Do you have Insurance for Construction Equipment Damaged at a Project Site?

Are you a contractor that utilizes large equipment such as a crane for purposes of your construction operations?  If so, is the equipment owned or leased from an equipment supplier?  Assuming you utilize such equipment, have you considered appropriate insurance to protect your interests in the event that equipment got damaged? If not, you should as that equipment, as you know, is expensive!

Please review this article that discusses insurance for equipment. This case discusses how a crane damaged on a project site during construction was not covered by a builder’s risk policy since the policy excludes coverage for equipment that will NOT become a permanent part of the structure.  This, however, does not mean that other insurance does not apply to cover the equipment.  

Insurance is an important part of risk management.  If you own or lease equipment, then making sure you have the right insurance to insure against foreseen risks is very important.  

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.

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Question of Fact whether Water Loss Occurred During the First 14 Days of Leak

Many property insurance policies have an exclusion regarding loss caused by a repeated leakage of water over a period of 14 days or more.  Think of a leak with a plumbing system and that leak is continuous over a period of 14 days or more.  Consider a leak in a vacation home or when you are out of town…a leak that you would not readily discover.  In recent decisions regarding this exclusion, it has been found that nothing in this exclusion bars water loss that occurs during the first 14 days.  While loss that occurs on the 14th day and after would be excluded, loss that occurs during the first 14 days could be covered.  This means the insured will have an expert testify the loss, or most of it, occurred during the first 14 days and the insurer will have an expert to testify the loss occurred on the 14th day and after.  This is a nice decision for insureds as this exclusion becomes a question of fact where it is likely the jury will find water loss occurred during the first 14 days from a continuous leak.  For more on this issue, please check here.

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.

 

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Design Professional’s Contractual Duty to Defend Obligation

Design professionals are oftentimes reluctant to contractually agree to defend their client (e.g., the owner) from claims arising from their negligence.  The reason for this is typically twofold: (1) their professional liability policy does not permit the owner to be an additional insured to insure the owner from claims arising from the design professional’s negligence and (2) their professional liability policy does not cover this contractual obligation.  If there is no insurance to cover this contractual defense obligation, this means the design professional has to come out of pocket to cover the defense costs, which can be exorbitant based on the nature of the claim.

However, a relatively new product has hit the market catered to design professionals known as Contractual Defense Protection. Unlike typical insurance where there is a deductible, with this product, there is no deductible.  Rather, it splits the costs of defense with the design professional-insured (through a coinsurance clause) based on an 80/20 split, where the design professional is responsible for 20% of the defense costs up to a per-claim cap. This is certainly better than the alternative where the design professional is contractually liable for 100% of the costs.  

For more information on this product, please review this article. This article explains the Contractual Defense Protection product and the rationale behind the product to cover a design professional’s contractual duty to defend obligation.

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.

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Don’t Let YOUR Property Insurer Argue Untimely Notice Prejudiced Its Rights

Remember, if you sustain a property loss due to a casualty, notify your property insurer.  Don’t remediate the damage and then after-the-fact notify your insurer.  If you do, the insurer will claim the lack of timely notice prejudiced its rights to investigate the claim, and, particularly, prejudiced its rights in determining the cause of the loss, the extent of the loss, and the costs to repair.  If an insurer’s rights are prejudiced, this could result in a forfeiture of otherwise valid coverage under the property insurance policy.

If an insured breaches the notice provision of his homeowner’s insurance policy, “prejudice to the insurer will be presumed, but may be rebutted by a showing that the insurer has not been prejudiced by the lack of notice.” A notice of damage is a pre-condition to a claim.  The insured has the burden to show the lack of prejudice if its insurer lost the opportunity to investigate the facts of the claim.  “Whether the presumption of prejudice to the insurer has been overcome is ‘ordinarily … a separate issue of fact.’ ”  

De La Rosa v. Florida Peninsula Ins. Co., 2018 WL 2246781, *3 (Fla. 4th DCA 2018) (internal citations omitted).  

