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Southern District of Texas Holds that Appraisal Award is Inconclusive of Whether a Loss is Covered

The Southern District of Texas recently held that an appraisal award did not establish liability for a covered loss under the policy. In Hoff v. Meridian Sec. Ins. Co., 2023 WL 5192013 (S.D. Tex. Aug. 11, 2023), Meridian Security Insurance (“Meridian”) insured Flemming Hoff (“Hoff”). After filing suit, Hoff requested an appraisal pursuant to the following policy language: If you [Hoff] and we [Meridian] disagree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or

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Posted in Uncategorized

Louisiana Supreme Court Reverses a Rare State Court of Appeals Win for COVID-19 Business Interruption Claimant

COVID-19 business interruption claimants have had few state appellate court decisions upon which to rely.  Louisiana produced one such decision in Cajun Conti, LLC v. Certain Underwriters at Lloyd’s, 2022 La. App. LEXIS 939 (La. App. 4 Cir., June 15, 2022).  The insurer prevailed in the trial court in a dispute over whether coronavirus constituted “direct physical loss of or damage to” insured property.  The insured restaurant appealed.  Louisiana’s Fourth Circuit Court of Appeal reversed the trial court.  The Court of Appeal’s opinion became widely-cited by other COVID-19 business interruption claimants.  The insurer appealed to the Louisiana Supreme Court and Cajun Conti became a widely-followed dispute.  As discussed below, the Court of Appeal’s analysis was out of step with the

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Posted in Uncategorized

Texas Court of Appeals Adds Confusion to Post-Appraisal Litigation Under the TPPCA

Ever since the Texas Supreme Court changed the landscape of Texas law regarding appraisal in Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) and Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019), practitioners and courts have been struggling to apply the Texas Supreme Court’s holdings.  Barbara Technologies and Ortiz answered some questions but raised others.  About The Authors

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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

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Posted in Uncategorized

Tenth Circuit Rules Against Insurer and Decides That Appraisers Can Decide Causation

In the continuing saga of what can and cannot be appraised in a property insurance appraisal, the Tenth Circuit, in contrast to many other courts, has ruled appraisers can determine coverage issues. In Bonbeck Parker, LLC v. Travelers Indem. Co. of Am., 2021 U.S. App. LEXIS 29607 (10th Cir. October 1, 2021), a hailstorm damaged three buildings covered under a commercial property insurance policy.  A dispute between the insured and insurer arose over whether the hailstorm caused all of the damage claimed.  The insurer paid some of the claimed damage, but denied coverage for other claimed damage, asserting that it was caused by non-covered causes such as wear and tear.  The insured invoked appraisal.  About The Author

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Posted in Causation, Coverage, Uncategorized

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

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Posted in Causes of Loss

Fifth Circuit: Total Loss Amount Caps Insured’s Recovery Even Under Multiple Policies Covering Different Risks

We don’t usually cover cases dealing with Standard Flood Insurance Policies (SFIPs) issued pursuant to the National Flood Insurance Program, but a Texas case decided by the federal Court of Appeals earlier this month addresses a broader issue – where the policyholder has multiple policies covering the same property against mutually exclusive risks, such as an SFIP covering flood and a homeowner’s policy covering wind, can his or her recovery ever exceed the total loss amount.  In Lowery v. Fidelity Nat’l. Prop. & Cas. Ins. Co., 2015 WL 6848323, 2015 U.S. App. LEXIS 19443 (5th Cir., Nov. 6, 2015), a unanimous panel of the Fifth Circuit answered no, in reliance on the insurance principle that bars a double recovery. The

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Posted in Actual Cash Value, Depreciation, Flood, Homeowners Coverage, Hurricane, Hurricane Ike, Replacement Cost, Valuation, Water, Windstorm

Fifth Circuit Refuses To Predict Texas Will Adopt a Sophisticated Insured Exception to Contra Proferentem

Texas has yet to address whether it recognizes a sophisticated insured exception to the doctrine of contra proferentem, and the state’s federal Court of Appeals declined an opportunity to make a prediction about that question in mid-August of this year in Certain Underwriters at Lloyds London v. Perraud, 2015 WL 4747318, 2015 U.S. App. LEXIS 14349 (5thCir., Aug. 12, 2015).  The judges split 2-1 on whether the contract of insurance was ambiguous in nature, but all three were unwilling to reach the sophisticated insured issue.  The case involved a director’s and officer’s (D&O) liability policy, but the issue implicates first-party coverage as well.  It also contains a useful survey of the approaches that courts have taken to this exception from

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Posted in Ambiguity

Texas Court Addresses What Constitutes an “Itemized” Appraisal Decision

On Tuesday of this week, a unanimous panel of Texas’ intermediate level appellate court rejected arguments that an appraisal award that set forth lump sum replacement cost, depreciation, and actual cash value amounts for real property, personal property, and additional living expense was not sufficiently “itemized.”  In Cantu v. Southern Ins. Co., 2015 Tex. App. LEXIS 8847 (Aug. 25, 2015), it also rejected the policyholder’s contention that a court, having appointed an umpire when the two appraisers were unable to agree, was without authority to remove him and select a replacement.  The decision is not currently reported on WestLaw. The insured’s home was damaged by 2011’s massive Bastrop County Complex Fire.  After disputes arose over the amount of loss, the

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Posted in Arbitration and Appraisal, Fire, Wildfire

Texas Court Rejects Ambiguity Arguments Bottomed on a Single Phrase

Last Thursday in King v. Burwell, 2015 WL 2473448, 2015 U.S. LEXIS 4248 (U.S., Jun. 25, 2015), Chief Justice Roberts explained that “[a] provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme” when construing a law.  In the same fashion, it is inappropriate to find ambiguity residing in a single phrase in a contract of insurance when the meaning can be clarified by referring to the policy as a whole.  That was the teaching of a recent opinion by a unanimous panel of Texas’ intermediate level appellate court in 3109 Props. L.L.C. v. Truck Ins. Exch., 2015 WL 3827580, 2015 Tex. App. LEXIS 6146 (Tex.Ct.App., Jun. 18, 2015). The insured was filmmaker

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Posted in Ambiguity, Fire, Newly-Acquired Property, Wildfire
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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