In Knickerbocker Village Inc. v. Lexington Insurance Co., New York's Appellate Division, First Judicial Department, dictated a clear rule for single-insured cases regarding the discovery of an insurer's treatment of insurance claims brought by other similarly situated insureds: that information is not "material and necessary" and thus not discoverable under section 3101 of the New York Civil Practice Law and Rules. This case arose out of a disagreement between ... Keep Reading »
Property
Insured’s Leaky “Abrupt” Interpretation of All-Risk Insurance Collapses Under Eleventh Circuit Scrutiny
In S.O. Beach Corp. v. Great American Insurance Company of New York, No. 18-1967 (11th Cir. Oct. 31, 2019), the Eleventh Circuit affirmed the district court’s grant of summary judgment in full to the insurer, finding there was no ambiguity in the all-risk policy’s definition of a “collapse” as “an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose” ... Keep Reading »
Connecticut Supreme Court Fortifies Crumbling Foundation Claim Denials in Trio of Insurer Victories
A year ago, we wrote about a rapidly emerging area of insurance litigation in Connecticut: crumbling foundations. As a quick recap, tens of thousands of homes in northeastern Connecticut built over a span of more than 30 years may have been constructed with defective concrete that causes basement walls to prematurely deteriorate and eventually become structurally unsound. The Crumbling Foundation Crisis The problem, known as alkali-silica reaction (ASR), is the result ... Keep Reading »
Court Finds Animals Incapable of Vandalism or Malicious Mischief for Insurance Purposes (and all other purposes, too)
I am willing to go out on a limb and say that if asked whether an animal, say, a raccoon, is capable of committing malicious criminal acts, most humans would agree that the issue is beyond dispute. But, alas, most humans would be wrong (apparently it very much can be disputed). There is good news, however. The nation’s courts have been quietly tackling the issue, and, thankfully, they have been able to allay any fear of a raccoon uprising occurring in the near future. A ... Keep Reading »
Appraise Away Says Florida’s Fifth DCA
Many homeowners insurance policies allow the insurer or the insured to invoke appraisal to resolve disagreements about the amount of the loss. Nonetheless, when one party invokes appraisal, the other party will sometimes refuse to participate in the process, forcing the party invoking appraisal to obtain a court order compelling the other party to participate. Fortunately, the recent decision in Underwriters at Lloyd's, London, ICAT Syndicate 4242 v. Sorgenfrei, No. ... Keep Reading »
The Insurer’s Howler, or How Travelers Proved Its Insured’s Case
What happens when an insurer presents evidence at trial that supports the insured's case? Answer: The evidence can be used to sustain the jury verdict for the insured-plaintiff. That is the lesson learned by Travelers in the Connecticut Supreme Court, despite: (1) Travelers' moving for directed verdict after the plaintiff's case-in-chief; (2) the trial court's reserving its ruling until after the defense's case; and (3) Travelers' renewing its motion for directed ... Keep Reading »
Destination Arbitration: Court Holds Service-Of-Suit Clause Does Not Conflict With Policy’s Arbitration Requirement
Coverage disputes often come down to the interplay between endorsements and the body of the policy. But this tension is not limited to terms addressing coverage. It can also extend to areas such as dispute resolution. In Southwest LTC-Management Services, LLC v. Lexington Insurance Co., No. 1:18-cv-00491-MAC (E.D. Tex. Apr. 17, 2019), the court held that a service-of-suit endorsement did not supersede the arbitration clause in the policy. A group of carriers paid $2.5 ... Keep Reading »
Tennessee Supreme Court Holds That Replacement Cost Less Depreciation Does Not Allow for Depreciation of Labor When Calculating Actual Cash Value of a Property Loss
Insurance policies are designed to indemnify an insured by putting the policyholder in the same position he or she would have been in had no loss occurred. In the context of property insurance policies, damaged property is typically valued based on its estimated actual cash value (ACV) if it is not repaired or replaced. In order to calculate ACV, an insurer will often calculate the replacement cost (RCV) based on the cost to repair or replace the property with materials ... Keep Reading »
Florida Legislature Passes Sweeping Assignment of Benefits Legislation
Significant changes appear to be in the pipeline for Florida property insurers after the Florida legislature passed sweeping assignment of benefits (AOB) reform legislation last week. If the legislation is signed into law (Governor DeSantis has indicated it will be), it will take effect on July 1, 2019. The legislation applies to residential and commercial property insurance policies and includes new restrictions on AOBs, changes to the fee-shifting framework for AOB ... Keep Reading »
Break Out Your Crystal Ball: New York’s First Department Relies on Policy’s Mitigation Provision as Support for Allegation That Consequential Damages Were Foreseeable
An insured sought coverage under its commercial property insurance policy for property damage incurred after construction work was performed in an adjoining building. Contending the insurer’s “investigatory process has taken so long and become so attenuated that the structural damage to the building has worsened,” the insured brought suit for breach of contract for failure to pay a covered loss under its insurance policy and breach of the implied covenant of good faith ... Keep Reading »
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