In De La Rosa, an insured noticed water backing up in his shower and seeping into his bathroom floor.  He contacted a plumbing company to fix the cause of the water back-up.   He later remediated the water damage in his bathroom.  Afterwords, and more than a year after the water back-up, the insured notified his insurer.  Guess what?  You guessed it.  The insurer argued that the untimely notice prejudiced its rights.  Think about it.  The insured notified his insurer long after the cause of loss was fixed and after he remediated the water damage.  The insured engaged an engineer and adjuster to perform an after-the-fact assessment to opine as to the cause of loss and extent of damage but the trial court, as affirmed by the appellate court, held this did not rebut the presumption of prejudice to the insurer.  The insurer was precluded from investigating the extent of the loss, specifically the loss at the time of the incident.  This prevented the insurer from being able to assess the cost of repairs, i.e., its rights were prejudiced. Thus, the insured was not afforded coverage under his property insurance policy. 

Notify your property insurer.  Having your insurer argue it was prejudiced due to untimely notice is an avoidable argument.

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.

 

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Insured Responsible for Paying Deductible when Insurer Elects Right to Repair

There are property (homeowner) insurance policies that contain right to repair clauses.  These right to repair clauses give the insurer the option to repair the loss with its preferred contractor.  Some insurers even have a captive restoration contractor that serves as its preferred contractor.  Although such right to repair clauses are enforceable, there still should be an agreement as to to the scope of repairs.  The insured should ask the insurer the details associated with the scope of repairs and there ideally should be an agreement as to the scope.  When an insurer elects this right to repair, technically, the insurer is assuming responsibility for the repairs being done properly.   

If an insurer elects the right to repair option, the insured is still responsible for the deductible required by the policy.  The insured’s obligation to pay the deductible is not eliminated when the insurer elects to repair the loss per the right to repair clause in the policy.  See Ganzenmuller v. Omega Insurance Company, 43 Fla.L.Weekly D948e (Fla. 2d DCA 2018).

If you have concerns when an insurer elects its right to repair, make sure to consult with legal counsel that understands the issues involved when an insurer makes such election and assumes responsibility for the repairs.

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.

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Insurer’s Claim File Not Discoverable in Insurance Coverage Dispute

In an insurance coverage dispute, an insurer’s claim file is not discoverable.  Typically, this is protected as work product and/or not relevant to the issues underlying coverage.  And this is true — the claims file is NOT relevant to the determination of coverage or damages.

 An insurer’s claim would be discoverable in a bad faith dispute against an insurer, but before you can institute a bad faith claim, you have to establish coverage, hence the insurance coverage dispute.  

Recently, in Homeowner’s Choice Property and Casualty Ins. Co., Inc. v. Avila, Fla.L.Weekly D885a (Fla. 3d DCA 2018), the Third District Court of Appeal affirmed, relying on a number of cases discussing this very issue, that an insurer’s claim file is not discoverable in an insurance coverage dispute.  This case dealt with a first-party property insurance dispute where the trial court compelled documents in an insurer’s claim file to be produced to the insured.  The Third District, however, granted the insurer’s petition for a writ of certiorari and quashed the trial court’s order finding this documentation was only discoverable in a bad faith action, not an insurance coverage dispute.  It is not there there is a “claims file privilege,” but an insurer’s claim file is not relevant and contains an insurer’s confidential work product not applicable in the underlying coverage dispute.  This is summed up nicely in a concurring opinion in this case:

