Claims And Issues

Notice of Cancellation, Certificates of Insurance, and Good Faith: California.

   A case decided by a Federal Judge in California within the last month presents at least three interesting holdings.

   First, the Judge resolved a claim to entitlement to receive notice of cancellation under section 677.2 of the California Insurance Code.  As applied by the Court, that California Statute requires only that notice of cancellation be provided in writing to the "named insured."  Observing that "[a]t least one California court has noted that the notice requirement does not apply to additional insureds," the Federal Judge aligned the ruling in this case with California law:  "No California court has held otherwise."  Download Riverport Insurance Co. v. Oakland Community Housing, Inc. (N.D. Cal. Opinion Filed November 6, 2009) at *2 attached.

   Second, the Federal Court considered the effect of a Certificate of Insurance in this case.  The Court easily rejected an argument that the Certificate entitled the defendants in that case to written notice of cancellation by quoting and applying the express terms of the Certificate itself, including standard language in Certificates of Insurance that "'this certificate is issued as a matter of information only and confers no rights upon the certificate holder'".  Download Riverport Insurance Co. v. Oakland Community Housing, Inc. (N.D. Cal. Opinion Filed November 6, 2009) at *3 attached.

   Third and finally, the Federal Judge seems to have applied the settled rule in that case that where there is no Coverage, there is no Bad Faith either.  "Accordingly, defendants' bad faith claim fails as a matter of law."  Download Riverport Insurance Co. v. Oakland Community Housing, Inc. (N.D. Cal. Opinion Filed November 6, 2009) at *4 attached.

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Chinese Drywall Insurance: Dropping Policyholders For Failure to Repair?

   The nightmare of Chinese Drywall Claims has gotten more nightmarish.  Homeowners have made Claims under their Homeowner's Insurance Policies.  Their Homeowner's Insurance Companies have denied the Claims, chiefly on the basis of Pollution Exclusions.

   Now, at least one Homeowner's Insurer is reportedly not renewing such Policies unless the Homeowners-Policyholders repair the damage caused by the Chinese Drywall, for which the Homeowners made Claims, which the Homeowner's Insurance Company denied.

   See Beatrice E. Garcia and Nirvi Shah, "Homeowners Could Lose Insurance Coverage Over Chinese-Drywall Woes" (Miami Herald Online, Thursday, October 8, 2009).

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Florida Office of Insurance Regulation Putins Allstate Insurance.

    For nearly a year, Allstate Insurance Company and its subsidiaries resisted investigations by the Florida Insurance Commissioner into its Reinsurance arrangements, its unauthorized Catastrophe Models that consistently predicted greater damage -- and thus the 'need' for greater Premiums -- than was predicted by the Catastrophe Models that have long been used in the industry and in Florida, and Allstate's relationships with raters and trade associations.  As readers of this web log know, many posts here have followed the developments during that time, until Allstate exhausted its appeals and Courts overruled its objections to the Insurance Commissioner's investigations.  Now, what the Florida Insurance Commissioner calls "'drastic actions'" have been agreed to by Allstate.  Tom Zucco, "Deal Cuts Allstate's Rates" (St. Petersburg Times Online, Friday, August 15, 2008).

    The capitulation to which Allstate has been forced to consent is as overwhelming in its own way, as the recent invasion of Georgia by the Russian Army.  Allstate's "agreeement" was released on Friday, August 15, 2008, the traditional day of the week to release bad news to the public and press.  The agreement includes these terms:

Allstate will pay a $5,000,0000.00 fine to the Florida Insurance Regulatory Trust Fund under its agreement with the Florida Office of Insurance Regulation, which is the Florida Insurance Commissioner's Office;

Allstate will write 100,000 new Insurance Policies in Florida over the next three years, breaking down into 50,000 new "basic" Homeowner's Insurance Policies and 50,000 new Condominium, Renters and other residential Property Insurance Policies;

Allstate will lower Premiums on its existing "Florida policies" by 5.6 %, it is reported in the linked article, although what kind of Insurance Policies they are is not reported;

Allstate will not seek a Premium Rate Increase for at least a year, although again, the linked article does not identify for what kind of Insurance Policies;

Allstate will continue to 'cooperate' with the Florida O.I.R. investigations; and

Allstate waives its rights to challenge this agreement in Court.

