Blog Archives

California Supreme Court Upholds Replacement Cost Estimate Regulation (For Now)

In 2011, the California Insurance Commissioner promulgated a regulation governing replacement cost estimates for homeowners insurance (Cal. Code Regs., tit. 10, §2695.183 [the Regulation]). After the trial court and intermediate court of appeal invalidated the Regulation,[1] this week the California Supreme Court reversed those decisions in a published decision, Association of California Insurance Companies v. Jones (Cal. Jan. 23, 2017) Case No. S226529. The Regulation was originally enacted in response to complaints from numerous homeowners who found that they were underinsured only after disaster completely destroyed their homes. In investigating these complaints, the Department of Insurance had found that the replacement cost coverage limit recommended by a number of insurers for their policyholders had understated what was actually necessary to

Tagged with: ,
Posted in Homeowners Coverage

Summary Judgment May Be Appropriate When Insured Fails to Take Reasonable Measures to Prevent Property Damage

Many first party property insurance policies exclude claims for water damage that occurs when the insured premises is left vacant or unoccupied, unless the insured has used reasonable care to prevent such losses. In litigation challenging the denial of such claims, whether or not the insured’s actions in preventing property damage were reasonable is generally treated as a question of fact to be decided by a jury. However, when the facts are not disputed, and there are no credibility issues presented, a court may grant summary judgment on behalf of the insurer upholding the denial. Such a result recently occurred in a Pennsylvania case involving substantial losses as a result of water damage from burst pipes. Micalis Pazianas, M.D., et

Posted in Freezing, Homeowners Coverage, Vacant or Unoccupied, Water, Water

Arkansas Bars Depreciation of Labor When Calculating Actual Cash Value

Over the last few years, courts have disagreed over whether labor — as opposed to materials — can be depreciated when determining actual cash value (ACV); two of our 2015 posts addressed cases in which the District of Kansas said yes while a Kentucky federal court said no.  On Thursday of last week, in a split decision, Arkansas’s highest court sided with the naysayers in Shelter Mut. Ins. Co. v. Goodner, 2015 Ark. 460, 2015 WL 8482788 (Ark., Dec. 10, 2015).  Two of the justices filed a vigorous descent.  At the present time, the case has no LEXIS citation. The insureds owned a mobile home in Texarkana that sustained a covered loss in July of 2012.  The policy provided that

Tagged with: ,
Posted in Actual Cash Value, Depreciation, Homeowners Coverage

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

Tagged with: , ,
Posted in Arson, Arson and Fraud, Fire, Fortuity, Homeowners Coverage

Fifth Circuit: Total Loss Amount Caps Insured’s Recovery Even Under Multiple Policies Covering Different Risks

We don’t usually cover cases dealing with Standard Flood Insurance Policies (SFIPs) issued pursuant to the National Flood Insurance Program, but a Texas case decided by the federal Court of Appeals earlier this month addresses a broader issue – where the policyholder has multiple policies covering the same property against mutually exclusive risks, such as an SFIP covering flood and a homeowner’s policy covering wind, can his or her recovery ever exceed the total loss amount.  In Lowery v. Fidelity Nat’l. Prop. & Cas. Ins. Co., 2015 WL 6848323, 2015 U.S. App. LEXIS 19443 (5th Cir., Nov. 6, 2015), a unanimous panel of the Fifth Circuit answered no, in reliance on the insurance principle that bars a double recovery. The

Tagged with: ,
Posted in Actual Cash Value, Depreciation, Flood, Homeowners Coverage, Hurricane, Hurricane Ike, Replacement Cost, Valuation, Water, Windstorm

California Court Holds Pre-Loss Preventative Measures To Avert A Collapse Are Not Covered as Mitigation.

Last week in Grebow v. Mercury Ins. Co., 2015 Cal. App. LEXIS 948, 2015 WL 6166610 (Cal.App., Oct. 26, 2015), a unanimous panel of California’s intermediate level appellate court rejected arguments that expenses incurred to prevent the collapse of a portion of the policyholders’ house were covered as mitigation.  The court held that the policy provision requiring an insured to protect the property from further damage was not analogous to a sue and labor provision and did not apply until after a loss that already occurred because to hold otherwise would effectively convert the contract of insurance into a maintenance agreement. The insureds owned a house in Tarzana.  In early 2013, concerned over recurring watermarks, they had a general contractor

Tagged with: ,
Posted in Ambiguity, Collapse, Corrosion, Hidden Decay, Homeowners Coverage, Preservation and Protection, Sue and Labor

New Jersey Panel: If a Flood Is Excluded, So Are the Unhealthy Water-Borne Substances that It Leaves Behind

Yesterday, a unanimous panel of New Jersey’s intermediate level appellate court rejected policyholder arguments that even though flood was excluded, the proximate cause of their Superstorm Sandy loss was the non-excluded peril of damage from “unhealthy water-borne substances” left behind by the receding water.  In Riccio v. Allstate N.J. Ins. Co., 2015 WL 6181466, 2015 N.J. Super. LEXIS 2417 (N.J. App., Oct. 22, 2015), the judges recognized that to hold otherwise would render the flood exclusions in homeowner’s policies meaningless. The insureds owned a home in Little Silver that was inundated by 20”-36” of water when a creek behind their property overflowed its banks during Superstorm Sandy on October 29, 2012.  They initially attempted to clean the house themselves, removing

Tagged with: ,
Posted in Contamination, Flood, Homeowners Coverage, Microorganisma, Superstorm Sandy, Water

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

Tagged with:
Posted in Conditions, Homeowners Coverage

Massachusetts Court Refuses to Apply Discovery Rule to Commencement of the Suit Limitations Period

Yesterday in Nurse v. Omega U.S.  Insurance., Inc., 2015 Mass. App. LEXIS 158, 2015 WL 5774390 (Mass.App., Oct. 5, 2015), a unanimous panel of Massachusetts’ intermediate level appellate court held that the two-year suit limitation provision in a first-party contract of insurance was not subject to a discovery rule.  The decision was a case of first impression in the Bay State’s courts (although two federal cases in the Commonwealth had split on the issue). The insured owned a three-unit residence in Boston which was vacant in December of 2009.  The heat was turned off at the time.  On December 19th, records from the city’s Water and Sewer Commission showed that the rate of water usage at the property “increased dramatically”

Tagged with:
Posted in Ambiguity, Freezing, Homeowners Coverage, Suit Limitation, Water

Florida to Decide What Test Applies When Concurrent Multiple Perils Cause a Loss

For years, Florida courts have been seesawing between two different doctrines to determine whether there is coverage under a property policy when two perils – one excluded and one included — combine to cause a loss.  Two districts of the state’s intermediate level appellate court have applied one test and a third has applied another, with the most recent decision being American Home Assur. Co. v. Sebo, 141 So.3d 195 (Fla.Ct.App., Sep. 18, 2013).  On October 7th of last year, the state’s highest court accepted review in the Sebo matter, and oral argument was conducted on September 2, 2015.  Some clarity will finally emerge in the Sunshine State with respect to this issue. When multiple perils combine to cause a

Tagged with: , ,
Posted in Anti-Concurrent Causation, Efficient Proximate Cause, Faulty Workmanship or Design, Homeowners Coverage, Hurricane Wilma, Water
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.
Stay Connected

Email:

Topics
Cozen O’Connor Blogs