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Tennessee Court: Requirement that Insurers “Make Available” Sinkhole Coverage Does Not Require Policyholders Be Notified

Since 2007, Tennessee statutes have required that homeowners carriers “make available” insurance coverage for sinkhole losses.  Last Friday in  Patterson v. Shelter Mut. Ins. Co., 2015 Tenn. App. LEXIS 734, 2015 WL 5320231 (Tenn.Ct.App., Sep. 11, 2015), a unanimous panel of the state’s intermediate level appellate court rejected arguments that this required that policyholders be notified of that fact, however, finding that the term meant only that such coverage must be “accessible or obtainable” upon request. The insureds alleged that their home was damaged by sinkhole activity in March of 2011.  The insurer denied, contending, inter alia, that while the contract of insurance did not expressly include or exclude sinkhole loss, it did bar coverage for damage caused by “the

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Posted in Earth Movement, Homeowners Coverage, Regulation, Sinkhole

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

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

Florida Court: Your Own Attorney is Simply Not a “Disinterested” Appraiser

As noted yesterday, last month saw an intermediate level appellate panel in Florida address whether the attorney for the policyholder could serve as that party’s appraiser.  It was a case of first impression in the Sunshine State.  In Florida Ins. Guar. Assn. v. Branco, 2014 WL 4648208, 2014 Fla. App. LEXIS 14602 (Fla.Dist.Ct.App., Sept. 19, 2014), the panel held that it was impermissible to select one’s own lawyer to act in that capacity when the contract of insurance called for a “disinterested” appraiser. The Brancos’ home was damaged by a sinkhole in April of 2010, and they made claim under a homeowner’s policy issued by Homewise Preferred Insurance Company.  The insurer denied liability, asserting that what had happened did not

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Posted in Arbitration and Appraisal, Loss Adjustment, Sinkhole

Florida Court Holds “Retained Rights” Provision Does Not Render an Appraisal Clause Unenforceable

In a pair of sinkhole cases, different panels of Florida’s intermediate level appellate court recently compelled appraisal, and the decisions are instructive because they address both challenges to the procedure and also the question of who is qualified to serve as an appraiser.  Today’s post will discuss Cincinnati Ins. Co. v. Cannon Ranch Partners, Inc., – So.3rd –, 2014 WL 5286519, 2014 Fla. App. LEXIS 17033 (Fla.Dist.Ct.App., Oct. 17, 2014) where the panel rejected arguments that the appraisal clause was unenforceable because it permitted the carrier to deny the claim even after an appraisal had taken place.  Tomorrow’s post will then address who constitutes a “disinterested” appraiser. The case involved sinkhole damage to a piece of property owned by Cannon

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Posted in Arbitration and Appraisal, Loss Adjustment, Sinkhole

Current Florida Sinkhole Statute Held to Apply Even Though Policy Used Prior Statute’s Formulation

Florida adopted a stringent, five-part definition of what constitutes a covered sinkhole loss in 2011, but many policies continue to employ the 2005 statutory formulation which merely defined “sinkhole loss” as “structural damage to the building, including a foundation, caused by sinkhole activity” and importantly left the term “structural damage” undefined.  The result was that Florida courts split into conflicting camps with respect to how such a contract of insurance should be read; the Middle District for example, held for policyholders in two cases and for the carrier in a third, as reported in a prior post that can found here.  When one of the former decisions recently reached the Eleventh Circuit, the Court of Appeals determined that the language

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Posted in Homeowners Coverage, Sinkhole

Florida Courts Differ On Whether The Undefined Term “Structural Damage” In A Sinkhole Case Should Be Given A Broad Or A Narrow Interpretation

Since 2005, Florida law has defined “sinkhole loss” as “structural damage to the building, including the foundation, caused by sinkhole activity.”  The term “structural damage” was long-undefined, however, leading numerous Florida courts to interpret that phrase broadly as meaning nothing more than “damage to the structure.”  In 2011, however, the Florida Legislature adopted a much narrower five-part definition of “structural damage” for application when construing policies affording coverage for sinkhole loss.  Fla. Stat. §627.706(2)(k) (2011).  The state’s federal courts have now split on the issue of whether that definition automatically applies to contracts of insurance issued after the statute’s effective date. The question came to the forefront in Juan Pinzon and Jaqueline Espitia v. The First Liberty Ins. Corp., 2013

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Posted in Sinkhole, Uncategorized
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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