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Utah Court: Seepage Over A Months-Long Period Is Excluded As Moral Hazard

Two weeks ago in Wheeler v. Allstate Ins. Co., 2015 WL 5714392, 2015 U.S. Dist. LEXIS 131736 (C.D.Utah, Sep. 29, 2015), a Utah court barred coverage for a mold loss caused when a vacant log cabin suffered a long-term water leak.  The policy excluded “seepage or leakage over a period of weeks, months or years,” and the judge held that that language embodied the concept that such a loss was a moral hazard – a preventable risk best assumed by the policyholder rather than by his or her homeowners insurer. The insured owned a seasonal cabin in Duck Creek that was not used during the winter months, and his practice was to leave both the water and the heat turned

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Posted in Ambiguity, Exclusions, Inherent Vice and Latent Defect, Mold, Moral Hazard, Seepage or Leakage, Water, Wear and Tear

Pennsylvania Court: Inaction When Damage is Known to Be Likely is Enough to Render the Loss Non-Fortuitous

On September 19th, a federal court in Pennsylvania held that a wall collapse was not fortuitous because the insureds knew that the wall was unstable and likely to fall and yet took no steps to correct the problem.  No one could say the loss was certain to happen, but the court effectively held that the insureds’ inaction was enough to make the collapse non-fortuitous given the likelihood that the wall would fail if it wasn’t repaired or braced.  The decision is Fry v. Phoenix Ins. Co., 2014 WL 4662481, 2014 U.S. Dist. LEXIS 131504 (E.D.Pa., Sept. 19, 2014). The Frys owned a home in Fleetwood, Pennsylvania.  The house was a wood-frame structure with a stone veneer, and they noticed that

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Posted in Collapse, Fortuity, Water, Wear and Tear

Florida, Georgia and Texas Appraisal Update: Is Causation A Coverage Question For The Court or A Damages Question for The Panel?

In most jurisdictions, underlying coverage issues must be resolved prior to invoking appraisal in a first-party property claim.  The question of what constitutes a coverage issue (typically reserved for a court’s judicial determination) and what constitutes a damage issue (appropriate for an appraisal panel’s consideration), however, is not always readily apparent. A routine subject of this particular appraisal debate is whether causation is a coverage or a damages inquiry, and recent decisions under Florida, Georgia and Texas law are evident of two things: (1) the determination of the issue is, in large part, factually dependent; but (2) the debate is far from over. In a recent appellate decision, Citizens Prop. Ins. Corp. v. Denetrescu, 2014 WL 1225124, — So.3d —

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Posted in Arbitration and Appraisal, Causation, Preservation and Protection, Wear and Tear
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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