Claims And Issues

LATE NOTICE COVERAGE DEFENSE: RECENT FLORIDA CASES, NEW YORK LAW.

            In three recently decided cases Courts applied Florida law to claims based on damage caused by Hurricane Wilma.  The results in these cases are instructive, particularly for those concerned with making and responding to Claims under Florida Insurance Law.

            The general rules governing the Late Notice Coverage Defense in Florida were outlined in detail in Slominski v. Citizens Property Insurance Corp., 2012 WL 4511322 *2 (Fla. 4th DCA October 3, 2012).  In that case, Citizens' Motion for Summary Judgment was granted because the Policyholders did not rebut the presumption of prejudice to Citizens which accrued from the Policyholders' Late Notice.  The Policyholders argued that they believed that the cost of repairing the damage would not exceed their deductible as their justification for allegedly late reporting of their claim.  Their argument was supported by Affidavits from a Contractor and an Engineer.  Slominski v. Citizens Property Insurance Corp., 2012 WL 4511322 *3-*4 (Fla. 4th DCA October 3, 2012).

            However, both the Contractor and the Engineer were deposed previously.  Their Deposition testimony each contradicted their testimony in their later-filed Affidavits, and this the Court would not permit.  The Florida Appellate Court held that the Policyholders "were not entitled to rely upon [the Affidavits] in opposition to summary judgment.  Without these affidavits, the [Policyholders] failed to meet their burden of proving lack of prejudice to Citizens."  Slominski v. Citizens Property Insurance Corp., 2012 WL 4511322 *4 (Fla. 4th DCA October 3, 2012).

            In another Hurricane Wilma case involving Late Notice,  a Federal Court applying Florida law presented an outstanding analysis of Florida Statute Section 627.409, Florida's Rescission Statute, and Post-Loss Conditions, in addition to the Judge's masterful discussion of the Late Notice Condition (or Coverage Defense).  The Court denied both sides' Motions for Summary Judgment as to Late Notice, because in that case there is a fact issue as to what the Policyholder under a Commercial Property Insurance Policy, a Condominium Association, told its Insurance Company about which buildings in the Condominium complex were damaged by Hurricane Wilma and thus part of the Insurance Claim.  Aspen Specialty Insurance Co. v. River Oaks of Palm Beach Homeowner's Ass'n, 2012 WL 3260398 *6 (S.D. Fla. August 8, 2012).   Applying the same legal standards, a different Federal Judge in the same District Court in Florida granted the same Property Insurance Company's Motion for Summary Judgment as to "replacement cost claims" because the Florida presumption of prejudice from Late Notice to the Insurance Company was not rebutted on the record of that case.  Oriole Gardens Condominium Ass'n I v. Aspen Specialty Insurance Co.,  2012 WL 2854331 *4 (S.D. Fla. July 12, 2012).

            In something of a change of pace, another recent decision on Late Notice was made under New York Law by a Federal Appeals Court in Pennsylvania.  Adding to the change of pace, the Late Notice Defense was raised by a Reinsurer, in the case of Pacific Employers Insurance Co. v. Global Reinsurance Corp. of Am., 2012 WL 3871588 (3d Cir. September 7, 2012).   The Clerk's list of the parties' Counsel of Record does not show any Law Firms based in New York representing Pacific Employers, whereas it appears that the lead Law Firm for Global Reinsurance Corporation is from New York, New York.  The decision, perhaps not coincidentally, was for Global Reinsurance Corporation under New York Law, which the parties apparently altered in their contract.  The  Third Circuit panel announced the parties' Reinsurance agreement as to notice, at the beginning of its opinion in this case as follows:

[Under the Reinsurance Certificate notice condition,] PEIC must provide Global with a definitive statement of loss ("DSOL") on a subset of claims or occurrences, specifically those that involve a death, serious injury, or lawsuit.  When must PEIC do this?  We believe it is promptly after someone reports such a claim or occurrence to it, not promptly after it demands indemnity from Global.  If PEIC dawdles, the consequences can be severe.  PEIC's compliance with this provision is a condition precedent to Global's duty to reinsure ....

  Pacific Employers Insurance Co. v. Global Reinsurance Corp. of Am., 2012 WL 3871588 *1 (3d Cir. September 7, 2012).   Applying the contract provision that the parties to this Reinsurance Certificate themselves put in their agreement, the Third Circuit reversed and remanded with instructions for the entry of "a judgment of nonliability" in favor of Global Reinsurance Corporation.  Pacific Employers Insurance Co. v. Global Reinsurance Corp. of Am., 2012 WL 3871588 *20 (3d Cir. September 7, 2012).

            A rule of conduct resulting from all these decisions, and resulting from others like them, is 'When in doubt, provide notice' to preserve and protect a Claim to Insurance Coverage.

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COMPUTER CLAIM MODELS USED TO INCREASE AUTO INSURANCE PREMIUMS ...

... FOR ACCIDENTS THAT HAVE NOT HAPPENED.

   The use of computer models to justify Premium increases is rampant.  The increasing use of computer models to justify Catastrophe Premium Increases for Homeowner's Insurance and Property Insurance has been commented on for years.  See, for example, the articles posted here on April 16, 2012, December 7, 2011, and June 29, 2011, and the many links in them to other sources as well.

    The use of computer models to justify Automobile Liability Insurance Policy Premiums has begun.  As in the case of Hurricane Damage and other Catastrophes, the database does not include -- as in not any longer -- evidence of actual occurrences and events.  Instead the computer claims model is premised on assumptions.  When such computer claims models are used in the context of increased Premiums for Homeowner's Insurance in Florida, for example, the "Garbage In, Garbage Out" ("GIGO") database consists of predicted future Hurricanes with the intensity of Hurricane Katrina and does not include actual payouts for actual covered storm damage caused by a Hurricane Isaac, if any.

    In the case of Automobile Liability Insurance, the computer database does not include accidents that have actually happened, but includes instead predictions about accidents that have not happened.  See David Sirota, "Big Brother in Your Car" (posted Friday, September 7, 2012)(©2012 Creators.com).

     Automobile Liability Insurance includes an added factor in the Premium equation.  Automobile Insurance is mandated by State statutes throughout the United States.   Auto Liability Insurance Companies have a built-in competitive advantage over many other Insurance Companies offering other lines or types of Insurance, thanks to State Governments.  In that view, then, it is appropriate for the same State Governments which mandate Auto Liability Insurance, to refuse to allow Auto Liability Insurance Companies to base their Premiums on losses that never occurred and on accidents that have not happened.

