Claims And Issues

"INSURANCE CLAIMS AND ISSUES," THE BOOK: COMING IN 2016!

 

 Storm Clouds lined up over the Gulf of Mexico.  Photograph and text copyright 2015-2016 by Dennis J. Wall.

I am hard at work on an anthology of the best blogs from "Insurance Claims and Issues."  The anthology I submit to my publisher will keep all hyperlinks intact, including links to the Insurance Claims and Bad Faith Law blog.  When articles posted on Insurance Claims and Bad Faith Law blog are important to the anthology of "Insurance Claims and Issues," I am including them in the anthology too.

As each previously posted article is updated, the posted articles will remain just as available here as they always have been.  New articles will benefit from me being better informed and better equipped to discuss future insurance claims and issues.

I have contracted with Thomson Reuters (West Publishing Company to those fortunate to have the experience) to publish "Insurance Claims and Issues," the Book, in the late Spring or early Summer of 2016.  Best wishes to everyone for a joyous and Happy New Year!

Please Read The Disclaimer.  ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016).  All rights reserved.

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Majority Holds No Negligence Cause of Action by Insured Against I.A.

PART PAYMENT OF PROPERTY INSURANCE CLAIMS STILL REQUIRES POL, EUO.

          Courts have looked carefully at whether Insurance Companies involved in First-Party Bad Faith Cases addressed the clearly covered parts of Coverage Claims, particularly those involving Property Insurance Claims.

          In order to invite this level of attention from Insurance Companies and Courts alike, however, there is more involved than making a Claim and saying to the Property Carrier that part of it is covered, you go figure out what part and pay it.

          Proofs of Loss in such cases must still be as accurate as they would otherwise be required to be under the local law, or Coverage will be forfeit by a Court holding that the Policyholder failed to comply with this condition precedent to recovery under the Policy.  See, e.g., Garden-Aire Village South Condominium Ass'n v. QBE Insurance Corp., 2013 WL 864570 *4 Point 47 (S.D. Fla. March 8, 2013)(Policyholder Condominium Association presenting Hurricane Wilma Claim "did not comply with the Proof of Loss requirements because it submitted items for insurance coverage that were not in fact damaged by Hurricane Wilma.  First, it asked for replacement of every single window, not just those damaged by the storm.  When pressed to clarify whether it was submitting claims for undamaged windows, [the Condominium Association's attorney] refused, suggesting that insurance coverage had been demanded at least in part for windows that had not been damaged by Hurricane Wilma....  Second, Plaintiff claimed damages that its own contractor ... had said were not Wilma-related.  Both overstatements violated Plaintiff's post-loss obligation regarding the proof of loss.").

          In addition, the Policy's requirements concerning Examinations Under Oath remain in effect in such cases, of course, and if a Court determines that the EUO provisions have not been complied with in a given case, the Policyholder runs the risk once again of forfeiting all Coverage where compliance with a Policy's EUO provision is a condition precedent to Coverage, as was the case in Garden-Aire Village South Condominium Ass'n v. QBE Insurance Corp., 2013 WL 864570 *5 Point 71, *6 Points 72-75 (S.D. Fla. March 8, 2013).

          In short, it is generally true that in most jurisdictions Property Insurance Carriers and other First-Party Insurance Companies have a legally enforceable obligation to pay clearly covered parts of claims made upon the Policies they issue.  However, in order to trigger payment in such circumstances there is more involved than simply making a Claim and saying to the Property Carrier that part of the Claim is covered, you go figure out what part and pay it.  When conditions precedent to recovery under the Policy are met, including where Proofs of Loss and Examinations Under Oath are conditions precedent and are met in the given case, the Policyholder's Claim to Coverage may not necessarily be a guaranteed success depending on other facts and the applicable law, but in such cases the First-Party Policyholder's Coverage Claim can continue to  move forward beyond these stopping points.

 

Please Read The Disclaimer.

Another First-Party Policy Provision: PROOF OF LOSS.

          Bullet points have their place.  In the context of one among several standard Proof of Loss provisions in use in First-Party Policies, reproduced below, the standout features identified in the case law which support the provision can be conveniently broken out as follows:

•      Purpose –
•      Information.
•      Sufficient.
•      Determine Policy rights and liabilities of the Insurance Company.

