TIMELY WRITTEN NOTICE TO INSURER AND COOPERATING WITH INSURER

shutterstock_651871066I harp on notifying a liability insurer in writing once a claim is asserted against you.  As soon as possible.  I harp on this because as an insured you want to remove any doubt or argument that the insurer was prejudiced due to a lack of timely notice. 

 

In a recent opinion, Zurich American Insurance Co. v. European Tile and Floors, Inc., 2017 WL 2427172 (M.D.Fla. 2017), the insurer moved for summary judgment in a coverage action arguing that its insured failed to provide it timely written notice.  Specifically, the insurer argued that the insured violated the clause in the liability policy that states:

 

2. Duties in the Event of Occurrence, Offense, Claim or Suit

b. If a claim is made or “suit” is brought against any insured, you must:

1. Immediately record the specifics of the claim or “suit” and the date received; and

2. Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or “suit” as soon as practicable. 

c.  You and any other insured must:

1. Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or “suit”;

2. Authorize us to obtain records and other information;

3. Cooperate with us in the investigation, settlement or defense of the claim or “suit”; and

4. Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply.

 

Here, the insured claimed it orally called the insurer about the nature of the suit and a representative told it that there would be no coverage for the lawsuit.   The insurer, however, claimed it has no record of such a call and only learned of the lawsuit after a judgment had already been entered against the insured.  Particularly, a seven-figure judgment was entered against the insured and the judgment creditor then sued the insurer which prompted the insurer to file a coverage lawsuit. 

 

The insurer argued that there should be no coverage because the insured violated the clause regarding being provided timely written notice of the lawsuit.  An insured can forfeit otherwise valid coverage by failing to provide timely notice to the prejudice of the insurer.

 

Under Florida law, if an insured’s notice is untimely, a presumption of prejudice arisesEuropean Tile and Floors, supra, at *5.  The insured can only prevail if it rebuts the presumption of prejudice by demonstrating with competent evidence that the insurer was not prejudiced by the untimely notice.   Id.   However, although the policy required written notice, this requirement can be waived when the insurer has actual notice of the claimId

 

In this case, the Middle District denied the insurer’s motion for summary judgment because there was a material fact dispute as to whether the insured provided notice of the lawsuit to the insurer—the insured claims it did so through an oral call which the insurer disputes.

 

The insurer also moved for summary judgment arguing the insured failed to cooperate with it.  An insurer may deny coverage for an insured’s failure to cooperate when “(1) the lack of cooperation was material, (2) the insurer exercised diligence and good faith in bringing about the cooperation of its insured and itself complied in good faith with the terms of the policy and (3) the lack of cooperation substantially prejudiced the insurer.”  European Tile and Floors, supra, at *6 quoting Mid-Continent Cas. Co. v. Basdeo, 477 Fed.Appx. 702, 706-07 (11th Cir. 2012).

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: PRIOR ACTS EXCLUSION IN INSURANCE POLICY

imagesAs an insured, it is important to understand the prior acts exclusion in your liability insurance policy.  The prior acts exclusion bars coverage for claims that arise out of an act prior to the policy period or specified date in the policy.   Knowing this, an insured typically can get some prior acts coverage to cover claims that arise out of an act that precedes the policy period (e.g., after a retroactive date).  Perhaps it is not full prior acts coverage (covering claims that arise out of acts that occur at any time) but coverage for claims arising out of an act after a retroactive date (date earlier than the policy period).  This becomes important, particularly with claims made policies (such as professional liability policies or directors and officers liability policies) since these policies are triggered by a claim made during the policy period.  With the prior acts exclusion or even with the retroactive date, if the claim arose out an act that pre-dates the policy period or retroactive date, the insurer has an argument that the policy does not cover the claim.

