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Positive Signs in the Enforcement of Late Notice Provisions

This year was off to a positive start in the realm of property insurance with a decision out of the Second Circuit upholding an at times embattled policy provision that is found in nearly every property insurance policy: the late notice provision. Courts’ varying enforcement of such provisions has hindered insurers from enforcing rights vital to protecting their ability to start investigating a loss as quickly as possible. The opinion in Minasian v. IDS Prop. Cas. Ins. Co., 676 F. App’x 29 (2d Cir. 2017) was thus welcome news for the insurance industry, with the appeals court enforcing the late notice provision in a series of property policies which required that the insured provide its carrier prompt notice of a loss.

Posted in Conditions, Coverage, Notice, Prejudice, Uncategorized

ISO Issues Countrywide Revision to the Definition of a “Residence Premises” in its HO Program

The “where you reside” language in the homeowners forms that the Insurance Services Office (ISO) has published since 1991 have spawned litigation around the country for over 20 years, given the number of scenarios which could see the named insured either temporarily or permanently not “in residence” at the property covered by his or her homeowners carrier.  In an effort to remedy that, ISO has now released new forms that revise the definition of a “residence premises;” they had an effective date of October 1st in most states. The problematic portion of the old forms was the three-word phrase “where you reside.”  The homeowners insuring agreement in the existing ISO program recited that coverage was afforded for “the dwelling on

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Posted in Conditions, Homeowners Coverage

Eleventh Circuit: Inventory Computation Exclusion Bars Alabama Employee Theft Claim

In February, we reported on an Alabama federal court decision that barred an insured from recovering for employee theft where the only evidence of shortage was a comparison between computer records and a physical inventory conducted after the malefactor had been discharged.  On August 6th, a unanimous panel of the Eleventh Circuit affirmed in W.L. Petrey Wholesale Co. v. Great Amer. Ins. Co., 2015 U.S. App. LEXIS 13738, 2015 WL 4646599 (11th Cir., Aug. 6, 2015).  The judges held that the policy’s inventory computation exclusion was unambiguous and that inventory computation evidence was only admissible to prove the amount of loss after the existence of loss had been shown by other means. As we noted earlier this year, the insured

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Posted in Conditions, Exclusions, Theft or Dishonesty

Illinois Court Holds Vacancy Clause Does Not Bar Vandalism and Theft Claim by Mortgagee

In a case of first impression in Illinois, a unanimous panel of the state’s Appellate Court recently addressed the interplay between a vacancy clause and a mortgagee provision and held that the insured’s failure to comply with the former did not preclude recovery by the mortgage company after vandals did over $2 million in damage.  In Old Second Nat’l Bank v. Indiana Ins. Co., 2015 IL App. (1st) 140265, — N.E.3d –, 2015 WL 1283867, 2015 Ill. App. LEXIS 185 (Mar. 20, 2015), it held that the vacancy clause was a condition subsequent to coverage and that its violation therefore only operated to bar the policyholder’s claim even though the structure – unbeknownst to the insurer — had been vacant

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Posted in Conditions, Loss Payees, Mortgagees, Theft or Dishonesty, Vacant or Unoccupied, Vandalism

Inventory Computation Exclusion Bars Employee Theft Claim in Alabama

Employee theft claims are frequently problematic when the only evidence of shortage is a comparison between computer records and a physical inventory conducted after the malefactor has been discharged.  In W.L. Petrey Wholesale Co. v. Great American Ins. Co., 2015 WL 404523, 2015 U.S. Dist. LEXIS 10943 (N.D.Ala., Jan. 30, 2015), an Alabama federal court recently granted summary judgment to the carrier where the contract of insurance barred employee dishonesty claims based solely on “inventory computation” and such a comparison was the policyholder’s only evidence of the loss. Petrey was a wholesale distributor of goods supplied to convenience stores, one of which was a two ounce “energy shot” drink called “5-Hour Energy.”  It hired salespeople for delivery routes, and each

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Posted in Conditions, Exclusions, Theft or Dishonesty

Late Notice Held to Bar a $6,000,000 Hurricane Wilma Claim in Florida

In The Yacht Club on the Intracoastal Condo. Ass’n. v. Lexington Ins. Co., –  Fed.Appx. –, 2015 WL 106862, 2015 U.S. App. LEXIS 293 (11h Cir., Jan. 8, 2015), a unanimous panel of the Eleventh Circuit recently held that a Florida condominium association’s multi-million claim for extensive Hurricane Wilma damage was barred because the insured failed to give notice of loss for fully 55 months.  The policyholder’s arguments that it was initially unaware that the damage exceeded the deductible and that it had created an issue of fact with respect to whether the presumption of prejudice had been rebutted because both parties were ultimately able to put up expert evidence of causation were unavailing. The Yacht Club had 380 units

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Posted in Conditions, Hurricane, Hurricane Wilma, Investigation, Notice, Prejudice
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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