    At the same time, there is a larger question reflected by this particular development in one field of Insurance Premiums.  To say again,  the use of computer models to justify Premunium increases is rampant.  Computer models are increasingly used to justify any and all lines or types of Insurance:  Catastrophe Coverage including Coverage for losses caused by Hurricanes in Florida and by Earthquakes in California,  Homeowner's Insurance losses in Texas and Property Insurance losses in New York, and now Automobile Liability Insurance anywhere in the U.S.

    That is the real story, I think.  Practitioners, purchasers and underwriters of Insurance will either deal effectively with computer claims models used to support increased Premiums, and which are no longer based on actual, actuarial evidence but which are instead based on assumptions, or they will confront higher Premiums for all lines of Insurance.  No other choice appears.

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FLORIDA SINKHOLE STATUTE: IMPAIRING VESTED INSURANCE CONTRACT RIGHTS UNCONSTITUTIONAL.

            A Federal Court has refused to retroactively apply Florida's newly amended Sinkhole Statute.

            An unspecified Property Insurance Policy was at issue.  Specifically, structural damages were claimed due to a sinkhole, "a covered cause of loss".

           Effective after the Insurance Contract was in place, a Florida statutory amendment in 2011 provides a statutory definition of "structural damage".  The Court refused to apply it, for to do so, the Court held, "would impair Plaintiff's vested contractual rights under the policy."  Download Zawadzki v. Liberty Mut. Fire Ins. Co. *1 (M.D. Fla. August 23, 2012).

          For another perspective on Sinkhole Claims, and with helpful links to other blog posts as sources of further information, see the May 10, 2012 post on the  Property Insurance Coverage Law Blog. 

 Dennis Wall is a featured speaker at this year's National Forum on Bad Faith Litigation in Orlando, Florida on November 28 and 29, 2012.  Readers of this blog can receive a $200.00 discount on registration by entering the code, "BFB 200," at the American Conference Institute's website:  www.americanconference.com/badfaith.

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HURRICANE DAMAGE IN FLORIDA, INSURANCE CONTRACT IN NEW JERSEY: DISMISSED.

   Property Damage was claimed as a result of damages inflicted by Hurricane Wilma in Florida.  However, the insurance contract under which the Property Damage claim was made, was itself made in New Jersey.  The claimant is a Condominium Association in Florida who filed suit against its Insurance Company for alleged breach of contract, Declaratory Judgment, and "to compel an appraisal on damages".  Club Caribe Condominium Ass'n v. Travelers Excess & Surplus Lines Co., 2012 WL 529972 *1 (S.D. Fla. February 17, 2012), Download Club Caribe Condo. Assn v. Travelers Excess and Surplus Lines Co. (S.D. Fla. Case No. 11.62673.CV, Order Filed Feb. 17, 2012) PUBLIC ACCESS.

   New Jersey provides for a two-year Statute of Limitation for alleged breach of contract; Florida provides a four-year Statute and applies the law of the place where the contract was made to determine which State's law to apply.  Here, the Court ruled that the State where the insurance contract was made, is New Jersey.  Accordingly, the Court granted the Motion to Dismiss based on the applicable -- New Jersey -- Statute of Limitation.  Id. at *4 - *5.

   However, in this case, the Court did more than that.

   The Court granted leave to file a Second Amended Complaint and after it is filed, also granted leave to the parties to "conduct limited discovery up until April 17, 2012 on the issues related to lex loci contractus and equitable estoppel related to the statute of limitations."  Id. at *5.

 

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Late Notice Defense of Excess Carrier to Hurricane Claim Rejected.

   Banta Properties, Inc. is a property management company.  It purchased Primary Property Insurance Coverage from General Star and Excess Coverage from Arch Specialty.  The Arch Specialty Excess Policy was 'following form,' i.e., it followed the forms of the underlying General Star Policy and provided the same Coverage except on an Excess basis in this case.

   Immediately after incurring damage from Hurricane Wilma on or about October 24, 2005, Banta gave notice to General Star and filed a claim with General Star for Property Damage Coverage.  Banta Properties, Inc. v. Arch Specialty Insurance Co., 2011 WL 5928578  *1 (S.D. Fla. November 23, 2011),  Download Banta Props., Inc. v. Arch Specialty Ins. Co. (S.D. Fla. Case No. 10.61485, Order Denying Defendants MSJ Entered Nov. 22, Filed Nov. 23, 2011) PUBLIC ACCESS.  In March, 2008, General Star "tendered the policy limits of $2.5 million under that [General Star] insurance contract".    Banta then "filed an insurance claim against Arch for its excess coverage."  Id.

   Arch reserved rights to deny all Coverage.  In pertinent part, Arch asserted "prejudice" from late notice of Banta's Hurricane Claim.  With its reservation of rights in place, Arch inspected the properties.  Banta filed a Proof of Loss.  Arch did not pay.  Banta filed suit against Arch for Declaratory Relief and for alleged Breach of Contract.  Arch defended and filed a Motion for Summary Judgment based on late notice of Banta's Hurricane Claim.

   The District Court summarized Florida law concerning late notice under an insurance policy.  Florida law raises a rebuttable presumption of prejudice to the Insurance Company from late notice.  As noted, the presumption of prejudice from late notice is rebuttable.  Id. at *2.

   The District Court thereafter discussed two ways in which an Insured may rebut the presumption of prejudice "to survive a motion for summary judgment.  First, an insured may rebut the presumption by showing that another insurer using competent individuals made a complete investigation of the claim.  [Citation omitted.]  Second, an insured may show that the insurer had access to 'substantial information' regarding the claim, creating an issue of fact of whether the delay prejudiced the insurer."  Id. at *4.

   Here, General Star as the Primary Carrier thoroughly investigated Banta's Hurricane Damage Claim.  To say again, Arch was Banta's Excess Carrier.  Nonetheless, Arch retained consultants to inspect the properties where Banta claimed that it had incurred Damage.  Banta "also provided evidence" that Arch's inspectors/consultants inspected Banta's properties but that they did not inspect many of the items of Damage claimed by Banta or review any repair invoices for already completed repairs.  Further, "Arch's consultants stated that they did not review any documents from General Star's investigation record, so these consultants never saw the photographs or reports made by General Star's several consultants [record references omitted]."  Id. at *2.  [Emphasis added.]

   On this record, Arch, the Excess Carrier, filed a Motion for Summary Judgment based on late notice.  Arch argued in support of its motion that in this case, Banta's notice of loss to Arch was untimely as a matter of Florida law.  The District Court held that Banta's notice to Arch did not fall into that category in this case based on past case law, but that, even if it did, Florida law even then provides for a rebuttable presumption of prejudice from the late notice.  In this case, Banta had rebutted the presumption.  Arch's Motion was denied.  Id. at *4.

