Blog Archives

Wisconsin Supreme Court Narrowly Interprets the “Permanent Property Insurance” Condition in a Builder’s Risk Policy

In Fontana Builders, Inc. v. Assurance Company of America, Case No. 2014AP821, 2016 WL 3526408 (Wis. Jun. 29, 2016), the Wisconsin Supreme Court addressed whether the purchase of a homeowner’s policy by the occupiers and presumptive purchasers of a home that was still under construction terminated coverage under a builder’s risk policy issued to the builder and owner of the home. The builder’s risk policy contained a provision that the coverage will end “[w]hen permanent property insurance applies,” which the court referred to as the “permanent property insurance” condition. In a split decision, the court held that the homeowner’s policy did not “apply” so as to terminate coverage under the builder’s risk policy. The case arose out of a June

Posted in Coverage, Fire

Can You Burn the House Down and Still Recover From Your Homeowners Insurer? An Illinois Judge Says Yes!

Someday the editors of this blog will have to create a “Hall of Shame” for most witheringly wrong-headed pieces of first-party property insurance jurisprudence, and a clear contender is a federal decision out of Illinois that came down early last month.  In Streit v. Metropolitan Cas. Ins. Co., 2015 WL 6736677, 2015 U.S. Dist. LEXIS 149904 (N.D.Ill., Nov. 4, 2015), the court determined that there was coverage for a fire set by one of the insureds because the intentional acts exclusion in the contract of insurance was void.  The state’s Standard Fire Policy did not exclude intentional acts, and the judge held that that meant that fires caused by intentional conduct, “including arson, . . . must be covered.” The

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Posted in Arson, Arson and Fraud, Fire, Fortuity, Homeowners Coverage

The Elephant in the Room – Catastrophic Property Damage from a Cyber Attack

This past October was the country’s first National Cyber Security Awareness Month, and that makes it an appropriate time to touch on a very troubling first-party exposure.  Every day brings news of massive cyber attacks on retailers, financial institutions, and hospitals and healthcare companies, with the aim of stealing digital assets such as Personally Identifiable Information (PII).  What has received far, far less attention, however, is the prospect of a cyber attack designed to escape the virtual world in order to do physical damage to tangible property in the real one. The ultimate risk is enormous.  Computerized industrial control systems run the world’s financial institutions, its manufacturing and chemical facilities, its transportation systems, and its energy infrastructure, including the electrical

Posted in Cyber, Cyber Insurance, Explosion, Fire, Terrorism Insurance

Texas Court Addresses What Constitutes an “Itemized” Appraisal Decision

On Tuesday of this week, a unanimous panel of Texas’ intermediate level appellate court rejected arguments that an appraisal award that set forth lump sum replacement cost, depreciation, and actual cash value amounts for real property, personal property, and additional living expense was not sufficiently “itemized.”  In Cantu v. Southern Ins. Co., 2015 Tex. App. LEXIS 8847 (Aug. 25, 2015), it also rejected the policyholder’s contention that a court, having appointed an umpire when the two appraisers were unable to agree, was without authority to remove him and select a replacement.  The decision is not currently reported on WestLaw. The insured’s home was damaged by 2011’s massive Bastrop County Complex Fire.  After disputes arose over the amount of loss, the

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Posted in Arbitration and Appraisal, Fire, Wildfire

Hurricanes vs. Wildfires — 2015’s Dramatic Contrast

Two of this blog’s four rotating headers depict a hurricane and a fire as examples of potentially-destructive types of property damage, and the hurricane season (June through November) and the wildfire season (late spring through mid-fall) are both well under way.  This year has brought good news to the east coast with respect to the former and catastrophically bad news to the west coast with respect to the latter. There are obviously many reasons for this.  The west is undergoing a historically severe drought; the snowpack in California is currently 5% of what it should be.  The region is also suffering from extreme heat; 2015 is the second warmest year ever recorded in Alaska, and temperatures in the west as

Posted in Fire, Hurricane, Wildfire

California Court: Appraisers Cannot be Directed to Assign Loss Values to Undamaged or Non-Existent Items in the Insured’s Scope

