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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

Insurance Fraud Act Suits by Insurers Held to Trigger Right to Jury Trials in New Jersey

Last week, the New Jersey Supreme Court unanimously held that a civil defendant sued by an insurance company for violations of the state’s Insurance Fraud Prevention Act (IFPA) has the right to trial by jury.  In Allstate New Jersey Ins. Co. v. Lajara, 2015 WL  4276162, 2015 N.J. LEXIS 797 (Jul. 16, 2015), the six justices decided that a statutory IFPA claim triggers the jury trial right because it seeks compensatory and punitive damages and is legal in nature as a result and because the elements necessary to prove such a claim are similar to common-law fraud. In December, 2008 Allstate and four affiliated companies brought suit against 63 defendants, alleging the violations of IFPA.  Those sued included physicians, chiropractors,

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Posted in Fraud and False Swearing, Regulation, U.S. Legal System

Oklahoma Holds Question of Whether Fracking Causes Earthquakes is for the Courts to Decide.

The issue of whether hydraulic fracturing or “fracking” causes earthquakes has first-party insurance implications because policies typically exclude damage from tremors attributable to man-made causes as opposed to purely unnatural ones.  We’ve discussed the issue in two recent posts after Insurance Commissioners in Oklahoma and Pennsylvania publicly warned carriers against denying earthquake claims on the basis that they were attributable to oil and gas drilling.  The jury is still out on the issue, but scientific evidence linking fracking to the tremors is accumulating rapidly. At the present time, Oklahoma is at the “sharp end of the spear” with respect to this issue because the state experienced fully 567 quakes of Magnitude 3.0 or greater in 2014.  That is the more

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Posted in Causation, Earthquake, Homeowners Coverage, Regulation

Pennsylvania Joins Oklahoma, Bans Homeowners Insurers From Attributing Earthquakes to Fracking

Last month we reported that the Oklahoma Insurance Commissioner had issued a bulletin cautioning earthquake insurers against denying claims on the basis that the quake was attributable to a man-made cause, which is to say oil and gas production, rather than to a purely natural one.  Recently, Pennsylvania’s Acting Insurance Commissioner Teresa Miller followed suit, “instructing” homeowners carriers that earthquake endorsements “should cover all earthquakes, whether believed to be ‘naturally occurring’ or caused by ‘human activity.’ ” The Keystone State has not seen the dramatic uptick in earthquake activity that has shattered both nerves and property in Oklahoma in recent years.  Because of the hydrocarbon-rich Marcellus Shale formation, however, it remains a jurisdiction with more oil and gas drilling than

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Posted in Causation, Earthquake, Homeowners Coverage, Regulation

Oklahoma Insurance Commissioner: Don’t Deny Earthquake Claims as Man-Made by Linking Them to Fracking

The jury is still out on whether hydraulic fracturing or “fracking” causes earthquakes, but carriers whose policies afford coverage for quakes have recently been denying such claims, asserting that they are excluded because they are attributable to a man-made cause – oil and gas production – rather than to a purely natural one.  Early last month, Oklahoma Insurance Commissioner John Doak cautioned against that, issuing a Bulletin warning earthquake insurers that his office would be forced “to take appropriate action to enforce the law” if they continued to deny quake claims on the basis of what he called “unsettled science.” Oklahoma has experienced a remarkable rise in earthquake activity in recent years.  According to the Oklahoma Geological Survey, the state

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Posted in Causation, Earthquake, Earthquake Insurance, Regulation
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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