 

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Current Computer Models Predict Premium Increases, Not Hurricanes.

   Hurricanes are not the only Catastrophes.  Today is Pearl Harbor Day.  Remember Pearl Harbor and remember, too, that everyone's life is entitled to respect if only because all our lives, already too short, are every one subject to unexpected Catastrophes and losses.

    The role that computer models play in current Insurance Premium Rate Requests is again being looked at.  This is a recurring, if sporadic, occurrence.  See, for example, the post here on June 29, 2011, "More Computer Models Print Out In Put:  This Time, Coverage?"

   The Massachusetts Attorney General's Office sent a letter to the Massachusetts insurance rating bureau on November 17, 2011.  In it, the A.G. pointed out her position that "faulty computer-generated hurricane models have contributed to unnecessarily high home insurance rates for property owners across [Massachusetts]."  Mark Alan Lovewell, "A.G. Faults Hurricane Models For Inflating Homeowner Insurance Rates" (Vineyard Gazette, published online on Friday, December 2, 2011).

   Although the A.G.'s letter itself does not seem to be on the A.G.'s website, a Press Release dated November 17, 2011 is accessible there.  In it, the Massachusetts Attorney General makes clear both that transparency does not exist in making these computer models, and that accumulated actual evidence is ignored in the input into these models.  These are real problems for homeowners who must pay higher Premiums:

Most Massachusetts insurers use private prediction models to estimate expected hurricane losses when rating and underwriting a policy.  AG Coakley noted in her letter that the insurers are not appropriately detailing how the companies are using these models, and no regulatory body has reviewed most of these models to ensure that they are suitable for use in Massachusetts.  Not only are models not being reviewed, the Commissioner is allowing the use of models that have been rejected in other states, such as Florida.  Historically, these rejected models have inflated expected losses well above actual experience.

 Massachusetts Attorney General's Press Release of November 17, 2011 concerning her letter to the Commissioner of the Massachusetts Insurance Rating Bureau, entitled "AG Coakley Urges Hearing on Excessive Homeowner Insurance Rates / Estimates Possible Overcharges of Half a Billion Dollars Due to Untested Hurricane Models".  Both of these points are made in the linked Vineyard newspaper report as well.   Parenthetically, so-called 'information asymmetry' or unbalanced access to information used in the writing of Insurance and in the handling of Insurance Claims is also a frequent subject of current commentary.  See, e.g., "Asymmetrical Information Overload" posted on Insurance Claims and Bad Faith Law Blog on November 22, 2011. 

   It is reasonable to expect an even greater increase in the use of allegedly faulty computer-generated models of catastrophe risk, along with the leverage that comes from information asymmetry.  Through the first nine months of 2011, Property and Casualty Insurance Companies in the United States experienced "catastrophe-related losses" that doubled all of the catastrophe claim payouts of 2010, or $38,600,000,000.00 ($38.6 Billion) in the first nine months of this year.  See "U.S. P/C Insurers' Catastrophe Losses Top $38 Billion" (Insurance Journal, published online on Monday, December 5, 2011).

The author of this post is also Co-Author of "CATClaims:  Insurance Coverage For Natural And Man-Made Disasters" (Thomson Reuters West).

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Collapsing Ethanol Production: No Business Interruption Found, New Collapse Trial.

     KAAPA Ethanol owned and managed an ethanol production plant.  KAAPA bought an "All Risk" Property Insurance Policy from Affiliated FM Insurance Company.

   Right after ethanol production began, the KAAPA plant stopped producing ethanol.  "[S]torage tanks began to lean, their foundations began showing visible signs of distress, and their supporting concrete walls sunk into the ground."  KAAPA Ethanol, LLC v. Affiliated FM Insurance Co., 2011 WL 5217207 *1 (8th Cir., Opinion Filed November 3, 2011), Download KAAPA Ethanol, LLC v. Affiliated FM Insurance Co. (8th Cir. Case Nos. 10.1929, 10.2071, Opinion Filed Nov. 3, 2011) PUBLIC ACCESS. KAAPA claimed Insurance Coverage including Business Interruption Coverage.  Affiliated denied the entire claim, "citing the faulty workmanship and settling exclusions."  Id. at *2.

   At Trial, a Jury awarded KAAPA $4 Million for its repair costs and other claimed losses, but gave KAAPA a zero on the Business Interruption Claim.  Id. at *1.

   Both KAAPA and Affiliated appealed to the Eighth Circuit Court of Appeals.  The Federal Appellate Court addressed only "collapse" issues of Insurance Coverage under All Risks Property Insurance Policies governed by Nebraska law.

   The District Judge instructed the Nebraska Insurance Coverage Jury in that case as follows:

   16. The insurance policy provides coverage for loss or damage caused by collapse. “Collapse” means substantial impairment of the structural integrity of a building or any part of a building. A structure or part of a structure does not need to fall down or be in imminent danger of falling down in order for it to have “collapsed,” nor do you need to find that the structure was either abandoned or taken out of use.

Id. at *2.  [Emphasis added.]  Affiliated objected to the italicized sentence in the Trial Court's Jury Instruction 16.  Affiliated argued that this was not a correct statement of Nebraska law on the subject of when a covered collapse takes place.   The appellate court agreed that this Jury Instruction was erroneous.  Further, the appellate court held that the Trial Court's error "prejudiced Affiliated's defense of this critical coverage issue; therefore, a new trial is necessary."  Id. at *4.

   According to the Eighth Circuit panel in this case, Nebraska already follows the majority view that a covered "collapse" under an All Risks Property Insurance Policy requires "material impairment."  Id.  Noting that collapse coverage has appeared in First-Party Insurance Policies for more than half a century, Courts have split over whether collapse coverages should include an "imminence" requirement.  The Courts that impose an "imminence" requirement on collapse coverage hold that "that requirement 'is consistent with the policy language and the reasonable expectations of the insured' and 'avoids both the absurdity of requiring an insured to wait for a seriously damaged building to fall and the improper extension of coverage' that would convert the policy 'into a maintenance agreement.'”   Id. at *5, quoting a California Court and thereafter citing to cases decided in New Jersey, the Ninth Circuit, the Third Circuit, and Delaware.

   In KAAPA Ethanol, a diversity case, the Eighth Circuit predicted that the Nebraska Supreme Court "would adopt some sort of imminence requirement in applying the material impairment standard" to determine whether there was a covered "collapse" under All Risks Property Insurance Policies.  Accordingly, the Appellate Court reversed and remanded for a New Trial on Collapse Coverage Issues in that case.  Id. at *6.