The Proof of Loss provision quoted by the Court in Kenneth v. Nationwide Mut. Fire Ins. Co., 2007 WL 3533887 *9 (W.D.N.Y. November 13, 2007), may be a bit longer than most, but it seems to cover the points which most Courts allow a Proof-of-Loss requirement to address:

Here, the policy provides, in pertinent part that “in case of loss” the [policyholders] submit to [the insurance company], within 60 days after [the insurance company's] request, a “signed, sworn proof of loss which sets forth, to the best of [the insured's] knowledge and belief:

 (1) the time and cause of loss.

(2) interest of the insured and all others in the property involved and all liens on the property.

(3) other insurance that may cover the loss.

(4) changes in title or occupancy of the property during the term of the policy.

(5) specifications of any damaged property and detailed estimates for repair of damage.

(6) a list of damaged personal property showing in detail the quantity, description, actual cash value, and amount of loss. Attach all bills and receipts that support the figures.

(7) receipts for additional living expenses and records supporting the fair rental value loss.

(8) evidence [or] affidavit supporting a claim under the Credit Card, Electronic Fund Transfer Card and Forgery Coverage. It should state the amount and cause of loss.

Please Read The Disclaimer.

Related articles

Insured's Pre-loss Waiver of Rights in Construction Contracts: ...

Owners Testifying Based on "Specialized Knowledge" Are Undisclosed Expert Witnesses.

   In Florida, owners of property are allowed to testify as to the value of their lost property  --  up to a very important point.  When an owner testifying to value of her or his property starts to testify based on "specialized knowledge," she or he just became an Expert Witness.

   If they were not disclosed in accordance with Court Order, their testimony in this regard is subject to being stricken as in the case of Fidelity Warranty Services, Inc. v. Firstate Insurance Holdings, Inc., 2011 WL 4577530 *4-*5 (Fla. 4th DCA October 5, 2011 and obviously not yet final).

   In the Fidelity Warranty case, once the offending testimony in question was stricken, there was no record evidence of value. As a result the Plaintiff in that case did not "meet its burden of proving the market value of its insurance agency," such that the Florida Appellate Court reversed "the final judgment for tortious interference" and remanded "for entry of a judgment for [Defendant] on that count."  Id. at *7.

   In many Insurance cases, the Policyholder is the owner of property at issue.  In many Insurance cases, the Policyholder's claim, moreover, is based on Insurance Coverage for destroyed property, the value of which needs to be established in order to complete the claim, or for diminished value of her or his property and the diminished value must be proven in order to prevail.

   The new Fidelity Warranty decision is therefore clearly significant both to potential Counsel for Policyholders and to potential Counsel for Insurance Companies alike.

Please Read The Disclaimer.   

 

No Theft Coverage to Alabama Corporation For Florida Flipping.

   In Hartford Fire Ins. Co. v. Mitchell Co., Download Hartford Fire Ins. Co. v. Mitchell Co. (S.D. Ala. Order Filed Dec. 15, 2010) PUBLIC ACCESS, also published as 2010 WL 5239246 (S.D. Ala. Dec. 15, 2010)(authorized password required to access Westlaw), Hartford sued its named Insured, The Mitchell Company ("TMC") and one Campus, "an employee and officer" of TMC, for Declaratory Judgment under a Crime Shield Policy which Hartford issued to TMC.

   TMC claimed a covered "Theft Loss" under the Policy.  Its original Proof of Loss listed $5,418,767.00 in damages and TMC filed a later, amended Proof of Loss claiming $4,735,567.00.

   The claimed "Theft Loss" was described by TMC in its Proof of Loss as the result of "flipping".  TMC is a corporation in Alabama; Campus is a resident of Florida.  TMC's description of the loss has purchasers associated with Campus buying land and then quickly reselling ("flipping") the same land to TMC.   Had Campus "acted in good faith as an employee and officer" of TMC, then TMC would have purchased the properties at a lower price and would not have overpayed by the amounts which TMC claimed for indemnity from Hartford.  Hartford Fire Ins. Co. v. Mitchell Co., 2010 WL 5239246 at *2.

