The Seventh Circuit Court of Appeal’s opinion this week in Streit v. Metropolitan Casualty Insurance Company,1 is a major victory for policyholders in Illinois. There, the Seventh Circuit affirmed the lower court judgment entered in favor of my clients, Wesley and Barbara Streit, arising out of Metropolitan’s failure to cover a fire loss to their residence in Illinois. The Seventh Circuit’s ruling establishes that an insurance policy exclusion which precludes innocent co-insureds from recovering violates the minimum level of protection afforded by the Illinois Standard Fire Policy.
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After a claim is made, and despite the obligation to objectively, fairly, and reasonably investigate a claim with an eye toward providing coverage and without putting the insurance company’s interests ahead of their insured’s, some insurers actively look for ways to deny coverage. One of the ways some insurers do this is by using the claim investigation to search for information that the insured provided in its insurance application that is or was inaccurate.
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What is an insured, who has an “actual cash value” property insurance policy, entitled to recover when their property is damaged, but not a total loss? Is the insured entitled to the cost to repair/replace the property minus depreciation? Or is the insured’s recovery limited to the property’s fair market value? What if the property’s fair market value of the property at the time of the loss is far less than the amount of money it will take to repair the property minus depreciation?
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Section 13-214.4 of the Illinois Code of Civil Procedure provides that “[a]ll causes of action brought by any person or entity under any statute or any legal or equitable theory against an insurance producer1 . . . concerning the sale, placement, procurement, renewal, cancellation of, or failure to procure any policy of insurance shall be brought within 2 years of the date the cause of action accrues.”2 Section 2–2201(d) of the Illinois Code of Civil Procedure anticipates negligence actions against insurance producers: “[w]hile limiting the scope of liability of an insurance producer, . . . the provisions of this [s]ection do not limit or release an insurance producer . . . from liability for negligence concerning the sale, placement, procurement, renewal, binding, cancellation of, or failure to procure any policy of insurance.”3 Section 2–2201(a) of the Illinois Code of Civil Procedure places a duty on insurance producers, including brokers and agents, to act with ordinary care in procuring insurance for insureds.4
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Larry Bache and I have many cases in Nebraska where we represent a contractor with assignments of insurance claims from homeowners. These assignments were made after a hail loss. The policyholder assigned his rights to the insurance claim to the roofing contractor working on his property. Most insurance policies contain what is called an anti-assignment clause, which forbids the policyholder from assigning rights and duties in the policy to anyone else without the insurance carrier’s consent. In Nebraska the insurance companies have steadily argued that our client’s claims are not valid because they were assigned without the insurance companies’ consent.
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On November 22, 2016, Judge Berle M. Schiller from the District Court for the Eastern District of Pennsylvania issued his Opinion and Order in Payne v. Allstate Insurance Company, granting summary judgment to Allstate and awarding them $25,000 in damages, after finding that the Plaintiff made material misrepresentations while securing the homeowners policy.
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The “water damage” exclusion, which applies to a loss caused by “water which backs up through sewers or drains” plagued New Yorkers for decades, until Pichel v. Dryden Mutual Insurance Company, 117 A.D.3d 1267 (3rd Dept. 2014). In Pichel, the insured was an owner of an apartment building and brought an action against its property insurer after a denial of coverage for a flood that occurred in the basement apartments from waste water entering the buildings through toilets, bathtubs, condensation drains, and laundry room drains. The insurer cited the water damage exclusion which excluded coverage for “water which backs up through sewers or drains.”
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