   PACER, the Online Docket of the Federal Courts, reflects that both a Motion for Rehearing and a Motion to Certify Question of State Law have been filed and are pending since this decision was entered.

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Counting All Hurricanes! Forecasters Fumble, Rockies Crumble, Florida Humble.

   One of the enduring legacies of the George W. Bush Administration was its award of lucrative (no-bid?) contracts to meteorologists located at Colorado State in the Rocky Mountains to issue Hurricane forecasts for Florida.

   Now it is reported that Hurricanes were, shall we say, 'under-reported' in past years.  See Ken Kaye, published in the Orlando Sentinel on Sunday, November 6, 2011 under the headline, "Storm of Controversy:  Did Experts Miss 75 Hurricanes?" p. B1, col. 1, published online at Florida Sun-Sentinel on Saturday, November 5, 2011 as "Hurricane Center:  More Than 240 Tropical Systems Missed". 

   If Hurricanes and other Weather Disasters are not forecast accurately, how can Homeowners, Property Owners, Landlords, Tenants, and their Insurance Companies reasonably be expected to adequately prepare for Claims which follow these Disasters?

   The author will co-present "Disasters in Insurance:  The Sequel" on Friday, November 18, 2011 live from Noon to 1:00 PM ET via the West Legal Education Center website.  Thereafter the Webinar will be available on demand, 24/7, on the website.  Here is a handy link to the prequel Webinar broadcast live on October 21, 2011:  http://westlegaledcenter.com/program_guide/course_detail.jsf?courseId=41335829

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Hurricane Irene and other Catastrophe Claims Flood The Travelers.

  Claims from Hurricane Irene, and other Catastrophe Claims, reportedly have reduced The Travelers' 3Q profit by 67%.  That reportedly reduced 3Q profit down to $333,000,000.00 or $33Million.

   However, it is also reported that Premium Rate Increase Requests for Business Insurance Coverages in particular rose in the same 3Q to $5,600,000,000.00 or $5.6Billion.  Erik Holm, "TRAVELERS / Storms Hit Bottom Line" p. C2, col. 4 (Wall Street Journal, Thursday, October 20, 2011)(subscription required to read entire report online).

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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.   

 

Irene Brings Flood Exclusions Along With Winds.

   The concurrence of Flood Exclusions and Wind Coverage is in many ways a specialized subject.  See, e.g., Dennis J. Wall, § 7:5, "ACCC or 'Lead-in Language'," and § 7:6, "Water and Flood," in John K. DiMugno, Steven Plitt, and Dennis J. Wall, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing 2008; 2011 Supplements).

   The Catastrophe called Irene has left a growing awareness in her wake that out of the great Damage she inflicted while she was among us, much may be Excluded.  See Michael Cooper, "Hurricane Cost Seen As Ranking Among Top Ten / Limits on Insurance / Many Policies Exclude Payment for Losses Caused by Flood" p. A1, col. 6 (New York Times Nat'l ed., Wed., August 31, 2011).

   This is one of the lessons Hurricane Katrina left us.  Having lived through Hurricanes Charley, Frances, and Jeanne myself, I can definitely say that it is better to have such problems, than to have nothing at all.

Please Read The Disclaimer.

Hurricane? Tropical Storm? Irene is a CATASTROPHE.

   Call it Hurricane Irene or call it Tropical Storm Irene.  By any name, it was a Catastrophe.

   Estimates of Insured Losses were greater than actual Claims after Irene passed through, as of August 29, 2011 anyway.  Stocks of Insurance Companies led a rise in share prices of shares traded on the New York Stock Exchange as a result.  E.g., Noah Buhayar, "Irene's Estimated U.S. Insurer Cost Drops to $2.6 Billion; Hartford Climbs" (Bloomberg.com, Monday, August 29, 2011); Associated Press copyrighted report, "Insurers Drive Stocks Higher After Weak Irene" (Published Online by the Los Angeles Times, Monday, August 29, 2011).

   However, in addition to Property Damage Claims, more "exotic" kinds of Claims not widely known to the public or the press, almost certainly are yet to be made.  They include "ALE" or "Additional Living Expense," cf. Noah Buhayar - Bloomberg, supra (not using the term, but pointing out that   Insured Losses "may include hotel and living expenses for policyholders"), and Business Interruption Claims.  See, e.g., id.; Mary Williams Walsh, "Irene Adds to Bad Year for Insurers" p. B1, col. 6 (New York Times Nat'l ed., "Business Day" Section, Monday, August 29, 2011).

   Irene is clearly a Catastrophe.  The Insurance Information Institute reportedly estimates $7 Billion or $7,000,000,000.00 in losses, placing Irene among the "Top Ten" CATClaims in U.S. history.  Mary Williams Walsh - New York Times, supra.

   Likely results will include less Property Insurance Coverage available to people and businesses located on the Coasts.  See, e.g., Noah Buhayar - Bloomberg, supra; Mary Williams Walsh - New York Times, supra.

   Without endorsing any answers in advance, you and your clients may wish to access "Bucks" blog on the New York Times Website if you have Insurance questions as a result of Hurricane Irene, or for steps you and your clients might take before the next Catastrophe, you might consider scouring the Boston Globe Online for Mark Jewell, Associated Press Copyrighted report, "Insurance Tips to Keep in Mind as Irene Closes In" (Published at Boston Globe Online, Saturday, August 27, 2011).

    The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  As a result, the ACI will offer you a large  discount if you choose to register for the Conference.  In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI and the deadline most recently announced by the ACI for requesting this discount is August 31, 2011.  Ms. Waltmon's direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at [email protected].  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or someone you know would like to attend.

Please Read The Disclaimer.

Handicapping Huge Hurricanes, Catastrophe Claims Climbing.

    Damage from "storms, tornadoes, flooding and heat waves" in the United States so far in 2011 adds up to an estimated $35 Billion or $35,000,000,000.00, says the National Oceanic and Atmospheric Administration.  This includes all Insured and Uninsured Loss estimates.  This figure has the dubious distinction, as they say, of tying a record set in 2008.  See Katharine Q. Seelye, "Year Packed With Weather Disasters Has Brought Economic Toll to Match" p. A13, col. 1 (New York Times Nat'l ed., Saturday, August 20, 2011).

   The NOAA estimates do not include what has not yet happened, including Damages yet to come from Hurricanes for example.