It is axiomatic that the appraisers’ task is solely to determine the amount of loss, as opposed to coverage or liability.  In Li-Lin Sung v. California Capital Ins. Co., 2015 WL 3797827, 2015 Cal. App. LEXIS 530 (Jun. 18, 2015), a unanimous panel of California’s Court of Appeal recently held that that necessarily entailed assessing whether components of the policyholder’s claim were actually damaged or even in existence at the time of the loss.  According to the opinion, it was error to compel the appraisers to assign loss values to each and every item the insured claimed — such as damage to non-existent windows or to a fourth story on a three-story building — because assessing the existence and nature

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Posted in Arbitration and Appraisal, Fire, Investigation, Loss Adjustment

Tennessee Court Weighs in on Whether Arson is a Species of Vandalism and Malicious Mischief

Last month in what was a case of first impression in Tennessee, a unanimous panel of the state’s intermediate level appellate court joined those jurisdictions that have concluded that arson does not constitute a type of vandalism and malicious mischief.  As is typically the case, the issue arose after a fire destroyed a vacant building and the carrier denied liability because the policy excluded loss by vandalism and malicious mischief during vacancy.  Southern Trust Ins. Co. v. Phillips, 2015 WL 3612989, 2015 Tenn. App. LEXIS 457 (Tenn.Ct.App., Jun. 10, 2015) contains a helpful canvas of state law on both sides of the question, but the holding itself is obviously far less useful for insurers. The insured owned a home in

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

Texas Court Rejects Ambiguity Arguments Bottomed on a Single Phrase

Last Thursday in King v. Burwell, 2015 WL 2473448, 2015 U.S. LEXIS 4248 (U.S., Jun. 25, 2015), Chief Justice Roberts explained that “[a] provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme” when construing a law.  In the same fashion, it is inappropriate to find ambiguity residing in a single phrase in a contract of insurance when the meaning can be clarified by referring to the policy as a whole.  That was the teaching of a recent opinion by a unanimous panel of Texas’ intermediate level appellate court in 3109 Props. L.L.C. v. Truck Ins. Exch., 2015 WL 3827580, 2015 Tex. App. LEXIS 6146 (Tex.Ct.App., Jun. 18, 2015). The insured was filmmaker

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Posted in Ambiguity, Fire, Newly-Acquired Property, Wildfire

Georgia Court: Policy Does Not Require Insured to Produce Recordings of Her Conversations With the Carrier

On May 20th, a federal court in Georgia held that the standard “requirements in case of loss” language compelling the insured to turn over her books and records during the adjustment process did not require the production of recordings that she had secretly made of her telephone calls with the insurer’s representatives.  In Armstead v. Allstate Prop. & Cas. Ins. Co., 2015 WL 2408049, 2015 U.S. Dist. LEXIS 66030 (N.D. Ga., May 20, 2015), the court rejected arguments that the policyholder’s refusal to disgorge the tapes was a violation of the “no action” clause that precluded her breach of contract and bad faith action because it held that the carrier had not shown that they were material to the adjustment

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Posted in Cooperation, Discovery, Examinations Under Oath, Fire, Homeowners Coverage, Investigation, Loss Adjustment

Arizona Court: Argument that All Business Income Loss Caused by a Wildfire is Covered is “Off Base”

Several weeks ago in White Mt. Communities Hosp., Inc. v. Hartford Cas. Ins. Co., 2015 WL 1755372, 2015 U.S. Dist. LEXIS 50900 (D. Ariz., Apr. 17, 2015), an Arizona federal court underscored that business interruption losses flowing from a wildfire are only covered to the extent that they stem directly from physical loss or damage to the policyholder’s property.  In other words, loss of income due to the fire in general is beyond the scope of such coverage absent a causal nexus with repairs necessitated by the blaze. The policyholder White Mountain owned a hospital in Springerville, Arizona.  On May 29, 2011, a blaze was started by an abandoned campfire in the nearby Bear Wallow Wilderness Area.  The wildfire ultimately

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Posted in Business Interuption, Causation, Contamination, Direct Physical Loss or Damage, Fire, Smoke and Soot, Wildfire
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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