    Allstate is reportedly the Number 2 Automobile Insurance Company in Florida, writing an average of some $564,000.00 in new Premiums a month in that line of business.  It is also reportedly the Number 4 Property Insurance Company in Florida.

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Preparing for Hurricane Insurance.

    Dennis Wall, Chair of the Insurance Law Committee, will speak at the Orange County Bar Association Center in Orlando, Florida about Preparing for Hurricane Insurance, on Wednesday, May 21, 2008 from Noon to 1:00 P.M.  The Orange County Bar Association Center is located at 880 North Orange Avenue in Orlando, Florida.

    You are cordially invited to attend this free public event.  Here  is a link to the "EVENTS" published about this presentation by the Orlando Sentinel on Monday, May 19, 2008 on page C3, col. 1, in "The Law & You" Section.

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Property Insurance and the Florida Legislature: Reforms or Risks?

    Property Insurance is a focus of the 2008 Florida Legislature.  This is not always to the good, according to an editorial on the subject in an influential Florida newspaper, "Insurance Risks Still Looming" (St. Petersburg Times Online, Thursday, March 27, 2008).

    The editorial highlights many areas of interest addressed by various bills passed or pending in the Florida Senate.  Some of these areas of interest are shared in varying degrees by the Florida House of Representatives and by other State officials such as Florida's current Chief Financial Officer.  Some were put in place by the 2007 Special Session of the Florida Legislature; some are new.  Here are the more significant areas of interest addressed in the editorial:

• Expanding Citizens Property Insurance Corporation.  Citizens is a public corporation owned by the Taxpayers of Florida.  A Senate bill, according to the editorial, would allow Citizens to issue Insurance Policies "insuring homes worth $1-million or more."
• Extending the current rate freeze through 2009.
• Providing incentives through "a $250-million state incentive program" for private Insurance Companies to remove and take over the risk on  Insurance Policies on which Citizens is currently on the risk.
• Reduce Florida's exposure to Reinsurance risk.
• "[R]esponsibly reduce exposure with both the CAT fund and Citizens, which can each assess policyholders when they run deficits."

Time, Hurricanes, the Florida Legislature, and Florida State officials will determine the outcome of these and other proposals.  That is, if there is enough Time.  And whether there is another Year of Hurricanes in Florida.  Much remains to be seen.

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What to do When the Coverage is Gone ... Some Suggestions.

    If you are nonrenewed, as happened to me and my Family within the year after Hurricane Charlie passed through Central Florida, you should act immediately to replace your nonrenewing Homeowner's or other Property Insurance Coverage.  That is a no-brainer, as they say.  The problem is, "Where's the replacement Coverage?"  Here are some thoughts in this comprehensive newspaper report by Anika Myers Palm, "Insurers Fold Up Policies/Homeowners Who Are Dropped Scramble to Find New Coverage" p. C1, col. 2 "Central Florida Business" Section (Orlando Sentinel, Tuesday, March 4, 2008).

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Homeowner's Insurance Nonrenewal Not Bad Faith Breach in Oklahoma.

     Oklahoma Insurance Law recognizes what its Courts call "the bad faith breach of an insurance contract."  However, this claim or cause of action must involve wrongful denial of a claim, or perhaps bad faith claim handling.  See Stanley_v. Farmers Insurance Co. (W.D. Okla. Case No. CIV.05.622.M, Opinion Filed Oct. 25, 2006).pdf , in which the Federal Court applied Oklahoma law that the conduct of the Insurance Company and the Agent in selling and issuing an Insurance Policy is not the Oklahoma tort of "bad faith breach of an insurance contract."  In the Stanley case, the Federal Court ruled that the Plaintiffs-Policyholders, Mr. and Mrs. Stanley, could not "maintain a bad faith claim based upon [their Homeowner's Insurance Company's] conduct in attempting not to renew the Stanleys' insurance policy."

     A separate aspect of this case is analyzed at Insurance Claims and Bad Faith Law Blog, in the category of, "Bad Faith:  Do You Want Coverage With That?"

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