In a recent case in Tennessee, homeowners suffered a fire loss and filed a claim with their insurance company, Anpac.1 The insurance company investigated the loss and found that the homeowners intentionally set the fire and denied coverage. It then filed a declaratory judgment action. The homeowners filed counterclaims for breach of contract, unfair claims practices and bad faith. They alleged that the insurance company ignored evidence that showed they did not set the fire. In Tennessee, a statute allows insureds to seek a penalty of up to 25% of the total liability where a claim is denied in bad faith.2 When an insurance company refuses to pay a claim within 60 days of a demand, it must pay an additional 25% if the refusal was not in good faith and caused the insureds additional damages.

Continue Reading Litigation Does Not End the Continuing Duty of Good Faith

It is official—in a case of first impression in New York,1 the appellate court will decide if a policy flood aggregate limit will apply to “downstream” financial losses such as delay in completion. The policyholder has filed the appellate brief on December 3rd requesting the appellate court to review the trial court’s ruling of first impression we discussed in: Delay in Completion Losses Under a Builders Risk Policy – Part 2.

Continue Reading Should Flood Aggregate Limit Apply To “Downstream” Financial Losses Like Delay In Completion?

On several occasions the following insurance industry argument has been addressed on this blog: the insurance company argues that since a claim proceeded to the contractual alternative dispute resolution process of appraisal and that it paid the award amount, there cannot be a bad faith case brought against it since they claim they followed the policy. This has been a hot topic in the Florida property insurance industry in the last couple of years. Florida’s Fourth District Court of Appeals ("4th DCA") has issued two opinions on this topic – State Farm Insurance Company v. Ulrich,1 and Trafalgar At Greenacres v. Zurich.2

Continue Reading In Florida, an Appraisal Award May Be a Final Determination of Liability For a Bad Faith Case

In part 2 of this series, I reviewed a New York trial court opinion in a case involving delay in completion coverage under a builders risk policy where damage was sustained during Sandy.1 The policyholder/developer sustained significant property and delay in completion loss from Hurricane Sandy. The court held that the policyholder was entitled to recover the total of $5 million for flood damages, physical damages, and the economic delay in completion losses sustained since they stemmed from the flood. The case was one of first impression in New York.

Continue Reading Delay in Completion Losses Under a Builders Risk Policy – Part 3

Discovery of claims management practices was a topic of discussion on Sunday morning at the Consumer Attorneys Association of Los Angeles (CAALA) annual convention. They have their convention in Las Vegas every Labor Day weekend, and it is an excellent opportunity to network and learn from some outstanding legal colleagues. I attended with our Los Angeles based attorney, Ken Kan.

Continue Reading Claims Management Practices

If there is a design defect to a part of your property, then most insurance policies will contain exclusions for those design defects. Depending on the type of policy that you have and it’s wording, if a separate loss occurs as a result of a design defect, it may be covered under your policy. Well what type of loss could follow from a design defect? There are too many possibilities to try to explain in a list, but consider a wall not designed correctly that falls down and causes direct damage to other areas of the insured property. Replacement of the improperly designed wall may not be covered, but if the claim involves the cost of repairing other areas of the insured property damaged when the wall fell, that should be covered.

Continue Reading If A Separate Loss Occurs as a Result of A Design Defect, It May Be Covered Under Your Insurance Policy

Superstorm Sandy raises a bunch of questions for many policyholders wondering if they are receiving the insurance benefits they are owed and how to go assert their rights to those benefits. I was asked by United Policyholders Executive Director Amy Bach to speak and answer those questions at a Roadmap to Recovery Workshop next Monday in Bay Head, New Jersey.

Continue Reading Superstorm Sandy Insurance Questions? Roadmap to Recovery Workshops Provide Answers

Property claims adjusters are supposed to promptly evaluate damage, investigate coverage, and provide full benefits to policyholders. Adjustment is about giving the customer the service promised and paid for when the policy was purchased. This service is not paid with "indemnity dollars," but with insurance company claims expense dollars, which insurance companies must spend to make certain their policyholders are promptly and fully receiving benefits.

Continue Reading Adjustment of Claims is 100 Percent Policyholder Service–Is The Insurance Industry Providing This Service?

(Note: This guest blog is by Ashley Smith, a third-year law student clerking in our Tampa, Florida, office)

A new opinion takes a step in the right direction for Florida policyholders seeking to hold insurance carriers accountable for their conduct in the adjustment of insurance claims. The Second District Court of Appeal’s opinion in Hunt v. State Farm Florida Insurance Company,1 unambiguously states that policyholders can bring bad faith causes of action against their insurance carriers after a favorable appraisal award.

Continue Reading A Step in the Right Direction: Appraisal Awards Satisfy Condition Precedent to Bad Faith Actions