    "Normally, three or four weather disasters a year in the United States will cause at least $1 billion in damages each. This year, there were nine such disasters....  The disasters were responsible for at least 589 deaths, including 160 in May when tornadoes ripped through Joplin, Mo."  Id.  Regarding Catastrophe Claims, see generally John K. DiMugno, Steven Plitt, and Dennis J. Wall, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (Thomson Reuters West, with 2011 Supplements).

   These observations apply to a full calendar year for the most part, except as noted.  This year is not over.

Please Read The Disclaimer.

Experts' Reports Do Not Answer Interrogatories in Property Insurance Case.

   Production of an incomplete Expert Report does not answer Interrogatories.  This holding came in a Property Insurance Case for Hurricane Wilma Damages:  Download 2000 Island Blvd. Condo. Ass'n v. QBE Insurance Corp. (S.D. Fla. Case No. 11.20247, Order Filed July 25, 2011) PUBLIC ACCESS, also published as 2011 WL 3441621 *1 (S.D. Fla. July 25, 2011)(Altonaga, United States District Judge).

   The following is a paraphrasing of the Interrogatories at issue in that case, while retaining the numbering used in a set of Interrogatories propounded by the Property Insurance Company to the Plaintiff Condominium Association:

   2.  Provide detailed information about each building component included in Plaintiff's claim, including whether the damaged components were repaired or replaced, who repaired or replaced them, the dates and costs of such repair or replacement, the ages or conditions of the components before the Hurricane, and whether there were discussions concerning repairing or replacing these components before the Hurricane struck.

   5.  Provide names and addresses of unit owners, management, and maintenance personnel.

   7.  Provide names and addresses of the persons who inspected and evaluated the property for damage.

The Plaintiff Condominium Association was ordered to answer each of these Interrogatories in this case.  The Plaintiff's response included the assertion that its Experts were still putting their Reports together and that the Plaintiff would provide the Expert Reports which, the Plaintiff submitted, would provide the Defendant Insurance Company with the information it was seeking through these Interrogatories.  The Federal District Judge specifically held that "Plaintiff cannot hide behind an incomplete expert report to deny QBE the information it seeks."  2000 Island Boulevard Condominium Ass'n v. QBE Insurance Corp., 2011 WL 3441621 at *1. 

    The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  As a result, the ACI will offer you a large discount if you choose to register for the Conference.  In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI on or before September 15, 2011.  Her direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at [email protected].  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or anyone you know would like to attend.

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Hurricanes, "Hurricane Damage Insurance," Homeowners, Condominium and Homeowners' Associations.

   The differences between Insurance that might cover Hurricane Damages that is available to Condominium (and perhaps some Homeowners') Associations, on the one hand, and the "Hurricane Damages Coverage" that is available to Homeowners, are explored in a syndicated column by Richard White, "Community Living / Hurricane Damage Insurance," published this morning in the print edition on p. B9, col. 1 (Orlando Sentinel, Monday, July 18, 2011),  but not made accessible Online.  (At first, I was going to provide you with a link if I could find one elsewhere Online, but I could not find a link for this particular syndicated column.  However, here is a link to the July, 2011 edition of Florida Community Association Journal, which is entitled, "Disaster Preparedness Special".   In particular, an article which may be of interest begins on page 14, by Kathy Danforth, "Minimizing Your Disaster".  I hope these are useful to you and to your clients.)

   The biggest difference?  Insurance carried by Condominium Associations will not likely provide Coverage for personal property of Homeowners.  Only the Homeowner has an insurable interest in her or his personal property.  See id.

   This useful column also briefly addresses questions concerning FEMA and Homeowners Associations, and mobile homes, following Hurricanes.

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More Computer Models Print Out In Put: This Time, Coverage?

   The U.S. Senate Banking, Housing and Urban Affairs Committee is considering whether Computer Models can be used to predict how much of a Hurricane Loss is due to Wind vs. how much is due to Flood.  See Lydia Mulvaney of McClatchy Newspapers, "Models Can Determine Wind and Water Damage, Panel Told" posted in political blog on MiamiHerald.com on Thursday, June 23, 2011.

   There is a major drawback:  Bad Faith.  Although it has been held by the Courts that it is not Bad Faith simply to use Computer Models as tools to determine Coverage for all or part of a Loss, Courts have also held that Insurance Companies expose themselves to liability beyond their Policy Limits if they abdicate to Computers their responsibility to determine whether all or part, if any, of a Loss is Covered.  See the post on Sunday, June 26, 2011 on Insurance Claims and Bad Faith Law Blog where this issue is addressed, and see the related post on Tuesday, June 28, 2011.

   There is a second drawback:  These Models are not necessarily as accurate as they are advertised to be.  There is no such thing as "Garbage In, Gospel Out".  See the post on Insurance Claims and Bad Faith Law Blog on Tuesday, June 28, 2011.  The people selling these Computer Models have a right to sell us this software, if we let them, but they have no right to call their Computer Models "the Gospel Truth".

   There is a third strike:  The way in which these Models are being sold is suspicious, although it may be sincere.  Predictions by people who profit from the predictions are inherently suspect predictions, whether the predictions are made by people who will profit by selling the software or by trying to sell a lower payment.  Advertising of these particular computer programs seems often to be based on the same marketing playbook that has been used recently in financial transactions and natural gas schemes:

"They want to bend light to hide the truth."

  Anonymous retired Unocal geologist writing in a February, 2011 E-Mail "about other companies invested in shale gas," quoted by Ian Urbina, "Insiders Sound an Alarm Amid a Natural Gas Rush" p. 1, col. 5 (New York Times Nat'l ed., Sunday, June 26, 2011).

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Anatomy of an "All Risks" Property Insurance Policy.

   Interpretation of an "all risks" Property Insurance Policy can be confusing for some Courts and Counsel, given the recent development toward requiring Policyholders to "prove" Coverage under their all risks policies.

   The anatomy of an All Risks Property Insurance Policy is much simpler than that, and far different from that somewhat traditional approach to interpreting Insurance Policies generally.  All Risks Property Insurance Policies are instead interpreted beginning with their simple nature of basically providing Property Coverage for, literally, damage caused by "all risks," unless excluded.  A recent decision of a Federal Court in California repeated and applied this very simple interpretative approach, for example:

 

Ruffin Road's Policy with Travelers is what is known as an “all-risk” insurance policy, meaning that the Policy provides coverage for all risks of physical loss to the covered property except those that fall within specifically enumerated exclusions or limitations. See Garvey v. State Farm Fire & Cas. Co., 48 Cal.3d 395, 399, 257 Cal.Rptr. 292, 770 P.2d 704 (1989). Neither party disputes the fact that the Building and the pipes beneath it constitute covered property. Therefore, the question is whether one or more of the exclusions or limitations applies.