In addition to work product, claims files usually contain confidential and proprietary claims-handling materials such as adjuster’s notes; reserves placed on the claim; activity logs; underwriting documents; emails and correspondence; documents related to adjusting or denying the claim; business policies; claims handling manuals, policies or guidelines; and more. These claims handling materials, while discoverable in a cause of action alleging the insurer adjusted a claim in bad faith, are not discoverable in a straightforward first-party or third-party claim for damages based upon the policy. As the Supreme Court has explained, these materials “are not relevant to the only issues involved, those of coverage and damages.” Allstate Indem. Co. v. Ruiz, 899 So. 2d 1121, 1129 (Fla. 2005). See Gov’t Employees Ins. Co. v. Rodriguez, 960 So. 2d 794, 796 (Fla. 3d DCA 2007) (holding in such cases claims files are “immaterial”); State Farm Fire & Cas. Co. v. Valido, 662 So. 2d 1012, 1013 (Fla. 3d DCA 1995) (holding “claim files, manuals, guidelines and documents concerning its claim handling procedures [are] irrelevant to [a] first party dispute”) (emphasis added).

Because claims handling materials are not relevant and material in an action by an insured against the insurer for simple damages and breach of contract when a potential bad faith claim is not ripe, and because these materials are confidential and proprietary, an order requiring their production is properly quashed by certiorari. See, e.g., State Farm Mut. Auto. Ins. Co. v. Premier Diagnostic Ctrs., LLC, 185 So. 3d 575, 576 (Fla. 3d DCA 2016); Castle Key Ins. Co. v. Benitez, 124 So. 3d 379, 380 (Fla. 3d DCA 2013); State Farm Fla. Ins. Co. v. Desai, 106 So. 3d 5, 6 (Fla. 3d DCA 2013).

Homeowner’s Choice Property and Casualty Ins. Co., Inc., supra (Logue, J., concurring).

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.

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Liability Insurer’s Duty to Defend Triggered by Allegations in Complaint

A liability insurer’s duty to defend its insured is triggered by the allegations in the complaint.  You probably already know this from reading a number of other articles on an insurer’s duty to defend.  A recent federal district court opinion out of the Southern District of Florida in Philadelphia Indemnity Insurance Company v. Florida Memorial University, 2018 WL 1737641, *3 (S.D.Fla. 2018), contains a concise discussion, supported by applicable case law, on this point I find worthy of recitation:

In Florida, in determining an insurer’s duty to defend, a court must look no further than “the allegations contained within the four corners of the complaint in the underlying action against the insured.” Philadelphia Indem. Ins. Co. v. Yachtman’s Inn Condo Ass’n, Inc., 595 F.Supp.2d 1319, 1322 (S.D. Fla. 2009) (King, J.); Auto Owners Ins. Co. v. Travelers Cas. & Sur. Co., 227 F.Supp.2d 1248, 1258 (M.D. Fla. 2002) (even where “ ‘actual facts’ developed in the discovery process or otherwise show that there is potential coverage under the insurance policy, the duty to defend is still not triggered”); Chicago Title Ins. Co. v. CV Reit, Inc., 588 So.2d 1075, 1076 (Fla. 4th DCA 1991) (“conclusions drawn by the insured based upon a theory of liability which has not been pled” do not trigger coverage).
On the other hand, “[w]here the complaint against the insured alleges any facts which actually, or even potentially, fall within the scope of coverage under the policy, the insurer is obligated to defend the entire suit.” Yachtman’s Inn, 595 F.Supp.2d at 1322. Conversely, “an insurer is relieved of its duty to defend if the alleged facts and legal theories do not fall within a policy’s coverage.” Wackenhut Servs., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 15 F.Supp.2d 1314, 1321 (S.D. Fla. 1998) (King, J.). Also, because “the duty to defend is much broader than the duty to indemnify,” “a court’s determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify.” Yachtman’s Inn, 595 F.Supp.2d at 1322.
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If you are dealing with an issue with your liability insurer where your insurer refuses to defend you in an underlying suit, make sure you consult counsel to best preserve your rights moving forward.  This may include requesting the plaintiff amend allegations in its lawsuit, it may require initiating an action for declaratory relief, or it may result in you considering whether to utilize a Coblentz agreement
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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.

