Blog Archives

Major Victories for Insurers in Fifth Circuit Regarding COVID-19 Business Interruption Claims

The Fifth Circuit Court of Appeals has joined seven other Circuits in finding no coverage for COVID-19 business interruption claims.[1]  In Terry Black’s Barbecue, L.L.C. v. State Auto. Mut. Ins. Co., 2022 U.S. App. LEXIS 287 (5th Cir. Jan. 5, 2022) and Aggie Invs., L.L.C. v. Continental Cas. Co., 2022 U.S. App. LEXIS 393 (5th Cir. Jan. 6, 2022), the Fifth Circuit considered claims under all-risk policies.  In Terry Black’s Barbecue, the policy included provisions for loss of business income and extra expense.  To trigger such coverages, the policy required that the suspension of operations “must be caused by direct physical loss of or damage to property at the premises.”  The policy’s definition of “period of restoration” was the period

Tagged with: , , , ,
Posted in Uncategorized

COVID-19 Business Interruption Claims: First California Court of Appeal Decision Holds That Closure Orders Are Not “Direct Physical Loss”

California has been a hotbed of litigation regarding COVID-19 business interruption claims.  The vast majority of the trial courts have held in favor of insurers and against businesses.  Now, the California Court of Appeal has weighed in.  In a published decision, The Inns by the Sea v. California Mutual Insurance Company (November 15, 2021, Case No. D079036), the Fourth Appellate District held that a hotel’s business income loss resulting from the COVID-19 pandemic was not covered. About The Author

Tagged with: , , , , ,
Posted in Uncategorized

Federal Court Holds that the Voluntary Payment of an Appraisal Award Plus Penalty Interest Defeats TPPCA Claims Under Texas Law

In 2019, the Supreme Court of Texas issued a pair of decisions that allowed policyholders to prosecute claims under the Texas Prompt Payment of Claims Act (“TPPCA”) even after the insurers paid appraisal awards. The decisions were a modification of law and so post-appraisal litigation has and continues to evolve. One such example is a recent decision from District Judge Tipton of the Southern District of Texas in White v. Allstate Vehicle and Property Insurance Company, which has provided a potential road map for insurers looking to curb post-appraisal demands and litigation after the payment of an appraisal award.[1] About The Author

Tagged with: , , , , ,
Posted in Uncategorized

Ninth Circuit Holds COVID-19 Business Interruption Losses Require Direct Physical Damage To The Property

In March 2020, Mudpie Inc.—a San Francisco children’s store—ceased operations when California Governor Gavin Newsom ordered all “non-essential” businesses to close due to the COVID-19 pandemic. Because of the shut-down, Mudpie sought coverage for loss of “business income” and “extra expense” under a commercial property policy issued by Travelers Casualty Insurance Company of America (“Travelers”). The Travelers policy provided coverage during the “period of restoration” for loss of business income due to the necessary suspension of the insured’s operations caused by “direct physical loss of or damage to the [insured’s] property.” About The Authors

Tagged with: , , , ,
Posted in Uncategorized

When Better Late Than Never Isn’t Good Enough: Florida Federal Court Grants Summary Judgment For Insurer In Late-Reported Hurricane Claim

On September 27, 2021, Judge Jose Martinez of the U.S. District Court for the Southern District of Florida granted summary judgment in favor of Scottsdale Insurance Company in LMP Holdings Inc. v. Scottsdale Ins. Co., case no. 20-24099. The case arose out of a Hurricane Irma claim reported more than two years after the storm. The insured, LMP Holdings, Inc., owned a commercial property located in Miami. The insured claimed the property sustained damage from Hurricane Irma, which struck South Florida on September 10, 2017. The insured’s handyman and one of the insured’s officers inspected the property the day after the storm. The handyman noticed punctures on the roof, which he patched, and a panel from one of the air