Download Ruffin Road Venture Lot IV v. Travelers Property Casualty Co. of America (S.D. Cal. Case No. 10CV11, Order Filed June 20, 2011) PUBLIC ACCESS, also published as 2011 WL *3 (S.D. Cal. June 20, 2011)(authorized password required to access Westlaw).

   Immediately after the Federal Court wrote these words, the Court granted in part the Property Insurance Company's Motion for Summary Judgment on the ground of an applicable Exclusion.  See generally John K. DiMugno, Stephen Plitt, and Dennis J. Wall, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" §7:1, "Introduction and Interpretation" in Ch. 7, "Property Insurance Coverage Issues:  Exclusions" (West, 2011 Supplements).

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If Florida "Scott Free" of "Citizens," Citizens Will Pay?

   Reports from Florida abound that as Property Insurance Companies reported an increase of 21% in their net income in the "last year," and that Governor scott is "secretly pushing to kill Citizens Property Insurance" on the basis of increasing "free market competition" and Property Insurance rates.  See Robert Trigaux, "As Gov. Scott Seeks to End Citizens Insurance, Property Insurers Rack Up Big Earnings Gains" (St. Petersburg Times Online Venture Blog, posted April 25, 2011).  The post includes links and cites to the Property Casualty Insurers Association of America, the Sarasota Herald Tribune, the Florida Center for Investigative Reporting, and Florida Today newspaper.

  Florida citizens would do really well to ask before the bills come due to them:  What is the deal here?

For another viewpoint on the same topic, see Chip Merlin, Esq.'s post on April 26, 2011 on Property Insurance Law Blog, here.

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Clearly Premature Appeal Rejected of Sovereign Immunity Defense to Bad Faith Lawsuit.

   In a result that could have been predicted, Florida's First District Court of Appeal rejected Citizens Property Insurance Corporation's appeal in a recent decision.  The Trial Court denied Citizens' Motion to Dismiss which apparently Citizens rested on an Affirmative Defense of Sovereign Immunity.

   One San Perdido Association, Inc., a not-for-profit corporation, sued Citizens in the Trial Court "alleging that Citizens engaged in bad faith insurance practices."  Citizens Property Insurance Corp. v. San Perdido Ass'n, Download Citizens Property Insurance Corp. v. San Perdido Ass'n (Fla. 1st DCA Case No. 1D09.6183, Opinion Filed October 6, 2010) PUBLIC ACCESS; STATED NOT FINAL, also published as 2010 WL 3894497 *1 (Fla. 1st DCA October 6, 2010)(Westlaw subscription required to access Westlaw).  Citizens interposed its Affirmative Defense of Sovereign Immunity, which the Trial Court denied in an Order denying Citizens Motion to Dismiss based on that ground.

   Following Florida precedent that an interlocutory Order like an Order Denying a Motion to Dismiss cannot be appealed under long-standing Florida Appellate Procedure, in a 2-to-1 decision, a panel of the First District rejected Citizens' appeal in this case.  Id.  All three Judges on the panel agreed to certify the following question in this case to the Supreme Court of Florida:

   Whether, in light of the supreme court's ruling in Department of Education v. Roe, 679 So. 2d 756 (Fla. 1996), review of the denial of a motion to dismiss based on a claim of sovereign immunity should await the entry of a final judgment in the trial court?

Id. at *3.  If appellate jurisdiction is perfected in the Supreme Court of Florida, allowing it to consider this certified question, perhaps there will be a ruling that Citizens -- and other governmental entities like it in other States -- will in the future have the legal capacity to defend Bad Faith Lawsuits by affirmatively alleging Sovereign Immunity, standing alone.

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The Rules Reiterated: Application of "Civil Authority" Clause Exclusion.

   A Federal Court in Pennsylvania has succinctly summarized the Rules of Interpretation which the Court found are applied in Federal Courts in cases involving the "Civil Authority" Clause or Exclusion -- at least in Pennsylvania:

   When the action of a civil authority completely shuts down access to a party's premises, federal courts have held that the coverage in insurance policies similar to the one at bar are triggered.  Narricot Industries, Inc. v. Fireman's Fund Ins. Co., No. CIV.A .01-4679, 2002 WL 31247972, at *4-5 (E.D. Pa. Sept. 30, 2002).  However, where the action of a civil authority merely hinders access to the covered premises, without completely prohibiting access, federal courts have held that such action is not covered under policies like the one in the instant case.

Ski Shawnee, Inc. v. Commonwealth Ins. Co., Download Ski Shawnee, Inc. v. Commonwealth Insurance Co. (M.D. Pa. Case No. 3.09cv02391, Memorandum Order Filed July 6, 2010) PUBLIC ACCESS also published as 2010 WL 2696782 *4 (M.D. Pa. July 6, 2010).

Differing applications and interpretations of "Civil Authority" Provisions are addressed by Dennis J. Wall in § 2:4, "Adjustment Process:  Confirm Coverage," in "CATClaims:  Insurance Coverage For Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplements in Process).

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Wisconsin Court Holds: First-Party Loss "During Policy Period" Coverage.

   The Court of Appeals of Wisconsin has held that a limitation in First-Party Policies to "cover loss or damage commencing:  (1) During the policy period shown in the Declarations" is a part of the Property Insurance Policies' Coverage Grant.  3303-05 Marina Road, LLC v. West Bend Mutual Insurance Co., Download 3303-05 Marina Road, LLC v. West Bend Mut. Ins. Co. (Wis. Ct. App. Case No. 2009AP1629, Opinion Filed September 8, 2010) PUBLIC ACCESS also published as 2010 WL 3489391 ¶¶15, 22 (Wis. Ct. App. September 8, 2010)(Westlaw subscription required to access Westlaw; page numbers not assigned at time of this publication).

   "In other words, the parties agree that by the plain language of the Policies, the Policies only cover 'physical loss of or damage to Covered Property' beginning after the Property was added to the Policies by the October 23, 2003 endorsement."  Id. ¶16.

   The nature of the Policyholders' Claims against West Bend included both Coverage and Bad Faith.  they filed suit against West Bend, "alleging that West Bend had breached its obligation to provide coverage for the damages to the Property under the terms of the Policies and did so in bad faith."  Id. ¶8.  After a month-long Bench Trial which included ten days of testimony, the Trial Court dismissed the Complaint.  "The trial court's decision was based on its finding that damage to the Property pre-existed the policy period."  Id. ¶ 9.  For the above reasons, the Court of Appeals of Wisconsin affirmed.

