Insurance Policy Conditions (a/k/a/ Land Mines): Part 9 - Damage Mitigation Continued
This blog post is an extension of my December 14, 2012, post, which addressed damage mitigation provisions and a couple different ways that carriers try to wield the insured’s mitigation efforts against the insured. Here is some more food for thought.
First, I have found this correlation holds true more often than not – the more time that passes without mitigation, the more health and safety hazards arise. If health and safety hazards are a reasonably possible consequence of delayed mitigation, it is my opinion that carriers will be even more hard-pressed to justify claim denial based on your prompt mitigation efforts.
Second, I would be remiss if I did not caution that the wording of mitigation and subrogation provisions sometimes conflicts (please read your policy carefully), and there exist pro-insurer judges who might decide on summary judgment that a subrogation provision trumps the mitigation provision. Such judges might throw the time-tested contractual doctrine of contra proferentem to the wayside and decide the insured’s mitigation efforts stymied the insurer’s subrogation exploration. Take a look at a Chip Merlin post on this subject: Subrogation Rights---Potential Danger Zone for Policyholder Coverage.
For the good reasons articulated in Chip’s post, there does not appear to be any Florida decisions similar to the New York decision featured in Chip’s post, and there are no decisions (Florida or otherwise) that cite to the New York decision. Regardless of the anomalousness of the New York decision, heed Chip’s advice to get approval from the insurer before mitigating. As I wrote two weeks ago – if the circumstances allow, contemporaneously report the claim and advise the carrier of your prospective mitigation plan.
To read previous posts in my series on insurance policy conditions, click here. Oh, and more thing … I invite audience participation in this blog series – please let me know if there is a particular condition or a precise condition-related issue that you would like for me to write about.
I would add that proof of written communication (certified letter, return receipt requested) is absolutely bulletproof if a claim goes to court. Get a stack of the cards from the post office and send everything to the carrier that way. Also follow up every phone call with a written summary and your own understanding of the call details. This puts a lot of extra ammo in the insured's corner.
Great subject! Keep up the good work!
Mark
Fully agreed, Mark. Document, document, document, and then document some more - photos, letters, emails, diaries, whatever. Thanks, and happy new year.
NY decision is bizarre. Another judge might have found the Transfer of Rights Clause ambiguous. Following MDW v. CNA and State of New York v. Home Indemn. Co. as noted in the decision the test for ambiguity is whether the language in the insurance contract is "susceptible of two reasonable interpretations." Judge notes insured's reliance on Wilkinson and ignores literal reading of the clause. Apart from the fact that the insured tried to have the insurer attend meetings with the mfg. and the insurer's rep could not attend, it is hard to imagine, given the insurer's conduct, how much time and business must a commercial establishment lose for this judge to consider the insured exercised due diligence. Need a restaurant go out of business and then try to collect the BI due to insurer's delay? Given a facial reading of the facts, it is hard for me to justify this decision, and I was a corporate insurer lawyer.
I appreciate the feedback and fully agree that the NY decision is bizarre. Spot on comment - your discussion re: ambiguity tracks my note on contra proferentem, and your concern with businesses closing down due to claim delay tracks the concerns raised in Chip's post.