 

A recent decision (discussed here) pertaining to a directors and officers liability policy shows the application of the prior acts exclusion and how courts broadly construe “arising out of” language in the exclusion.  In other words, in the recent decision, even though the claim pertained to a wrongful act that occurred during the policy, the underlying act that made it a wrongful act arose out of acts that occurred prior to the policy period.  Thus, the court broadly construing “arising out of” language, maintained that the prior acts exclusion barred coverage for the directors and officers claim.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

NEGLIGENT PROCUREMENT OF INSURANCE

shutterstock_540587629As you know, insurance is an important part of risk assessment for many, many business needs.  Oftentimes, an insured relies on an insurance broker or agent to procure specific insurance to meet its express business objectives and risks.  Notably, there is a potential negligence claim associated with an insurance agent or broker’s negligent procurement of insurance for an insured.  While this is not the easiest claim to prove, a recent Third District case explained this standard:

 

It is well settled that “where an insurance agent or broker undertakes to obtain insurance coverage for another person and fails to do so, he may be held liable for resulting damages for . . . negligence.  More specifically, and as applicable here, “[a]n agent is required to use reasonable skill and diligence, and liability may result from a negligent failure to obtain coverage which is specifically requested or clearly warranted by the insured’s expressed needs.”  As explained by our sister court, “[t]his general duty requires the agent to exercise due care in correctly advising the insured of the existence and availability of particular insurance, including the availability and desirability of obtaining higher limits, depending on the scope of the agents undertaking.” 

Kendall South Medical Center, Inc. v. Consolidated Ins. Nation, Inc., 42 Fla. L. Weekly D1071a (Fla. 3d DCA 2017) (internal quotations omitted).

 

 

In this case, a leak occurred on commercial leased premises.  The commercial tenant had a property insurance policy that provided $100,000 of coverage for the physical improvements and contents of the property.  However, there was a 90% coinsurance provision.  A coinsurance provision shifts risk to the insured when the insured purchases less coverage than the value of the property. 

 

As a result of the coinsurance provision, the insured only received a fraction of its damages, and less than the $100,000 in coverage.    The insured, however, claimed it was under the belief it would recover $100,000 in insurance proceeds as that was what it told its agent it needed.  The insured sued its insurance agent claiming the agent’s failure to advise it that the procured policy did not address its expressed insurance needs. “[W]hen an insured alleges that it specifically communicated its insurance needs to an agent who then undertook to procure a policy addressing such needs, the insured states a cause of action for negligent procurement where it also alleges that, without providing an explanation that different coverage was required, the agent procured a policy not meeting those expressed needs.”  Kendall South Medical Center, supra.

 

Perhaps this could have been avoided had the insured reviewed the specific terms of the insurance policy.  Perhaps there are e-mails or other records where the insurance agent explained that the coverage the insured was seeking could not be procured without a coinsurance provision that shifted the risk to the insured.  Know your insurance and know the risks and coverage afforded to you!

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: SUBMITTING CIVIL REMEDY NOTICE

imagesThere are steps an insured or claimant need to take in order to assert a statutory bad faith claim.  The first step is the obligatory Civil Remedy Notice.  This obligation is set forth in Florida Statute s. 624.155.   The Civil Remedy Notice is, in essence, written notice of the specific violation(s) that are being claimed against the insurer that give rise to potential bad faith and an opportunity for the insurer to cure the violation(s).   Florida Statute s. 624.155 would not be confused as a model of clarity, so it is important that a insured or claimant work with an attorney regarding any bad faith claim including filling out the Civil Remedy Notice.  

 

In Fox v. Starr Indemnity & Liability Co., 2017 WL 1541294 (M.D.Fla. 2017), an insured sued his property insurer for bad faith.  Prior to suing, the insured submitted the required Civil Remedy Notice.  However, the insurer moved to dismiss the lawsuit under the argument that the insured did not strictly comply with the statutory requirements based on how the insured filled out the Notice.   The insurer argued this because if the Civil Remedy Notice was deficient than the statutory bad faith claim would not be triggered.  The Middle District, reviewing this issue, maintained, that substantial compliance with the statutory requirements would suffice.  The Middle District was not going to toss out a bad faith claim based on technicalities with how the Civil Remedy Notice was filled out when the insured substantially complied with the intent of the requirements.

 

Pursuing a bad faith claim against an insurer is not as easy as it may appear.  There are steps and requirements that must occur before the bad faith claim can even be pursued. The first step is submitting the Civil Remedy Notice pursuant to Florida Statute s. 624.155.  But, this is not the only step.  Check out this article for more information on bad faith.  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.