On June 3, Connecticut’s intermediate level appellate court held that the failure of a policyholder to file a sworn statement in proof of loss was fatal to his claim. Palkimas v. State Farm Fire & Casualty Co., 150 Conn.App. 655, 2014 Conn.App. LEXIS 244 (June 3, 2014) rejected the insured’s arguments that prejudice need be shown, holding that while the insurance company may well need to make a showing of prejudice in cases involving the belated submission of a proof, its burden to make such a showing never arises in cases in which the insured has never submitted such a document.
Richard Palkimas was insured under a homeowner’s policy issued by State Farm Fire & Casualty Company, and he sustained two losses. The first occurred in September 2006, “when workers negligently used a toilet that had been blocked off resulting in a buildup of sewage, and the breaking and rupturing of a sanitary pipe, as well as the spreading of sewage and fecal matter throughout the home.” Then in January of the following year, the policyholder discovered that “freezing temperatures caused substantial damage to [his] home, including fracturing of the plaster walls and building structure.”
The insured made claim for both events, and he hired a public adjuster to negotiate with State Farm on his behalf. It was undisputed, however, that he never filed a sworn statement in proof of loss in connection with either claim. The insurer ultimately denied coverage for both, contending that the policyholder’s failure to submit a proof meant that he had failed to satisfy a condition precedent to coverage under the contract of insurance. Read more ›
The policyholder owned an apartment complex that was insured by Dryden Mutual. The structure was damaged when waste water inundated the first floor, entering the units through toilets, bathtubs, and drains. The insurer denied liability, contending that coverage was barred by two “Water Damage” exclusions. The first recited that loss caused by “water which backs up through sewers and drains” was excluded, while the second barred coverage for “loss caused by repeated or continuous discharge, or leakage of liquids or steam from within a plumbing … system.” The second of these exclusions, however, went on to state that Dryden Mutual would pay for “loss caused by the accidental leakage, overflow or discharge of liquids or steam from a plumbing … system.”
In Mirarchi, a fire damaged the insured’s property. The insurer paid the entire undisputed amount, and the parties proceed to appraisal on the remainder of the claim. An umpire entered an award close to the amount sought by the policyholder, and the carrier paid. Thereafter, however, the insured filed an action against the insurance company in federal court, asserting that the insurer had delayed payment in bad faith, and he requested discovery of the company’s reserve information. Seneca Specialty refused to provide the requested information, and the district court held that it was not obligated to so so. The trial court subsequently dismissed the bad faith claims in their entirety, noting that the insurer had paid the undisputed amount despite the lack of any contractual or legal obligation to do so and further that the insurer, in valuing the claim lower than the appraisal award, had relied on reasonable expert opinions. 
TRIA is activated once an event has been certified as an “act of terrorism” by the Secretaries of the Treasury and the Departments of State and Homeland Security. There is presently a $27.5 billion annual aggregate retention level, meaning that industry-wide commercial and worker’s compensation claims from a terrorist attack must exceed $27.5 billion before TRIA kicks in. The statute also has an 85/15 co-pay; above $27.5 billion, the federal government pays 85% of the loss and the insurance industry pays the remaining 15% up to a cap of $100 billion. Finally, each individual insurance company has a deductible that it must fund equal to 20% of its total property and casualty insurance premiums. 
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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.