BURDEN OF PROOF UNDER ALL-RISK PROPERTY INSURANCE POLICY

shutterstock_641983000A recent Florida case, Jones v. Federated National Ins. Co., 43 Fla. L. Weekly D164a (Fla. 4th DCA 2018) discusses the burden of proof of an insured in establishing coverage under an all-risk property insurance policy.  Getting right to this critical point, the court explained the burden of proof as follows:

 

 

1. The insured has the initial burden of proof to establish that the damage at issue occurred during a period in which the damaged property had insurance coverage. If the insured fails to meet this burden, judgment shall be entered in favor of the insurer.

2. If the insured’s initial burden is met, the burden of proof shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases where there was more than one cause, there was an “efficient proximate cause” of the loss.

3. If the insurer meets the burden of proof under either 2.(a) or 2.(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy. If the insurer does so, then judgment shall be entered in its favor. If the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured.

4. If the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized. Applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage.  If it fails to satisfy this burden of production, judgment shall be entered in favor of the insured.

5. If the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden of production shifts to the insured to present evidence that an allegedly covered risk was a concurrent cause of the loss at issue. If the insured fails to satisfy this burden of production, judgment shall be entered in favor of the insurer.

6. If the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish that the insured’s purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis) causal role in the loss), or (b) excluded from coverage by the insurance policy. If the insurer fails to satisfy this burden of proof, judgment shall be entered in favor of the insured.

Jones, supra

 

In this case, the insured suffered roof damage and claimed it was the result of a hailstorm, a peril covered under the policy.  The property insurer denied coverage contending the roof damage was not covered under the policy due to certain exclusions including, without limitation: (i) wear and tear, (ii) faulty or defective design, and (iii) existing damage.  The homeowner argued that the concurrent cause doctrine should apply to determine if there was coverage under this all-risk property insurance policy.  (Check out this article for more on the concurrent cause doctrine.)  This doctrine holds that insurance coverage may exist if an excluded peril and covered peril concurrently cause a loss.   The trial court did not apply this doctrine; rather, it applied the doctrine known as the efficient proximate cause doctrine which holds that if there are concurrent causes for a loss, the peril that set the other peril in motion is the peril that the loss is attributable to, i.e., you are looking at the most responsible cause of the loss.  Thus, if an excluded peril set a covered peril in motion, i.e., it is the most responsible cause of the loss, the loss would be attributable to the excluded peril and not covered by the policy.

 

The court, relying on a Florida Supreme Court decision, maintained that it was error to instruct the jury on the efficient proximate cause doctrine without the jury first determining whether an efficient proximate cause of the loss could be determined.  If it could not be determined, the concurrent cause doctrine would apply and the jury would determine if one of the concurrent causes (perils) was covered under the policy.  For instance, if the jury could not determine whether one peril set another peril in motion, the jury would determine whether the hailstorm concurrently caused the roof damage with another peril (e.g., defective design); and, if so, whether the hailstorm is a covered peril such that the roof damage would be covered under the policy.

 

Notably, the court noted that certain exclusions the insurer relied on contain anti-concurrent cause language, which negates the application of the concurrent cause doctrine.  However, since some of the exclusions the insurer relied on did not specifically incorporate anti-concurrent cause language, the jury could have found that the hailstorm concurrently caused the roof damage with an exclusion that did not contain the anti-concurrent cause language meaning the concurrent cause doctrine would apply.

 

I know this is confusing.  I agree, it very well can be confusing.  Nonetheless, what this emphasizes is the importance of strategy when it comes to presenting a property insurance claim to trigger the application of the concurrent cause doctrine and preparing jury instructions, which is the law you want the jury to follow. This also emphasizes the importance of the verdict form which is the form the jury fills out to decide the outcome of the case.

 

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.

 

BAD FAITH IN THE CONTEXT OF PROPERTY INSURANCE CLAIMS (WEBINAR)

Recently, I participated in a national webinar involving insurance bad faith in the property insurance context.  My section of the webinar dealt with the elements and burden of proof in demonstrating bad faith by an insurer in various jurisdictions.  If you are dealing with a property insurance claim, or believe there may have been bad faith by the insurer, make sure you are working with counsel equipped to handle the jurisdictional nuances in advising you of your rights and proving such a claim.

 

Download (PDF, 248KB)

 

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: INSURER’S DENIAL OF COVERAGE WAIVES RIGHT TO ENFORCE POST-LOSS POLICY CONDITIONS

 

imagesThere is ostensibly a big difference between an insurance carrier DENYING coverage and simply asking for additional information, as permitted under the post-loss conditions of a property (first-party) insurance policy, right?  Typically, the answer is yes and there is a big difference.  If an insured refuses to comply with post-loss conditions under their insurance policy, they are shooting themselves in the foot (in most cases) by giving the insurer an out when it comes to coverage.  If an insurance carrier denies coverage, however, the insurance carrier cannot then require its insured to comply with post-loss conditions in the property insurance policy.

