Yearly Archives: 2014

Website Names the Top Ten Most Ridiculous Lawsuits of 2014

December saw two posts about the depressing demise of TRIA, so we thought we’d end the year on a considerably lighter note.  FacesOfLawsuitAbuse.org is a U.S. Chamber of Commerce project that addresses this country’s litigation explosion, and it publishes a list of the ten most ridiculous lawsuits at the end of every year.  While none of this year’s finalists involve insurance coverage per se, we thought that we still would share them with our readership.  Some of last year’s – such as the man who sued Apple because he allegedly became addicted to pornography after “accidently” visiting an adult website on an Apple device or the criminal who sued eight brewers for not warning him that alcohol, which supposedly led

Posted in U.S. Legal System

Minnesota Holds “Comparable Material and Quality” Requires Wholesale Replacement Where Undamaged Siding Is Faded

Matching issues are frequently problematic when storms damage only portions of an insured structure’s exterior and it proves impossible to replace the damaged sections with material that is an exact match for the rest of the building’s roof or siding.  Earlier this month, the Minnesota Supreme Court held that the phrase “comparable material and quality” means material that is suitable for matching; with respect to color, a reasonable match – not an identical match – is all that is required.  In Cedar Bluff Townhome Condominium Ass’n. v. American Family Mut. Ins. Co., – N.W.2d – , 2014 WL 7156914, 2014 Minn. LEXIS 661 (Minn., Dec. 17, 2014), however, the court held that that meant that all of the siding on

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Posted in Direct Physical Loss or Damage, Hailstorm, Replacement Cost, Valuation

Our Dysfunctional Congress Skedaddles, Leaving TRIA to Die

Last Friday we reported that the House of Representatives had finally passed a bill reauthorizing the Terrorism Risk Insurance Act (TRIA) and sent it to the Senate.  The post included a picture of a cartoon bomb with a lit fuse because the statute was due to expire in only two weeks.  On Tuesday, in an epic act of irresponsibility, the Senate allowed that to happen, adjourning for the year without taking up the measure and leaving TRIA to sunset on December 31st. Congress has a bad habit of larding important legislation like TRIA with wholly-unrelated provisions, and it was one of those that doomed reauthorization.  When the Senate wrote its own reauthorization bill earlier this year, it proposed including a

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Posted in Terrorism, Terrorism Insurance

If It’s December, It Must Finally Be Time for Congress to Do Something About TRIA

It looks like Congress is finally turning its attention to reauthorizing the Terrorism Risk Insurance Act (TRIA).  The statute will sunset on December 31st unless action is taken before then. Addressing our nation’s urgent problems at the last possible minute has become a Congressional hallmark in recent decades, and TRIA is no exception.  We ran a post explaining how the statute works in early May, and we optimistically titled it “Congress Moves Towards Reauthorization of TRIA.”  We should have known better.  TRIA was enacted in 2002 with a sunset date of December 31, 2005.  It has since been reauthorized twice – for two years by the Terrorism Risk Insurance Extension Act (TRIEA) in 2005 and then again for seven years

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Posted in Terrorism, Terrorism Insurance

Florida Court: Under All-Risk Policy, Insured Does Not Bear Burden of Showing Loss Was Caused by a Sinkhole

On November 26th, a unanimous panel of Florida’s Second District Court of Appeals held that a trial judge had erred in placing the burden of showing that loss was caused by covered sinkhole activity on the shoulders of the insured.  In Mejia v. Citizens Prop. Ins. Corp., 2014 WL 6675717, 2014 Fla. App. LEXIS 19526 (Fla.Dist.Ct.App., Nov. 26, 2014), the court stated that the policyholder under an all-risk contract of insurance has met his burden by showing that the insured property suffered a loss while the policy was in effect; the burden then shifts to the insurance carrier to prove that the cause of the loss was excluded from coverage. Alfredo Mejia owned a home that was insured by Citizens

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Posted in All Risk, Burden of Proof, Experts, Homeowners Coverage, Sinkhole

New Jersey Court: Loss of Use – Without More – Can Be “Direct Physical Loss or Damage”

