Ensuing Loss

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In my experience, an insurer oftentimes acts differently than its lawyers. What I mean is that the way in which an insurance claim is handled changes dramatically once it is handed off to a defense lawyer. Insurance defense lawyers oftentimes argue different reasons for the denial of a claim than its client wrote in its denial letters to my client. This sometimes leads to insurance defense lawyers arguing that a policy provides much less coverage than the insured believed it provided. But in zealously advocating for their client, sometimes insurance defense lawyers go too far, as was the case in RLI Insurance Company v. Willbros Construction (U.S.) L.L.C., et al.…

Continue Reading Texas Court Explains Why Insured Purchased Insurance in the First Place

Property policies usually include a mold exclusion. Water damage, however, is a commonly covered “cause of loss.” Mold growth and water infiltration have a close causal tie, and there has been a raging dispute in the industry over whether property policies respond to mold losses when water infiltration, a covered cause of loss, caused or contributed to the mold. The debate is complicated by fairly common exclusionary language that incorporates an “ensuing loss” exception:.

We do not cover loss caused by:

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(2) rust, rot, mold or other fungi. …

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We do cover ensuing loss caused by collapse of the building or any part of the building, water damage, or breakage of glass which is part of the building if the loss would otherwise be covered under this policy.

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Continue Reading Is Ensuing Mold Damage Covered? – Breaking Down Your Homeowners Insurance Policy

Herb Albert and the Tijuana Brass produced an album, Whipped Cream and Other Delights, which has been on my mind lately. While a number of my less academic colleagues would simply be interested in the album cover and the music, my insurance coverage nerd personality drove me to research insurance coverage cases involving whipped cream or honey.
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Continue Reading Whipped Cream, Honey and Covered Ensuing Loss Delights

The chicken or the egg causality dilemma is commonly stated as “which came first, the chicken or the egg?” To ancient philosophers, the question about the first chicken or egg also evoked questions of how life and the universe began. Similarly, yet minus the philosophical dilemma, in first party property insurance policy interpretation, parties are often confronted with a causality question of which came first, the windstorm event or some other cause?…

Continue Reading Which Came First, The Windstorm Or Some Other Cause?

Oftentimes after a windstorm, flood, or plumbing leak, mold develops in a home. There are several standard insurance policies issued in Texas, and they all have some language that deals with mold. For example, a standard Texas Dwelling Policy—Form 3 specifically excludes mold damage, but covers an “ensuing loss” caused by water damage. These clauses seemingly contradict one another: how can there be no coverage for mold damage if it is an “ensuing loss” caused by water damage? In 2004, the U.S. District Court for the Eastern District of Texas discussed this issue in Malley v. Allstate Texas Lloyds.…

Continue Reading Is Mold Covered Under my Texas Homeowners Policy?

The Texas Supreme Court released an interesting ruling recently. Many were intrigued by it because it appeared to be counterintuitive at first glance. In State Farm Lloyds et al. v. Page, No. 08-0799, 2010 WL 2331460 (Tex. June 11, 2010), the Court decided that mold damage to a woman’s personal property was covered in a standard homeowner’s insurance policy, but damage to her home was not.…

Continue Reading Texas Supreme Court Retreats From Its Previous Broad Mold Exclusion Ruling

I am always looking for "an edge." Just something to get a better chance of winning for my client–like all good litigators. This morning’s post, Chinese Drywall Losses Covered Under First Party Property Insurance Policy, mentioned how going to a NAPIA Conference can give a policyholder’s advocate that type of "edge." Let me explain how a few lessons by Ed Eshoo’s lecture can help everybody making arguments for disputed coverage claims.…

Continue Reading Ensuing or Resulting Loss, and the Burden of Proving Causation Explained Simply

The insurance industry is probably calling and writing the editors of the FC&S Bulletin because the June 2009 edition correctly notes that Ensuing Loss Damage is covered under the ISO form policies for typical Chinese Drywall losses. I recently noted various coverage issues related to Chinese Drywall. A number of these cases are coming to our office because insurers are not affording first party coverage.…

Continue Reading FC&S Says Ensuing Loss Coverage Applies to Chinese Drywall Claims

The coverage questions regarding problems with Chinese drywall are becoming ever more frequent in our firm. I will caution everybody that I am not giving a definitive answer. I can say that the analysis is complex, depending on which state law you are applying. As usual, the policy and the factual problems associated with the particular drywall result in some of the loss covered, all covered, or none covered. Merlin’s Woody Isom and Mary Fortson have been tasked with keeping up on coverage and recovery efforts and particular questions should go to them. After considering a number of issues, the one thing I can tell you is that anybody who claims they have a guaranteed accurate answer is puffing something stronger than is legal.
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Continue Reading Are Chinese Drywall Problems Covered Under Property Insurance Policies?