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.

ILLUSORY INSURANCE COVERAGE: REAL OR UNREAL?

shutterstock_585394823In insurance coverage declaratory relief actions, there are times an insured will argue that the insurance policy coverage is illusory.  Typically, an insured will raise this illusory argument if its insurer is denying coverage based on an exclusion or limitation in the policy.  If a court agrees and deems the coverage illusory, the court will construe the policy to afford coverage to the insured.  This is the obvious value of the argument: coverage!

 

A policy is illusory only if there is an internal contradiction that completely negates the coverage it expresses to provide.”  The Warwick Corp. v. Turetsky, 42 Fla.L.Weekly D1797a (Fla. 4th DCA 2017).    Thus, if a policy grants coverage in one section but then excludes the same coverage in another section, the coverage would be deemed illusory.  Id. quoting Tire Kingdom, Inc. v. First S. Ins. Co., 573 So.2d 885, 887 (Fla. 3d DCA 1990).  An illusory policy was found in the following examples: (a) a policy covered certain intentional torts but then excluded intended acts; (b) a policy covered advertising injury but elsewhere excluded advertising injury; and (c) a policy covered parasailing but excluded watercrafts.  Id. (citations omitted). In all examples, coverage in the policy was completely swallowed up by an exclusion rendering the coverage illusory.  Stated differently, coverage was completely contradicted by an exclusion in the policy rendering the policy absurd.

 

However, if an exclusion or limitation in the policy does not entirely swallow up the coverage, the policy is not illusory.  The Warwick Corp., supra.  For example, if a policy covers advertising injury but excludes advertising injury caused by a violation of law, the coverage is not illusory.   The exclusion does not completely swallow up the coverage as it only excludes advertising injury cased by a violation of law.  Id. (citation omitted). 

 

In The Warwick Corp., the insured argued that the excess commercial property insurance policy that covered four hotels was illusory because its coverage was limited to the value of the hotel, which equaled the amount payable under the primary property insurance policy.  Although the court acknowledged that it would be very rare that the excess policy would ever be triggered for one of the hotels, it held that the policy was not illusory because the limitation did not completely swallow up the coverage (as there was an unlikely circumstance that could trigger coverage for the hotel).  Additionally, the court noted that the insured was a sophisticated entity that paid a minimum premium for minimum coverage under the excess policy for the hotel, meaning it elected to buy the policy and coverage it bought which is a choice it cannot change after-the-fact.

 

As you know from reading my prior posts, insurance coverage is important so make sure you know what risks are covered and what risks are not for your business interests.

 

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.