Last month, a New Jersey federal court held that the term “direct physical loss of or damage to” property did not require that the property be physically altered in any permanent way.  In Gregory Packaging, Inc. v. Travelers Property Cas. Co., 2014 WL 6675934, 2014 U.S. Dist. LEXIS 165232 (D.N.J., Nov. 25, 2014), the court determined that an ammonia release that rendered the insured manufacturing plant unusable until the gas had been dissipated “physically transformed the air” within the facility and thereby inflicted direct physical loss or damage to the plant. Gregory Packaging manufactured and sold juice cups, and it was in the process of installing a refrigeration system at a new plant in Newman, Georgia when anhydrous ammonia was

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Posted in Direct Physical Loss or Damage, Explosion, Seepage or Leakage

With Respect to Discoverability, Indiana Federal Court Distinguishes Between Pre-Suit and Post-Suit Reserves

In May, we reported on a Third Circuit decision holding that loss reserve information was generally irrelevant and not discoverable.  In October, a federal court in Indiana came to the same conclusion with respect to post-suit reserves.  In G & S Metal Consultants, Inc. v. Continental Casualty Co., 2014 WL 5431223, 2014 U.S. Dist. LEXIS 151431 (N.D.Ind., Oct. 24, 2014), the court agreed that reserves established after litigation were irrelevant because of the multiplicity of factors that were necessarily considered in establishing them.  The opinion suggests that pre-suit reserves are discoverable unless they have been set in anticipation of litigation and consultation with counsel, however. G & S Metal Consultants filed suit for property damage and business interruption loss after

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Posted in Discovery, Explosion, Privilege, Reserves

Seventh Circuit: Under Wisconsin Law, “Continuous or Repeated Exposure” Language Means That a Continuous Trigger Theory Applies

Yesterday, in Strauss v. Chubb Indem. Ins. Co., – F.3d – , 2014 WL 6435314, 2014 U.S. App. LEXIS 21794 (7th Cir., Nov. 18, 2014), the Court of Appeals held that the use of the phrase “continuous or repeated exposure” in a Wisconsin first-party property policy’s definition of occurrence meant that the contract of insurance contemplated that the continuous trigger theory determined whether loss was covered.  As a result, a claim for 11 years of gradual water damage under a series of insurance policies was held to be timely even though it was first presented when the damage was initially discovered, five years after the last contract of insurance had expired. The Strausses had constructed a home in Mequon, Wisconsin

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Posted in Ambiguity, Homeowners Coverage, Trigger, Water

New Jersey Court Holds $22 Million “Named Storm” Deductible Applicable to a Superstorm Sandy Loss

On October 29th, a New Jersey trial court held that a commercial policyholder’s Superstorm Sandy claims were subject to a $22 million “named storm” deductible equal to 2% of the total insurable values at risk at all of the loss locations for which the insured made claim.  In Wakefern Food Corp., et al. v. Lexington Ins. Co., Case No. L-6483-13 (N.J.Super.Ct., Middlesex Cty., Oct. 29, 2014), the court held that damage had begun to occur hours before Sandy was downgraded and no longer constituted a “named storm” as defined and that that fact “created a substantial nexus between the storm and Wakefern’s total losses” justifying application of the deductible. Plaintiff Wakefern was a buying cooperative consisting of the owners of

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Posted in Deductible, Hurricane, Superstorm Sandy

Second Circuit Affirms a Southern District Decision Construing “Covered Location” Narrowly

In January, the Southern District rejected an insured’s $2 million claim for a generator destroyed by Superstorm Sandy.  The unit was in the basement of an office building in lower Manhattan, but the contract of insurance defined “covered location” to mean the 33rd floor of the structure.  The district court rejected the policyholder’s argument that language insuring personal property “in buildings or structures at a ‘covered location’ “ extended coverage to the entire building including its basement.  On October 16th, a panel of the Court of Appeals affirmed this carrier-friendly interpretation in Jane Street Holding, LLC v. Aspen American Ins. Co., — Fed.Appx. –, 2014 WL 5287051, 2014 U.S. App. LEXIS 19905 (2d. Cir., Oct. 16, 2014). Jane Street Holding,

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Posted in Flood, Insured Premises, Superstorm Sandy, Water
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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