   The parties' lawyers were not skimpy on the length and number of their submissions to the Federal Court in this case, apparently.  "However, despite the approximately 4160  pages of substantive briefing and voluminous exhibits submitted by the parties, this case is decided by the first [or Insurance Coverage] issue:  whether Campus' alleged misconduct constitutes 'theft' as defined in the Policy such that it is a covered claim."  Id. at *4.  [Emphasis by the Court.]

   The Federal Court held that this was not a covered "Theft Loss" under the Policy at issue.  Although it was clear on the record of that case that Mr. Campus "received money" from transactions in which TMC purchased properties and that Campus "did not disclose to TMC his financial interest in the properties[,] ... this behavior cannot be characterized as theft as defined in the policy."  Further, "[w]hile Campus' acts were certainly dishonest, they do not constitute theft of money by Campus."  Id. at *5.  The Federal District Court accordingly granted Hartford's Motion for Summary Judgment of No Coverage in this case.  The PACER Online Federal Court Docket reflects that a Notice of Appeal was filed in this case on January 12, 2011.

Please Read The Disclaimer.  

Wind Insurance Claim, Hurricane Ivan, Home Destroyed: Insurance Coverage Issues.

   In 2004, Hurricane Ivan destroyed Mr. and Mrs. Hamilton's mobile home in Milton, Florida.  The Hamiltons made a Flood Insurance Claim on their Flood Insurance Policy, which was paid on the basis of a covered "flood loss".  Mr. Hamilton returned a sworn Proof of Loss to the Hamiltons' Flood Insurance Company that "he was claiming under the policy for the full value of the home and its contents, based on the 'flood loss' of September 2004."  Citizens Property Insurance Corp. v. Hamilton, Download Citizens Property Insurance Corp. v. Hamilton (Fla. 1st DCA Case No. 1D09.4128, Opinion Filed July 7, 2010) also published as 2010 WL 2671808 *1 (Fla. 1st DCA July 7, 2010)(Westlaw subscription required to access Westlaw; STATED NOT RELEASED FOR PUBLICATION IN PERMANENT LAW REPORTS AND SUBJECT TO REVISION OR WITHDRAWAL).  The Flood Insurance Claim was paid for the mobile home.  (The Hamiltons sustained losses to other structures which are not the subject of this post, although they were involved in other parts of the decision than those commented on here.)

   The Hamiltons thereafter filed a Wind Insurance Claim.  A flood of Insurance Coverage Issues ensued.  Among them, the Florida Appellate Court first dealt with Citizens' argument that it should have been allowed to put on evidence of the amount of the Flood Insurance payment.  (The Trial Court permitted Citizens to put on evidence that there was Flood Coverage, that there was Flood Damage, and that the Hamiltons made a Flood Loss Claim on their Flood Insurance Policy, "except as to dollar amount."  Hamilton, 2010 WL 2671808 at *3.)   Citizens was thus arguing that it should have been allowed to put on evidence of the amount of the Flood Insurance Claim despite the Collateral Source Rule.

   "As applied, the common law collateral source rule militates against evidence of the dollar amount of flood insurance payments, disbursed by an entity wholly independent of appellant, under a plainly distinct contractual obligation, and paid for entirely by premiums remitted by the Hamiltons, Accordingly, we find no abuse of discretion in the ruling on this matter."  Id. at *4.  [Emphasis added.]  The Appellate Court pointed out that with respect to this 2004 loss, "under the statute in effect at the time of the loss, the common law collateral source rule had not been legislatively altered.  See § 627.702(1), Fla. Stat. (2004)."  Id.  Section 627.702(1) has since been legislatively altered:  See Fla. Stat. § 627.702(1) (2009).

  Another Insurance Coverage Issue of interest in this case involves determining an "actual total loss" vs. a "constructive total loss".  "A building is considered an actual total loss, under the identity test, if it 'has lost its identity and specific character as a building, and becomes so far disintegrated, it cannot be possibly designated as a building, although some part of it may remain standing.  [Citation omitted.]  '[A] building is considered a constructive total loss when the building, although still standing, is damaged to the extent that ordinances or regulations in effect prohibit the building's repair, such that the building has to be demolished.'"  Id. at *5.  [Emphasis added.]  In this particular case, the Appellate Court held that the Trial Court's ruling on "the constructive total loss instruction" was not error and, even if it was error, Citizens was not prejudiced by it here.