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Expert Opinions in Insurance Coverage Disputes

Insurance coverage disputes may result in expert witnesses.  An expert is used to help determine the cause of the loss or the damages covered under the policy.  But, just because you, an insured, have an expert opinion that says “X” does not mean the insurer will not have an expert opinion that says “Y.”  Competing expert opinions are part of the process and experts do not always agree on the cause of the loss or the quantum of covered damages.   An example of competing expert opinions in a property insurance dispute is discussed here.  When it comes to experts, in general, the credibility of an expert is always an issue. This is true when there are competing expert opinions — which expert is the most believable.  

Consider the expert you hire for credibility purposes, the opinion the expert provides for credibility purposes, and the merit of any opinion from a competing expert.  Expert witnesses are an important part of disputes dealing with complicated issues and oftentimes cases hinge on the expert opinion and credibility of that opinion.

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.

 

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Insurer’s Payment AFTER Expiration of 60-Day Cure Period from Civil Remedy Notice can Trigger Bad Faith

In order to assert a first-party bad faith claim against your insurer, you must  file a Civil Remedy Notice identifying the statutory violations.  This gives the insurer 60 days to cure the violations.  

What happens if the insurer cures the violations after the 60 days?  For example, what if the insurer pays the claim after the expiration of the 60 days?  

A recent case involving a first-party property insurance policy held that this fact can trigger a bad faith claim because the payment of the claim AFTER the 60 days supports the determination of coverage and damages under the policy.  This ruling makes it all the more important for an insurer to treat the 60 day cure period with seriousness.  Because if it cures the violations after the cure period and pays the claim without obtaining a release from the insured, even if this occurs pre-suit, the insurer can be exposed to a statutory bad faith lawsuit.  

Read this article for more information on this case and issue. 

 

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.

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Injured Parties Must Comply with Florida’s Nonjoinder Statute

When it comes to filing a claim against another’s liability insurer, injured parties sometimes try to improperly put the proverbial cart before the horse.  

You CANNOT sue another’s liability insurer (a policy you are not insured under) until you get a verdict / judgment or enter into a settlement against the insured.  This is statutory and embodied in what is commonly known as Florida’s nonjoinder statute.  This applies to third-party claims which are claims where you, an injured party, are suing another perhaps for purposes of their liability insurance coverage but you are not an insured under the policy. 

For instance, in an automobile negligence action, an injured party moved to amend his complaint to assert a claim against the defendant tortfeasor’s automobile liability insurer.  The injured party wanted to assert a third-party bad faith claim against the insurer. Although the trial court surprisingly allowed this to occur, the appellate court granted a petition for writ of certiorari and quashed the trial court’s order:

By its terms, the nonjoinder statute, and its mandatory condition precedent, is inapplicable to first-party bad-faith claims; it is instead limited to cases, such as this, which involve a third party (such as Martinez [the plaintiff], who is not an insured under the policy) seeking to join an insurer in the underlying action before Martinez “first obtain[s] a settlement or verdict against a person [such as Guevara] who is an insured under the terms of the policy. . . .” … Unlike first-party claims, premature and unaccrued third-party claims must be evaluated in light of the legislative mandate established by the plain language of the nonjoinder statute. That legislative mandate precludes Martinez from maintaining any cause of action against GEICO — indeed, precludes even the accrual of such a cause of action — until Martinez satisfies the compulsory condition precedent of obtaining a settlement or verdict against Guevara. 

Geico General Ins. Co. v. Martinez, 43 Fla.L.Weekly D86a (Fla.3d DCA 2018).

Stated simply, the injured party could NOT sue the tortfeasor’s (party that caused the automobile accident) liability insurer without first obtaining a verdict / judgment or entering into a settlement with the tortfeasor.  The injured party was not an insured under the tortfeasor’s liability policy and, thus, had to comply with Florida’s nonjoinder statute.

As an injured party, you always, and I mean always, want to consider applicable, available liability insurance.  In doing so, however, this does not mean you get to put the proverbial cart before the horse and sue the tortfeasor’s liability insurance carrier right off the bat.

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.i

 

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