In Joy Tabernacle — The New Testament Church v. State Farm Fire & Cas. Co., 2015 WL 3824733, 2015 U.S. App. LEXIS 10707 (6th Cir., Jun. 22, 2015), a unanimous panel of the federal Court of Appeals recently held that a collapse extension of coverage negates a policy’s exclusions for cracking and faulty workmanship and design because more specific provisions of a contract of insurance are controlling over general ones. The court noted that any collapse necessarily entails “the cracking of beams and walls” and that giving effect to the exclusion under those circumstances would render the extension nugatory. In addition, the defective design exclusion was ineffective because the collapse extension specifically recited that collapse caused at least in part…
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Sixth Circuit: A Michigan Collapse Extension Overrides Exclusions for Cracking and Defective Design
Posted in Collapse, Exclusions, Faulty Workmanship or Design, Hidden Decay, Settling or Cracking
Sixth Circuit: Growing Marijuana is Not the Same as Buying a Houseplant or Entertaining Visitors
Half of the states in this country have now legalized marijuana for medical use, and that has led to a number of small-scale growing operations in policyholders’ homes. While not nearly as dangerous as cooking meth on the kitchen stove, such activities can nonetheless pose unacceptable risks of loss. On Tuesday in Nationwide Mut. Fire Ins. Co. v. McDermott, 2015 WL 756206, 2015 U.S. App. LEXIS 3012 (6th Cir., Feb. 24, 2015), a unanimous panel of the Court of Appeals roundly rejected policyholder arguments that starting up such an operation did not represent a change in use or occupancy that the insured was required to bring to the insurer’s attention. In 2005, Kasey McDermott purchased a home in Bay City, Michigan…
Sixth Circuit Holds That Declines in Market Value are Not a Factor in Determining Actual Cash Value
In a case of first impression in Michigan, the federal Court of Appeals determined last month that general market conditions could not be considered when calculating actual cash value. In Whitehouse Condominium Group, LLC v. Cincinnati Ins. Co., — Fed.Appx. —, 2014 WL 2743480 (6th Cir., June 17, 2014), the contract of insurance defined ACV as replacement cost less a number of factors including “obsolescence .” The Sixth Circuit held that the word connoted only functional obsolescence as opposed to both functional and economic obsolescence. The policyholder owned a condominium building in Flint, Michigan that was heavily damaged by fire in November of 2010. The policy afforded coverage for ACV, which was defined in the contract of insurance to mean…
Posted in Actual Cash Value, Depreciation, Fire, Loss Adjustment