 

In a recent decision, Ifergane v. Citizens Property Ins. Corp., 42 Fla. L. Weekly D12198a (Fla. 3d DCA 2017), the appellate court held that there was a factual issue as to whether a letter sent by the insurer constituted a denial of coverage versus a request for additional information per the post-loss policy conditions in the property insurance policy.  This was a significant issue because the appellate court, in a prior appeal in the same case, found that the insured’s non-compliance with participating in an examination under oath would preclude coverage under the property insurance policy.  But, if it turns out that the insurer actually denied coverage first, then the insurer, as a matter of law, waived its right to enforce post-loss policy conditions in the property insurance policy such as requiring the insured to participate in an examination under oath.

 

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.

MAKE PRUDENT DECISIONS REGARDING YOUR HURRICANE IRMA PROPERTY DAMAGE CLAIMS

shutterstock_710399056Hurricane Irma barreled down on us with all of her forceful winds and torrential rains.  She was scary and relentless.  There was mass evacuation.  Commercial flights were booked.  Trains were booked.  There was gridlock with the concern as to whether gas would even be available.  There were many people that did not evacuate, uncertain as to the eventual path Irma would take.   Originally projecting an easterly course, people on the east coast evacuated to the west coast, central Florida or out-of-state.   She then shifted to a westerly course forcing people on the west coast to evacuate to the east coast, central Florida, or out-of-state.  It was chaos stemming from the total unpredictability of Mother Nature.  It was chaos stemming from the dreadful images of Hurricane Harvey.  Mother Nature and all of her uncertainty is undoubtedly frightening, as proven by her devastation throughout the amazing state of Florida.

  

We are fortunate.  We made it through her wrath.  We have our life and our health. This is the most important.  I repeat — the most important.  Sure, there may be property damage at our house or in our community, but it could always be worse.  I repeat again — it could always be worse.  Assets are replaceable.  Life and health is not replaceable. 

 

When it comes to property damage, perspective is important.   Do not forget perspective.  Please do not engage in an emotional knee jerk reaction and hire the first person that comes your way to assist with the damage and fallout of Irma.  Disaster unfortunately causes others and the unqualified to prey on vulnerabilities.  Take a deep breath and do not neglect to digest your damage and do your due diligence on your course of action and hiring someone you will trust and know will assist in your needs.  Here are some tips I encourage:

 

1) Survey the damage.  After you have initially digested and assessed the damage, do another walk-through of your property and survey and notate the damage you are observing.  Either get a pen and pad and write down your assessment or use your phone, ipad, or laptop to memorialize your observations.

2) Persuasively photograph the damage Sure, everyone tells you to do this.  But, I am telling you to look at the photos you take to ensure you are capturing the damage to the best of your ability.  This means to focus on the elevation of your photo and the proximity of your camera or phone (in the case of a camera phone) to the damage or item you are capturing.  The reason for this is to persuasively capture the damage – take photos from various elevations, angles, and distances to capture the water damage and hurricane-caused damage.   Correlate the photo with your written survey.  If you use a camera that is not a camera phone, date stamp the photograph.

3)  Persuasively video the damage.  Similar to above, if you have a systemic leak, do not just photograph that leak.  Take a video of it that captures the water intrusion and movement of the leak.  Correlate your video with your written survey.  You can also take a video of the damage and narrate that damage as you are observing it. 

4) Obtain a copy, if you can, of your property insurance policy or your declaration page so that you can submit a claim ASAP.  If you have a property insurance policy, have this handy.  Insurance is complex and it is always advisable that you work with a professional when submitting a claim under your policy for hurricane-related damage.   You will want to submit an insurance claim soon to report the damage caused by Irma.  Your property insurer is anticipating claims caused by Irma.

5) Hire a trustworthy and qualified professional.  There will be a lot of lawyers and/or public adjusters soliciting your business.  Lots of them.  They will be offering to help.  Some will have good intentions. Others will not.  They will want you to pay them a contingency percentage of anything you receive from your property insurer (oftentimes, a minimum of 20% or more based on the issue).   You want someone QUALIFIED and you can TRUST – that you know will not take advantage of the situation and will keep you informed and give you the best advice so that you can make the most informed decisions.  This is very important and based on the severity of the damage you may want to explore different options to compensate a professional.

6)  If you hire a contractor, make sure they are licensed.  If you hire a contractor to implement immediate repairs and remediate water intrusion, make sure they are licensed and read what you sign.  A reason to engage a professional is to ensure you are properly notifying your property insurer and you are not being taken advantage of by hiring a qualified professional.  Also, make sure you save all contracts, invoices, and payments you make to preserve a basis for reimbursement from your property insurer.  

7)  Do not unilaterally discard any damaged contents or otherwise.  Do not start throwing things away or discarding damage before you engage in items 1 – 5 above.  A reason you want to hire a professional is so that you do not prejudice your rights by discarding potential evidence before notifying your insurer. 

 

 

The key is not to act haphazardly based on your emotional reaction to the damage. I know it is emotional.  I get it.  But, because it is emotional, you want to make sure that you are implementing prudent decisions moving forward to maximize your property insurance.  You want to make sure you are implementing a path that benefits 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.