The answer by most readers to the question posed is “Of course Chip! Just because a property is damaged does not mean that the policyholder cannot sell the damaged property.” Well, not so fast my nerdy insurance coverage and claims friends.
Continue Reading Can a Policyholder Sell the Damaged Property After a Loss?
The Puerto Rico Insurance Code provides that the right of subrogation is “[t]he right of an insurer to recover damages who has been called to pay an insured under his policy.”1 Under this law, this right arises once the insurance company makes a payment to the insured. The Supreme Court of Puerto Rico has expressed that this provides a legal replacement mechanism whereby an insurance company replaces the insured person in the exercise of the actions or rights that it has against the person causing damage.2 In other words, the right of subrogation of the insurance company arises when it pays the insured; it is the payment that makes the insurer a creditor through subrogation.3
Continue Reading When Does a Subrogation Clause Apply?
Insurance companies in Texas are one of the most litigious entities, filing lawsuits and making tort subrogation claims after paying policyholders for first-party property damage claims. Claims departments incentivize and promote the collection of subrogation amounts to make claims departments more profitable. It is amazing that the Texas "tort reform" advocates do not lobby to do away with this—but then again the "tort reform" advocates are the insurers themselves.
Continue Reading Texas Insurers Acting in Bad Faith During Subrogation
In Auto Owners Insurance Company v. Southwest Nut Company,1 a fire destroyed portions of a storage warehouse in Georgia. The warehouse contained nine storage bays and was about 60,000 square feet. The owner of the warehouse leased portions of the warehouse to a tenant which used the space to store its inventory of pecans. The lease between the landlord and tenant provided that the tenant will “insure and keep in effect on the Warehouse and contents, fire, extended coverage and all other endorsements to cover the full range of losses for which Tenant is responsible hereunder.” The lease also defined the term “Warehouse” as “a refrigerated bulk commodity storage facility consisting of three cold storage bays and one dry storage bay with office … comprising approximately 24,000 square feet in floor size, and associated loading dock area.” Also, as part of the lease, the tenant agreed “to procure and maintain full insurance coverage for absolutely all losses, liabilities, damages, or claims that may occur in connection with Tenant’s use of the Warehouse and Tenant’s obligations under this lease.” (emphasis added). The owner had insured the warehouse under a policy issued by Auto-Owners Insurance. The tenant obtained an insurance policy from Travelers which provided coverage for “newly acquired property.”
Continue Reading Georgia Law on Intended Third Party Beneficiaries to an Insurance Policy
I footnoted in last week’s post that this week’s post would address an insurer’s subrogation rights against an individual or entity listed as an additional insured in an insurance policy. An additional insured is a
person or organization not automatically included as an insured under an insurance policy of another but for whom the named insured desires or is required to provide a certain degree of protection under its insurance policy.1
Additional insureds often come about by
an endorsement added to the policy[,] which either identifies the additional party by name or by a general description contained in a ‘blanket additional insured endorsement.’2
Most insurance policies contain a subrogation condition. Subrogation is “[t]he principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy.”1
Continue Reading Insurance Policy Conditions (a/k/a/ Land Mines): Part 29 – Subrogation
Policyholders naturally want to get their property back to a pre-loss condition as soon as possible after a loss. One potential problem involves preserving evidence to protect an insurance company’s right to seek reimbursement against third parties causing the loss, which is called subrogation. One commercial policyholder failed to do so and lost its right to any insurance proceeds.
Continue Reading Subrogation Rights—Potential Danger Zone for Policyholder Coverage
I will be speaking in an upcoming live web seminar entitled "Insurance Subrogation Challenges for Insurers and Policyholders" scheduled for Tuesday, November 16, 1:00pm-2:30pm EST. The scope of an insurer’s subrogation rights, generally a matter of state law, may be expanded or contracted depending on the language of the underlying policy. Understanding the interplay between subrogation law and policy language is critical–especially for policyholders who want to preserve and maximize their rights for recovery against third parties.
Continue Reading Insurance Subrogation Challenges for Insurers and Policyholders
On Bloomberg, I gave a television interview regarding the legal and financial aspect of claims and lawsuits which are being generated as a result of the BP Oil Spill. Lost profit and business interruption claims and disputes are not novel to those of us with commercial first party insurance claims experience. Every Sunday, Michelle Claverol, in our Coral Gables office, posts about lost profit cases, which often involve complex accounting and economic issues. The BP Oil Spill is causing an epidemic of these financial loss claims, which will largely be brought as third party claims under the Oil Pollution Act of 1990.
Continue Reading The BP Oil Spill Causes an Epidemic of Claims
Nancy and Anthony Podorski hired On Target, Inc., a leak detection service, to locate a leak under the floor of their home. The On Target technician who responded presented Mr. Podorski with a two-page form titled “Customer Information Card and authorization to proceed with the work.” The Customer Information Card authorized On Target to find the leak, provided general information about the nature and extent of the services provided by On Target, and the indemnification provision at issue in this case:
Continue Reading A Recent Florida Court Decision on Subrogation