   Although West Bend attempted to raise the "known loss" doctrine on appeal, neither the Trial Court nor the Appellate Court rested their judgments on this ground.   Moreover, as the Appellate Court noted, in the Trial Court, "West Bend did not assert the known loss doctrine as a defense."  Id. ¶8.  "In any event, our conclusion that the plain language of the Policies excludes coverage is dispositive, regardless of whether any comments from the trial court imply that it considered the known loss doctrine."  Id. ¶22.

    Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  Mr. Wall will be a featured speaker on several panels which will address the BP Oil Spill Catastrophe.  On September 15, 2010, he will be a featured speaker on a panel addressing "BP Oil Spill Damages Claims:  The Coverage Predicates" at the September 15, 2010 Seminar of the Insurance Law Committee sponsored by the Orange County Bar Association in Orlando, Florida.   Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".  The American Conference Institute is offering a discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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MORE Consequential Damages From Oil Well Explosion Catastrophe: Insurance Coverage?

   First, to add to a post here on August 31, 2010, "Consequential Damages from Oil Well Explosion Catastrophe:  Insurance Coverage Issues," is this report about the action of a Florida House of Representatives special committee on public sector losses, i.e., damages to government agencies and bodies.  The committee reached a recent decision via telephone conference call.  The group's decision was to approve, telephonically as noted, a final draft of a report devoted in large measure to urge "local governments to vigilantly record spill-related expenses."  Michael Peltier, "House Panel Urges Communities to Tally Losses Related to Oil Spill" p. B9, col. 1 (Orlando Sentinel, Tuesday, August 31, 2010), substantially rewritten online.

   Second, it appears that BP and legions of lawyers have been providing press releases to reporters willing to read them and, often, to publish them as news.  Seventy-five witnesses have reportedly "been grilled by an armada of lawyers and government experts" before a government panel of unreported name which is investigating the responsibility for the Oil Well Explosion Catastrophe.  Press reports for months have tended to point to BP as the leading figure in the drama, with smaller parts played by others.  "But the government has released no conclusions, and many questions about the disaster still exist."  Robbie Brown, "In Oil Inquiry, Panel Sees No Single Smoking Gun" p. A12, col. 5 (New York Times Nat'l ed., Saturday, August 28, 2010) (byline added online for Henry Fountain).

   Right.

   Aside from the extent of Damages which Juries will award against all responsible parties, the remaining questions about the disaster which still exist in reality, are for the most part questions of whether one form or another of Insurance Coverage will apply, or not.

Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  Mr. Wall will be a featured speaker on several panels which will address the BP Oil Spill Catastrophe.  On September 15, 2010, he will be a featured speaker on a panel addressing "BP Oil Spill Damages Claims:  The Coverage Predicates" at the September 15, 2010 Seminar of the Insurance Law Committee sponsored by the Orange County Bar Association in Orlando, Florida.   Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".  The American Conference Institute is offering a discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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Consequential Damages from Oil Well Explosion Catastrophe: Insurance Coverage Issues.

   Florida will or may soon be incurring Economic Damages from Business Interruptions caused by the Gulf Oil Well Explosion Catastrophe.  There may be no settlement money from BP's Gulf Coast Claims Facility (or settlement fund) to pay them.  See Robert Trigaux, "Tourism Officials:  Misperceptions About Oil On Florida Beaches Means BP Needs to Ante Up" (St. Petersburg Times Online, Sunday, August 29, 2010); Robert Trigaux, "How Oil-Stained is Florida Global Brand?  Enough to Cost State Billions, Thousands of Jobs" Post on Friday, August 27, 2010 on "Venture Blog" on St. Petersburg Times Online.

   These developing Business Interruption Claims will bring Insurance Coverage Issues with them, which are almost certain to arrive for resolution at Courthouses in Florida sooner than we may think possible.

 Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  Mr. Wall will be a featured speaker on several panels which will address the BP Oil Spill Catastrophe.  On September 15, 2010, he will be a featured speaker on a panel addressing "BP Oil Spill Damages Claims:  The Coverage Predicates" at the September 15, 2010 Seminar of the Insurance Law Committee sponsored by the Orange County Bar Association in Orlando, Florida.   Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".

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Replacing Cancelled Homeowners and Other Property Insurance Policies in Florida.

   Many Homeowners and some Commercial Property owners are receiving cancellation notices from their Homeowners and Property Insurance Carriers in Florida.  Mr. Tim Shaw, owner of Tim Shaw Insurance in Fort Myers, is quoted in a newspaper report providing this potentially sage advice:

   He said when looking for a new policy, a consumer should find out how much of a surplus a company has to pay claims and how many "events," such as hurricanes, its reinsurance policy will cover in a year.

Laura Layden, "State Farm Sheds 125,000 Florida Homeowner Policies, Some in Collier, Lee" (naplesnews.com, published Sunday, July 25, 2010).

   If I learn of any other way to find these things out, in addition to simply asking an insurance agent to tell me, I will post that information here, but right now I do not know of any other way to find out (1) how much surplus (reserves) is or are available to a given Homeowners or other Property Insurer, and (2) what the terms are of their Reinsurance Policies.

Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".

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One Bankruptcy Judge to Decide BP Fiasco Insurance Coverage Issues?

    Recent newspaper reports reflect anxiety over an unlikely possibility:  that BP will file for Bankruptcy.  BP's exposure to many Damages Claims of many kinds may force it to seek reorganization under the U.S. Bankruptcy Code, it is reported.  See, for example, John Schwartz, "Weighing the Possibility of Bankruptcy for BP/Liability Claims Expected to be Enormous" p. A11, col. 5 (New York Times Nat'l ed., Saturday, July 10, 2010).

   If BP filed for Bankruptcy in the United States, then under the U.S. Bankruptcy Code and established practice, the many Insurance Coverage Issues arising out of the Drilling Explosion Fiasco may well be decided by one (Bankruptcy) Judge.

   However, why must BP file for protection from creditors and Claimants in the United States?   Perhaps it will seek that protection in the Courts and Laws of the United Kingdom.  It used to be called "British Petroleum" for a reason.

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Florida Property Insurance Claims Mediation Statute Means What it Says.

   Florida Statute Section 627.7015(7). entitled "Alternative Procedure for Resolution of Disputed Property Insurance Claims," requires notice by certain Property Insurance Companies to "a first-party claimant of its right to participate in the mediation program under this section".  The Statute mandates that failure to provide the statutorily required notice means that the Property Insurance Company, which includes certain Homeowners Insurance Companies, cannot require an Appraisal. 