   A third and final Insurance Coverage Issue of interest involves the Appellate Court's rejection at common law of a doctrine legislatively enacted, at least in part, into the relevant Statute:  the total loss recovery rule.  "The total loss recovery rule is a theory of damages based on indemnity principles, limiting an insured's recovery as between two or more insurers to the pre-loss value of the subject structure."  Id. at *7.  The Florida Appellate Court pointed out in its Hamilton decision that Florida Courts had rejected this rule before, and it rejected it at common law again, in this case.  In an echo of its ruling on the Collateral Source Rule, the First District held in this case:  "Accordingly, where the covered peril causes a total loss, the insurer has no equitable plea to reap a windfall from, in effect, a total set-off for unrelated insurance payments."  Id. at *8.

   The Florida Legislature's subsequent limited enactment of "the total loss recovery rule" did not affect the outcome in the Hamilton case:  "That the Legislature in 2005 amended the VPL [Florida's Valued Policy Law] to incorporate the spirit of the total loss recovery rule further supports our conclusion that this doctrine was not previously part of our canon of common law.  See § 627.702(1)(b),  Fla. Stat. (2005)....  In light of these decisions and the subsequent amendment to the VPL, we find no error in the court's refusal to apply the total loss recovery rule."  Id.   Here is a link to the current version of the Statute cited by the Hamilton Court.

   In many respects, losses incurred from Hurricanes in 2004 -- which included Hurricanes Charley, Frances and Jeanne, in addition to Ivan -- swept legislation into place in 2005 which had not previously existed in Florida.  The outcomes of decided cases may be different since then if the statutory changes apply to the given loss.

Please Read The Disclaimer.

  

Proof of Loss Provisions Held Effect No Waiver, No Violation.

   Proof-of-loss requirements are often dependent on the language of the policy at issue.  Where a policyholder did not submit a proof of loss with the detailed supporting documentation required both by the terms of the insurance policy and requested by the insurance company, it was held that there was no waiver, no estoppel, and no violation of the applicable Missouri statute which imposed a deadline on a response to a "proof of loss".  Cedar Hill Hardware & Constr. Supply, Inc. v. Insurance Corp. of Hannover, 563 F.3d 329, 342 (8th Cir. 2009).

Please Read The Disclaimer.

Proof of Loss Provision Did Not Require Additional Documentation, So ....

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... Federal Appellate Court Declined to Rewrite It.

   The Federal Fifth Circuit recently considered an appeal involving Louisiana substantive Insurance law in Download Versai Management Corp. v. Clarendon America Insurance Co. (5th Cir. Case No. 08.30874, Opinion Filed February 19, 2010), also published as Versai Management Corp. v. Clarendon American Insurance Co., 2010 WL 572532 (5th Cir. February 19, 2010).  Specifically, one of the issues in that appeal involved the Excess Property Insurers' "Proof of Loss" provision.  The Excess Property Carriers argued that the provision required the Policyholder to support its Proof of Loss with additional documentation, although the provision did not say that at all.

   The Fifth Circuit rejected this argument.  The Court declined to rewrite the Excess Property Conditions Insurance Policies to require additional documentation where the Underwriters of those Companies had not done so:  "The plain reading of this section reveals no requirement for additional documentation to support a proof of loss."   Versai Management Corp. v. Clarendon American Insurance Co., 2010 WL 572532 *3 (5th Cir. February 19, 2010). 

   The Insurance Companies argued that "everyone does it," in essence, arguing that the Insurance Industry as a whole requires that additional documentation be produced when a Proof of Loss is submitted on a Property claim.  "If this is so, their policy breaks the mold," wrote the Fifth Circuit.  "We will not read in such a requirement where none exists."  Versai Management Corp. v. Clarendon American Insurance Co., 2010 WL 572532 *3 (5th Cir. February 19, 2010).   The Fifth Circuit reversed the District Court's grant of summary judgment to the Insurance Company Defendants and remanded in that case.

   Underwriters.  You gotta love 'em.

There is a useful post about Proofs of Loss and how Florida Courts treat them as one example of the decisions across the nation, on Insurance Claims Bad Faith Law Blog, on April 1, 2010.

Please Read The Disclaimer.