Monthly Archives: April 2015

Smelly Cat – Closely-Divided New Hampshire Supreme Court Addresses Whether Cat Urine Is a Pollutant

Last Friday, New Hampshire’s highest court unanimously held that the pungent aroma of cat urine could constitute physical loss or damage under a property policy.  In Mellin v. Northern Security Ins. Co., 2015 WL 1869572, 2015 N.H. LEXIS 32 (N.H., Apr. 24, 2015), it split on whether such a loss was barred by standard pollution exclusion language, however.  Three of the five justices (including a specially-appointed retiree) held that the exclusion was ambiguous in nature.  The Chief Justice and another member of the court disagreed, labeling the provision “plain and unambiguous” and clearly applicable to preclude coverage for a pervasive cat odor problem. On the TV show “Friends,” Phoebe Buffay used to entertain patrons at the Central Perk coffee shop

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Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution

Texas Supreme Court Enforces Anti-Concurrent Causation, Bars Coverage Where Wind and Flood Combine to Cause the Loss

Last Friday, Texas’ highest court unanimously endorsed lower court and federal court decisions giving effect to anti-concurrent causation (ACC) clauses and held that such provisions bar coverage where a combination of an excluded peril and an included peril operate together to cause the loss.  In JAW The Pointe, LLC v. Lexington Ins. Co., 2015 WL 1870054, 2015 Tex. LEXIS 343 (Tex., Apr. 24, 2015), that meant that the insured could not recover where flood and wind damage triggered the enforcement of city ordinances even though the covered wind damage component was arguably sufficient in and of itself to cause the loss. The policyholder owned The Pointe Apartments – a complex in Galveston, Texas that was heavily damaged when Hurricane Ike

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Posted in Anti-Concurrent Causation, Causation, Flood, Hurricane, Hurricane Ike, Ordinance or Law, Windstorm

A New Twist in the California Debate Over Allegedly Inadequate Replacement Cost Limits in Homeowners’ Policies

The April 8, 2015 decision of the California Court of Appeals in Ass’n. of Cal. Insurance Companies v. Jones, 2015 WL 1569669, 2015 Cal. App. LEXIS 298 (Cal.Ct.App., Apr. 8, 2015) held that the state’s Insurance Commissioner overstepped his authority in attempting to regulate the content and format of replacement cost estimates under homeowners’ insurance policies.  Although the legislature may choose to provide such a definition, it has not done so.  While the sufficiency of policy limits remains a concern in the insurance industry and there are other valid statutes in effect that address replacement cost, pending a potential appeal of the decision the Regulation at issue, Title 10, Cal. Code of Regulations, §2695.183, is therefore no longer effective. Fire

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Posted in Loss Adjustment, Replacement Cost, Unfair Insurance Practices

Kentucky Court: Depreciating Labor to Get Actual Cash Value Is Like Making the Insured Use a Very Old Roofer With Debilitating Arthritis to Repair the Roof

Surprisingly few states have addressed the question of whether an insurer can depreciate labor – as opposed to materials – to arrive at actual cash value (ACV).  Two weeks ago in Bailey v. State Farm Fire & Cas. Co., 2015 WL 1401640, 2015 U.S. Dist. LEXIS 37568 (E.D.Ky., Mar. 25, 2015), a federal court in Kentucky held that it was impermissible to do so, quoting an Oklahoma opinion that analogized such a step to requiring the policyholder to use “a very old roofer with debilitating arthritis who can barely climb a ladder or hammer a nail” to effect repairs to a roof. The case was a proposed class action by a West Liberty, Kentucky dentist whose office was damaged by

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Posted in Actual Cash Value, Depreciation, Fire, Replacement Cost, Tornado

Squatter’s Warming Fire in Vacant Home Held Not to be Vandalism by Divided California Court

In February, we published a Post about a Florida decision that aligned that state with the clear majority of American courts that have held that the destruction of property by an intentionally set fire is encompassed within the terms “vandalism and malicious mischief.”  Last Friday, in Hung Van Ong v. Fire Ins. Exch., 2015 WL 1524464, 2015 Cal. App. LEXIS 290 (Cal.Ct.App., Apr. 3, 2015), two of the three justices on a California intermediate level appellate court panel rejected that approach, reversing a grant of summary judgment in favor of the insurer in a case in which a vacant dwelling had been damaged when a transient set a fire on the kitchen floor to warm himself because they concluded that

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Posted in Arson, Exclusions, Fire, Vacant or Unoccupied, Vandalism

Oklahoma Insurance Commissioner: Don’t Deny Earthquake Claims as Man-Made by Linking Them to Fracking

The jury is still out on whether hydraulic fracturing or “fracking” causes earthquakes, but carriers whose policies afford coverage for quakes have recently been denying such claims, asserting that they are excluded because they are attributable to a man-made cause – oil and gas production – rather than to a purely natural one.  Early last month, Oklahoma Insurance Commissioner John Doak cautioned against that, issuing a Bulletin warning earthquake insurers that his office would be forced “to take appropriate action to enforce the law” if they continued to deny quake claims on the basis of what he called “unsettled science.” Oklahoma has experienced a remarkable rise in earthquake activity in recent years.  According to the Oklahoma Geological Survey, the state

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Posted in Causation, Earthquake, Earthquake Insurance, Regulation

Eleventh Circuit: Sinkhole Loss in Florida Must Impair the Property’s Structural Integrity to be Covered

Effective in 2005, Florida statutes defined “sinkhole loss” to mean “structural damage to the building, including the foundation, caused by sinkhole activity,” and they left the all-important term “structural damage” undefined.  Homeowner’s policies issued in the state employed that formulation until May 17, 2011, when Florida adopted a much narrower five-part definition of structural damage that applied to policies affording coverage for sinkhole loss, and many courts construing the 2005 language held that the term “structural damage” meant nothing more than “damage to the structure.”  Several weeks ago in Hegel v. First Liberty Ins. Corp., 778 F.3d 1214 (11th Cir., Feb. 27, 2015), a unanimous Eleventh Circuit panel held: (1) that defining structural damage to mean any “damage to the

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Posted in Direct Physical Loss or Damage, Homeowners Coverage, Sinkhole
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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