Tagged with: , , , , , , ,
Posted in Catastrophes

A Look Inside Florida’s Recent Property Insurance Reform

Two years after implementing meaningful assignment of benefits reform, Florida enacted broader property insurance claim reform. On June 11, 2021, Governor DeSantis sign S.B. 76, which takes effect on July 1, 2021. S.B. 76 focuses on reducing insurance claim litigation by, amongst other things, requiring timely notice of claims, curtailing certain solicitation practices used by roofing contractors, and limiting the circumstances in which attorney’s fees can be awarded to policyholders in property insurance lawsuits. About The Authors

Tagged with: , , , , , , , , , , , , , , , , , , , ,
Posted in Property Insurance Reform

South Carolina Allows Depreciation of Labor Costs In ACV Calculation

Insurers in South Carolina may now depreciate both labor costs and material costs when determining the “actual cash value” (ACV) owed to policyholders for property damage. In Miriam Butler et al. v. Travelers Home and Marine Insurance Co. et al., Case No. 2020-001285 (S.C. May 12, 2021), the South Carolina Supreme Court held that insurers may depreciate labor costs to determine the ACV of a damaged property when an insurance policy does not define ACV and the “cost to repair or replace the damaged property at issue includes both materials and embedded labor components.” Id. About The Authors

Tagged with: , , , , , , , , , , , ,
Posted in Actual Cash Value

Southern District of New York Holds Contamination Exclusion is Ambiguous as Applied to Covid-19 Business Losses

The Southern District of New York recently held that a contamination exclusion was ambiguous in the context of Covid-19-related business interruption losses. Accordingly, the court held that the issue was inappropriate to decide at the summary judgment stage and denied both parties’ cross-motions for summary judgment.    In Thor Equities LLC v. Factory Mut. Ins. Co., No. 1:20-cv-03380 (S.D.N.Y. Mar. 31, 2021), an insured commercial property owner sought business interruption coverage under its property insurance policy. The parties filed cross-motions for summary judgment, asking the court to determine the applicability of two exclusions, one of which was a contamination exclusion. The exclusion excluded “contamination, and any cost due to contamination including the inability to use or occupy property or any

Tagged with: , , , , , , , , , ,
Posted in Contamination

The Supreme Court of Texas Finds that a Reasonable Payment of an Insurance Claim Does Not Satisfy the Texas Prompt Payment of Claims Act

In Hinojos v. State Farm Lloyds, the Supreme Court of Texas addressed liability under the Texas Prompt Payment of Claims Act (the “TPPCA”) when an insurer timely pays only part of a claim.[1] As demonstrated in Hinojos, disputes as to TPPCA liability typically arise in the context of appraisal and the payment of an award.   In a fairly short opinion, the Court held that timely payments less than the full amount of the ultimate insurance claim do not satisfy an insurer’s duties under the TPPCA. However, the Court also reiterated that payment of an appraisal award outside the TPPCA’s deadlines does not satisfy a policyholder’s burden to prove an actual TPPCA violation.   About The Author

Tagged with: , , , , , , , ,
Posted in Causes of Loss

Policyholders’ Counsel Test “Mother of All” Covid-19 Coverage Suits in a Bid to Block Insurers’ Path to Federal Court

Covid-19 has caused trillions in business losses. Whether those losses are covered by commercial property insurance is an existential issue for both policyholders and insurers. But before that legal battle, the battlefield must be chosen. Do these coverage suits belong in federal or state court? In July 2020, a group of 42 Chicago restaurants and bars filed a lawsuit in Illinois state court against 19 commercial property insurers, seeking coverage for Covid-19 business losses,[1] in what plaintiffs’ counsel called the “mother of all” Covid-19 coverage suits.[2] A few days later, the same counsel filed a suit in New York state court on behalf of 94 restaurants and bars against 41 insurers.[3] Both suits allege that the insurers wrongly denied coverage,

Tagged with: , , , , , , , , , ,
Posted in Coverage, Fraud
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.
Subscribe For Updates

propertyinsurancelawobserver

Topics
Cozen O’Connor Blogs