Overhead and Profit cases and discussions are one of the hottest topics in property insurance law. The insurance companies are in a race with each other to push to the limit policy language which reduces traditionally paid benefits and delays payments to their customers. A case last week by the Pennsylvania Supreme Court allows “open season” on Pennsylvania policyholders.1

I thought of a few other titles which would be just as appropriate for this post:

  • Farmers Sells Bad and Inferior Homeowners Insurance in Pennsylvania—Don’t Get Scammed Into Talking to A Farmers Insurance Agent
  • Are Pennsylvania Insurance Regulators in the Pocket of The insurance Industry?
  • A Standard All Risk Insurance Policy Is Needed For The Same Reasons A Standard Fire Insurance Policy Was Required Over 100 Years Ago—To Make The Cheating Insurance Companies Pay!

The holding of the case allows Farmers Insurance, pursuant to its policy terms, not to pay general contractor overhead and profit until the policyholder first pays it. Since there is not any Pennsylvania regulation or statutory law which prevents this—and the Pennsylvania insurance regulators did not stop it from being approved—the court said the terms of the contract apply. The cheap Farmers Insurance wins and the insurance customers lose.

The rest of the insurance industry does not a pass on this either. Insurance companies belong to organizations which filed amici briefs supporting Farmers against their own customer. Indeed, the worst example of this is mutual insurance companies who filed briefs against the customers that are their own members and theoretical owners.

Where are the insurance industry CPCU’s speaking out against this? Where is the discussion by insurance coverage leaders talking about this change? Why don’t regulators regulate?

The biggest question is whether we need states to mandate a standard all risk aka open peril insurance policy for the same reasons we had a standard minimum fire policy.

Join me at 2 today while we go over this case and its ramifications.

Thought For The Day

Sometimes I think the playing field is certainly not even. You know, it’s just not.
—Rod Stewart
1 Kurach v. Truck Ins. Exchange, No. 12 EAP 2019, 2020 WL 4760092 (Penn. Aug. 18, 2020).