Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Many insurance policies include a section titled "Definitions," which defines certain terms used throughout the policy. The meanings of those terms are frequently the subject of litigation. A perfect example is the case I write about this week. Despite the fact that Actual Cash Value ("ACV") is usually a term that is defined or explained in some way in an insurance policy, this provision is frequently the subject of dispute between homeowners and insurance companies. On occasion, insurance companies do not properly calculate the ACV. The case addressed below reflects a resolution in a jurisdiction where the rulings were not uniform with regard to calculating ACV.

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In my last post, Understanding the Importance of “Replacement Cost Value” Coverage, I explained that insurers are not permitted to withhold any depreciation under replacement cost value coverage for personal property claims. This post highlights a recent change to Florida Statute § 627.7011, which took effect May 17, 2011, and alters the payment of dwelling claims.

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Someone recently asked me if bad faith tort claims originated in California. Although I cannot say that California is the jurisdiction in which bad faith claims were founded, I can safely say that the development of what we consider the current insurance bad faith tort cause of action is heavily influenced by two landmark California Supreme Court decisions: Comunale v. Traders & General Ins. Co., 50 Cal. 2d 654 (1958), and Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566 (1973).

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Countless angry and distressed homeowners and business owners contact our firm because they’ve just experienced a property loss and found out they are severely underinsured. Nearly every underinsured policyholder tells a familiar story: “My agent told me I was fully insured and I relied on my agent to tell me if I needed more insurance coverage.” Nearly all underinsured policyholders also ask if they can file claims against their agent for failure to inform them about certain coverages or failure to inform them that their coverage limits are insufficient to rebuild their business property or home. Unfortunately, public perception regarding what services insurance agents perform for customers is often vastly different from what the law actually holds agents responsible for.

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In H&H Hospitality L.L.C. v. Discover Specialty Ins. Co., No. 10-1886 (S.D. Tex. Dec. 20, 2011), the U.S. District Court for the Southern District of Texas granted summary judgment in favor of a commercial property insurer in an action brought by an insured motel owner for wrongful denial of a business interruption claim arising from property damage caused by Hurricane Ike. The Court held that the policy did not provide coverage for the reduced business operations experienced by the policyholder.

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On January 19th, the Florida Supreme Court issued its opinion in Petty v. Florida Insurance Guaranty Association, which decided whether an insured is entitled to recover attorney’s fees from the Florida Insurance Guaranty Association (FIGA). I wrote about the case in October 2010, when it was at the lower appellate level, in The Definition of a "Covered" Claim by the FIGA Act Leads Florida Second and Third District Court of Appeals to Different Results.

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In Elkins v. QBE Insurance Corporation, No. C11-5150, US District Court (W.D. Washington), Mr. and Mrs. Elkins filed suit against their condominium association’s insurance carriers for loss of rental income after a fire damaged common areas and individual units. The Elkins alleged that their individual loss of rent was part of the “community income” as defined in the property and casualty policy in question.

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Sometimes we have experiences that give us a better perspective on reality. In this busy world with constant deadlines, stress, and email, it is important to take a step back and remember that life is short and we should be sure to consider our safety and well being as we travel through our busy days.

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In a federal case from Washington, a company providing general contracting services found itself facing lawsuits for construction defects and its insurance company would not respond to its requests for coverage or indemnification.

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The legislative session is moving at breakneck speed this year. At this point, we already have 31 bills on our “watch list.” Go to PolicyholdersofFlorida.com for a full list of these bills and their current status in the legislature.

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In Florida, except under certain circumstances, in an “actual cash value” policy, the carrier withholds depreciation through the indemnification process. For an additional premium amount, policyholders can purchase “replacement cost value” coverage which requires insurance companies to replace the damaged property with the full value of replacement. For example, a television valued at $1,000 is damaged in a windstorm; the life of the television is 10 years, so a five year old television is valued at $500. If the policyholder purchased “replacement cost value” coverage, she would be entitled to $1,000 to purchase a new television, compared to $500 under an “actual cash value” policy.

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“Do I have to answer that?” Occasionally, one of my clients will turn to me during an examination under oath and aks that very question. Almost every time, I answer, “Yes,” or at least have the questioner clarify a poorly-worded question. The reason I usually counsel clients to answer has several elements, but most importantly: if a fight may be easily avoided and there is no benefit to fighting, why fight? If a policyholder refuses to answer a question at EUO, defense counsel immediately suspect fraud, thinking, “Why else would someone refuse to answer questions unless they were hiding something?” But more importantly, I know defense counsel’s eyes will start rolling around like a slot machine until they land on DENIAL because they believe they have right to ask anything and the insured has to answer, otherwise the policyholder is violating the policy’s duty to cooperate. Is this true? May defense counsel ask the policyholder literally anything at an examination? Must the insured answer or risk violating the cooperation clause?

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On January 5, 2012, the Ninth Circuit asked the California Supreme Court to decide two insurance law issues that arose in a flood coverage dispute. In the matter of Sierra Pacific Power Company v. Hartford Steam Boiler Inspection and Insurance Company, the Ninth Circuit reached conflicting conclusions on two distinct issues.

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It was about a year ago when I reported that Texas led the nation for highest insurance premiums in 2010. Well, the results are in for 2011 and Texas has once again topped the nation as the state with the highest insurance premiums in the land. Roger Mares of KTXS News reports that Texas homeowners pay an average of $1,511 annually for their home insurance. That’s $50 more than Florida, the state that came in second place.

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