After finishing yesterday afternoon’s post, The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions, I recalled an Amicus Brief we filed in the Florida Supreme Court in the case of Fayad v. Clarendon Nat’l Ins. Co., 899 So. 2d 1082 (Fla. 2005). An Amicus Brief is a brief filed by a someone who is not a party to the court action to help the Appellate Court make the right decision. It is supposed to address factors which may not be fully addressed by the parties to the dispute.
Mary Fortson and I were asked by the policyholder’s counsel if we could file such a brief. After looking at the issues, we started laughing because our library had an insurance industry manual about this topic. It clearly indicated that coverage existed for the type of "earth movement" that damaged the policyholder’s property. Why would the insurance industry publish an adjustment manual on something that was not covered?
If you have the time and want to learn how to better interpret insurance policies, read the Amicus Brief we filed. The portion involving the reference materials is quoted below:
"The construction applied by the Third District suggests that coverage for “blasting” damage will never be covered. Yet the American Insurance Services Group publishes a pamphlet entitled Blasting Damage and Other Structural Cracking, a Guide for Adjusters and Engineers (3d ed. 1990) that teaches first party property adjusters how to adjust for the type of damages appellant’s are claiming. It states, in part:
If possible, inspection of the damage should be made jointly by adjusters representing the liability carriers and property insurers. The adjusters should always make a point of telling the property-owner who the company representatives are, what companies they represent, and what the purpose of the visit is.
If the casualty interests agree that liability exists, they may be willing to take over the adjustment. But if the direct property adjuster is convinced that the blasting did not cause the damage, his company may wish to consult and cooperate in the investigation and defense of the claim with the blaster and his insurance carrier, if any.
In those cases where the adjustment is concluded by property insurance carriers, the company may wish to ascertain from counsel whether the blasting took place in an absolute liability state, or whether it is necessary to prove negligence before the blaster can be held liable….
Blasting Damage and other Structural Cracking at 4-5. Thus, it is obvious the insurance industry recognizes that blasting type damages are covered under their standard policy terms or they would not make a specialized booklet for their property adjusters and engineers dealing with the nuances of such losses, including subrogation recoveries after paying their policyholders.
In this case, the all-risk homeowners policy should have been construed so that the exclusion would be found ambiguous, as it reasonably could be construed. Thus, the exclusion will apply to only naturally-occurring, widespread disasters, which is the construction found to apply in a multitude of instances in other jurisdictions, as set forth in the Petitioners’ Initial Brief. In this manner, the public (and insurers) are protected from insurers becoming insolvent when widespread damages from earthquakes, volcanoes and the like occur. Yet, the small number of isolated “blasting” claims can be paid, eliminating devastating financial damage to isolated policyholders.
Further, as to the named peril personal property portion of the policy relating to “explosion”, rather than finding the inconsistencies to favor non-coverage, the court should have, again, construed the policy in favor of the policyholder.
Significantly, in a treatise published by the National Underwriter company, when discussing homeowners policy coverage interpretation, the author notes that, in the ISO policy form, the term “explosion” is: “neither defined in the policy, nor is there any modifying language following the word so that a broad range of ‘explosions’ may be covered.” Diane W. Richardson, Homeowners Coverage Guide Interpretation and Analysis 48 (National Underwriter Co. 1999). Again, the interpretation adopted by the Third District in its opinion is incorrect. Even the insurance industry recognizes a different interpretation of “explosion” than that interpreted by the Third District."
I credit New York attorney Eugene Anderson and claims consultant, Gary Fye, for encouraging me to build a law library with insurance industry reference materials. Every good policyholder attorney needs to make this type of investment if he or she is serious about doing this line of legal work at the highest level.
We have books about the history of various insurance companies, advertisements, claims manuals, treatises, and current and ancient industry magazines. We even have a record with advertising songs State Farm has used to sell its insurance. Those songs come in handy when we show State Farm’s promises at the point of sale.
The bottom line is that courts and insurance defense attorneys have little to say when the insurance industry publishes materials which demonstrate that an insurance policy covers a loss.