Blog Archives

Missouri Takes A Stand On Depreciation

Posted on July 21, 2022 by Alycen A. Moss, Dakota Knehans

On June 28, the Missouri Court of Appeals upheld a lower court’s decision finding Lexington Insurance Company (“Lexington”) breached its policy with homeowner Cynthia Franklin. Franklin’s home has sustained damage in a May 2016 storm for which she submitted a claim with Lexington. Lexington utilizes a two-step adjusting process in which it first determines the ACV of a covered loss and issues an ACV payment. Then, if an insured requests additional reimbursement for repair and replacement costs over the amount previously paid, Lexington assesses the appropriateness of payment. In processing Franklin’s claim, Lexington withheld over $5,000 in actual cash value, citing to “depreciated labor costs.” Lexington, in a letter dated July 7, 2016, explained that Franklin could recover “applicable depreciation…

Tagged with: Breach, Missouri, property
Posted in Uncategorized

Under Illinois Law, Mine Subsidence Held to Be a Type of Excluded Earth Movement

Posted on September 23, 2015 by Dick Bennett

Ever since Mattis v. State Farm Fire & Cas. Co., 118 Ill.App.3d 612, 73 Ill.Dec. 907, 454 N.E.2d 1156 (1983), Illinois courts have held that an earth movement exclusion contained in a first-party policy applies only to earth movement due to natural causes. At the beginning of this month, however, a federal court in Missouri construing Illinois Law found otherwise with respect to mine subsidence. In Hutchinson v. Pacific Indem. Co., 2015 WL 5139183, 2015 U.S. Dist. LEXIS 112239 (E.D.Mo., Sep. 1, 2015), the court held that an earth movement exclusion was unambiguous and clearly barred coverage for such a loss. The policyholders owned a home in Alton, Illinois that was totally destroyed by “a mine subsidence event” on May…

Tagged with: Ejusdem Generis, Illinois, Mine Subsidence, Missouri
Posted in Ambiguity, Earth Movement, Exclusions, Subsidence

Eighth Circuit: Repairs May Be Compensable as Extra Expense Even if They Don’t Reduce the Business Income Loss

Posted on August 5, 2015 by Dick Bennett

“Read the policy, read the policy, read the policy” is a famous piece of advice for coverage counsel everywhere. Last Friday in Midwest Reg’l Allergy, Asthma, Arthritis & Osteoporosis Center v. Cincinnati Ins. Co., 2015 WL 4590642, 2015 U.S. App. LEXIS 13430 (8th Cir., Jul. 31, 2015), a unanimous panel of the Court of Appeals rejected arguments that a contract of insurance required that any Extra Expense serve to reduce the otherwise payable business income loss in order to be compensable. As interpreted by the court, the policy was written in such a fashion as to make that a prerequisite for only one of the three defined types of Extra Expense. The insured operated a clinic in Joplin, Missouri. On…

Tagged with: Eighth Circuit, Missouri
Posted in Extra Expense, Tornado

Missouri Court: “Equivalent” Requires that Replacement Siding be Both Equal in Value and Virtually Identical

Posted on June 30, 2015 by Dick Bennett

In December, we published a post about a Minnesota Supreme Court case that held that under a replacement cost policy, the phrase “comparable material and quality” meant that all of the siding on 20 buildings had to be replaced to avoid a color mismatch, even though less than 2% had actually been damaged by hail. According to the court, that was necessary to ensure a “reasonable” color match. Last week, a unanimous panel of Missouri’s intermediate level appellate court reached a similar conclusion under a replacement cost contract of insurance that required replacement “for equivalent construction and use.” In Alessi v. Mid-Century Ins. Co., 2015 WL 3874799, 2015 Mo.App. LEXIS 679 (Mo.App., Jun. 23, 2015), the judges held that the…

Missouri Court Clarifies What Constitutes An Ensuing Loss

Posted on June 9, 2015 by Dick Bennett

Last week in Performance Arts Cmty. Improvement Dist. v. ACE Amer. Ins. Co., 2015 WL 3491292, 2015 U.S. Dist. LEXIS 71592 (W.D. Mo., June 3, 2015), a federal court in Missouri shot down an insured’s arguments that a wall collapse caused by the excluded peril of defective design was a covered ensuing loss under a builder’s risk policy. The developer admittedly erred in calling an for excess amount of concrete slurry to be pumped behind the structure, but the policyholder contended that the collapse that that mistake caused was a separate loss by “excessive lateral pressure.” The court analogized to that to arguing that the collapse of a defectively-designed building was a separate loss caused by the covered peril of…

Tagged with: Missouri
Posted in Builders' Risk, Collapse, Ensuing Loss, Faulty Workmanship or Design