   The Statute means what it says, according to the only Judge found in Florida to have construed the Statute to date.  "Thus, the statute states that if an insurer fails to give notice of the right to mediation, or the insurer requests the mediation and one of the parties rejects its outcome, the insurer loses its right to invoke the appraisal provision of the insurance contract."  QBE Insurance Corp. v. Dome Condominium Ass'n, Download QBE Insurance Corp. v. Dome Condominium Ass'n (S.D. Fla. Case No. 08.20906, Order on Pretrial Conference, Filed 09.17.10) also published as 2009 WL 3241284 (S.D. Fla. September 17, 2009)(Westlaw subscription required to access Westlaw).

  In the cited case, "the insured requested, and the parties participated in, DFS [Florida Department of Financial Services, which houses the Florida Office of Insurance Regulation] mediation ... and, after the mediation reached an impasse, the parties began the appraisal process ...."  QBE Insurance Corp. v. Dome Condominium Ass'n, 2009 WL 3241284 *2 n.6 (S.D. Fla. September 17, 2009).  Neither the parties' participation in statutory Mediation, nor the parties' participation in Appraisal, affected the outcome of the Federal Court's ruling in this case.  The simple, determinative fact was that QBE Insurance Company did not provide the statutorily required notice that mediation of this dispute was available to the first-party claimant, its Insured:  "QBE lost its right to invoke appraisal by failing to comply with the notice provision of the [sic] § 627.7015 and it cannot reinstate that right.  Nothing in the statutory language would allow for that."  Id. at *3.

   This decision has not yet been appealed, and there is a good reason why not.  No judgment has been entered yet, although there has been a verdict. 

   Pacer, the online docket of this case, reveals a Jury Verdict in favor of Dome in two separate awards which total $6,400,000.00 or $6.4 Million.  Download QBE Insurance Corp. v. Dome Condominium Ass'n (S.D. Fla. Case No. 08.20906 Jury Verdict 12.18.09, Filed 12.21.09).

   Judgment has not yet been entered because the parties dispute Interest.  The Federal Court entered a Stay Order on January 13, 2010 which is apparently still in effect.  Download QBE Insurance Corp. v. Dome Condominium Ass'n (S.D. Fla. Case No. 08.20906 Order of 01.13.10 Filed 01.14.10).  This Order stayed the entry of a Judgment until the Supreme Court of Florida answers questions certified to it by the Eleventh Circuit Court of Appeals on March 9, 2009 in Chalfonte Condominium Apt. Ass'n v. QBE Insurance Corp., 561 F.3d 1267 (11th Cir. 2009).

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Florida Governor Vetoes Property Insurance Bill, Signs Chinese Drywall Legislation.

   Reportedly citing concerns about possibly generating greater increases in Florida Property Insurance Premiums, Florida Governor Charlie Crist vetoed a pending Property Insurance Bill on June 1, 2010.  The Governor's statement does not appear to be available online, but newspapers and journals are full of the report about what the Governor has to say.  Here is the Insurance Journal story for example.

   On June 1, 2010, Florida Governor Crist also signed into law pending legislation affecting Property Owners afflicted with Chinese Drywall concerns.  Here is the Memorandum of reasons for signing that legislation which was issued by the Florida Governor's Office online:  Download Florida Governor Charlie Crist MEMORANDUM Governor Crist's Bill Actions Today, June 1, 2010.

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Hurricanes and Florida Property Insurance Preparedness.

   Hurricane Season officially begins on Tuesday, June 1, 2010.  Apparently, Citizens Property Insurance Corporation, which is run by the State of Florida, and most private Property Insurance Companies are prepared.  However, in the event of a major Hurricane with accompanying Property Damage, a different story may arise out of Florida's Catastrophe Fund which is designed to pay out in the event of huge Hurricane Losses, and out of many private Property Insurance Companies which may not withstand the event.  See generally Julie Patel, "How Prepared is Florida's Property Insurance Market for a Major Hurricane?" (South Florida Sun-Sentinel.com, Friday, May 28, 2010).

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Discovery Request by Insurance Company Compelled in Hurricane Damages Case.

  In the case of Abdin v. American Security Insurance Co., Download Abdin v. American Security Insurance Co. (S.D. Fla. Case No. 09.81456, Opinion Filed March 29, 2010) also published as 2010 WL 1257702 *2 (S.D. Fla. March 29, 2010), the Federal Court was confronted with an Insurance Coverage Claim for Hurricane Damage under a Homeowner's or other Property Insurance Policy (it is not clear which type of Policy was at issue, nor does that fact make any difference really to the holding mentioned in this post at this time).  The Federal Court ordered that the Policyholder-Plaintiff had to respond to the following Request for Production of documents and tangible things which was served by the Insurance Company in that case:

All original documents, including but not limited to receipts, cancelled checks or any other documents which evidence any repairs to the insured property at any time since you have owned it.  This request includes, but is not limited to, all documents and records evidencing the repairs to the insured property subsequent to the September 4, 2004, and July 18, 2008 losses.  This request contemplates the original invoices from contractor.

   The requested documentation, in the view of the Court in this case, "are necessary for Defendant to understand the scope of the damages claimed and to aid in the determination of whether the repairs and damages claimed are related to Hurricane Frances.  Plaintiff is instructed to respond to this discovery request." 

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Ambiguities, Exclusions, Arguments With Lots of Forms and Endorsements.

  

   Two frequently advanced arguments occurred in the same Federal Case recently.  The Federal Judge ended up denying the Defendant Insurance Company's Motion to Dismiss, granting the Plaintiff's Motion for Leave to Amend, and denying the Insurance Company's Motion for Summary Judgment.  The two arguments in question led directly to those outcomes:

1.  Ambiguity in an exclusion, especially where as in that case there are also arguably a lot of policy forms and endorsements ("Plaintiff asserts, inter alia, that the insurance policy relevant to this action is itself a 'masterpiece of obfuscation,' containing no less than forty policy forms and endorsements, thereby raising questions of material fact sufficient to defeat a motion for summary judgment."  Masonic Association of Utica, N.Y. v. West American Insurance Co., Download Masonic Association v. West American Insurance Co. (N.D.N.Y. Case No. 6.08cv00552 Memorandum-Decision and Order Filed March 30, 2010) also published as  2010 WL 1223177 *4 (N.D.N.Y. March 30, 2010)(Westlaw subscription required to access Westlaw); and

2. Unsettled substantive Insurance Law regarding the Property Coverage, as for example, the Property Coverage issues of "collapse" versus "hidden decay," also in Masonic Association of Utica, N.Y. v. West American Insurance Co., 2010 WL 1223177 at *4.

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