Blog Archives

Reasonableness of Insurer’s Coverage Decision Determined by Evidence Available at Time of Decision

The Eighth Circuit Court of Appeals recently held that, under Iowa law, an insurer is not liable for breach of contract or bad faith if its coverage decision was objectively reasonable at the time it was made. In Hallmark Specialty Ins. Co. v. Phoenix C & D Recycling, Inc., No. 20-1339, 2021 WL 2197068 (8th Cir. June 1, 2021), a fire originated from a pile of biofuel material on an insured’s power plant, causing alleged damage to buildings, wiring, equipment, and other materials. The insurer paid for a portion of the insured’s equipment losses, but not for removal and installation of wiring and equipment because the policy did not require such payment until damaged property had been repaired or replaced.

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Posted in Coverage

Appraisal Process Tolls Contractual Suit Limitation Period Even For Non-Covered Claims

The Eleventh Circuit Court of Appeals recently held that, under Georgia law, an appraisal process tolled a commercial property policy’s two-year contractual suit limitation period even for non-covered claims. In Omni Health Solutions, LLC v. Zurich Am. Ins. Co., No. 19-12406, 2021 WL 2025146 (11th Cir. May 21, 2021) (unpublished), the insured filed a property insurance claim with its insurer, reporting hail damage to the roof of its medical facility in Macon, Georgia, and water intrusion. The policy required the insurer to give notice of its intentions with respect to a claim within 30 days of receiving a sworn proof of loss. Following a protracted appraisal process, the insured sued the insurer in Georgia superior court for breach of contract

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Posted in Bad Faith, Proof of Loss

Pennsylvania District Court Holds Materiality Does Not Require Fraud

A District Court in the Eastern District of Pennsylvania recently held that an insured’s submission of invoices altered to inflate replacement costs for water-damaged inventory constituted material misrepresentations. The court granted the insurer’s motion for summary judgment on its claims for declaratory judgment and violation of the Pennsylvania Insurance Fraud Act; however, the court held that the altered invoices fell short of satisfying the elements of common law fraud.  About The Authors

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Posted in Bad Faith

A Consequential Ruling: Florida Supreme Court Rejects Recovery of Consequential Damages in First-Party Breach of Contract Actions

In first-party breach of insurance contract actions, the parties oftentimes dispute whether the policyholder may seek damages that are not explicitly provided for in the policy, with the policyholder arguing such indirect damages flow from the alleged breach of contract. By doing so, policyholders blur the lines between breach of contract actions and bad faith actions. The Florida Supreme Court recently considered this issue in Citizens Property Insurance Corp. v. Manor House, LLC,[1]  and held that “extra-contractual, consequential damages are not available in a first-party breach of insurance contract action because the contractual amount due to the insured is the amount owed pursuant to the express terms and conditions of the insurance policy.” Manor House arose from a Hurricane Frances

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Posted in Hurricane

New York Ruling Could Significantly Impact Disclosure of Communications Between Insurer and Counsel

A recent decision from one of New York’s trial courts of general jurisdiction could have a chilling effect on written communications between an insurer and its retained counsel during a claim investigation.  In Otsuka America, Inc. v. Crum & Forster Specialty Insurance Co., 2019 WL 4131024, Judge Andrea Masley of the Supreme Court of the State of New York, New York County, ruled that several communications between Crum & Forster (CF) and its attorney (including the attorney’s coverage opinion letter), were not privileged and must be produced.  The Court found that CF retained counsel, in part, to provide an opinion on whether the insured’s claim was covered.  Determining whether a claim is covered is part of the regular business of

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Posted in Bad Faith, Discovery, Investigation, Loss Adjustment, Privilege, U.S. Legal System
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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