 14 MC 41, on January 10 “for the purposes of Pretrial Case Administration in all actions seeking insurance coverage for damage caused by Hurricane Sandy.” She simultaneously directed three magistrate judges “to evaluate and make a recommendation regarding how to best handle all Hurricane Sandy cases.”
Peerless Insurance Company issued a $1 million fire insurance policy to Executive Plaza. This gave Executive the choice to select payment of “actual cash value” or payment of “replacement cost.” The policy also provided that Peerless would not pay the replacement cost for any loss or damage until the property had actually been repaired or replaced. Finally, the policy contained a suit limitation clause that required the insured to commence any legal action within two years from the date of loss.
In October of 2005, Hurricane Wilma damaged three apartment complexes in Broward County, Florida. The property manager for all three was Banta Properties, Inc., a company owned by various Banta family members. The individual family members also owned two of the three properties at the time of the storm, having sold the third one (Parkcrest Apartments) to an unrelated, non-party entity two months beforehand.