Repeated Seepage of Water Over Period of 14 Days or More

There is an exclusion in property insurance policies dealing with the repeated seepage or leakage of water over a period of 14 days or more.   For example, if a pipe bursts and there is a repeated seepage of water for 14 days or more this exclusion comes into play.  

Certainly, this can be an issue if the pipe bursts when you are out of town and do not discover the issue until you return.  

A recent case holds that while this exclusion may apply, it does not apply to bar coverage to the extent of loss during the first 13 days of water seepage.  In other words, covered damages would be limited to damages that occurs during the first 13 days after the pipe bursts as determined by the trier of fact.  This is huge from an insured’s standpoint.  Huge.

If you have a question or issue regarding maximizing insurance coverage under a property insurance policy, consult a lawyer. A lawyer can help couch the claim in light of exclusions in the policy. 

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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An Insured should be Cautious when Receiving an Insurer’s Proposal for Settlement

As an insured, when you are suing an insurance carrier you are moving for attorney’s fees to the extent you prevail in the coverage lawsuit.  For an insurer to counteract your right to fees, the insurer may serve a proposal for settlement, which is a procedural vehicle for an insurer to preserve its right to obtain fees from the insured in the event the proposal for settlement is not accepted.  Be cautious when it comes to an insurer’s proposal for settlement because if the insurer prevails you could be liable for the insurer’s attorney’s fees.  Do not automatically assume the insurer’s proposal for settlement is without good faith.

In a property insurance coverage case, Mount Vernon Fire Ins. Co. v. New Moon Management, Inc., 43 Fla. L. Weekly D395a (Fla. 3d DCA 2018), the insured filed a coverage suit for water damage.  The insurer had denied the insurer’s claim due to coverage exclusions in the policy. After two years of litigation and discovery, the insurer served a proposal for settlement for $1,000.  The insured, of course, did not accept this nominal amount.  The insurer also moved for summary judgment and guess what? The insurer prevailed meaning it now had a basis to recover attorney’s fees based on the insured not accepting the proposal for settlement. The insured argued that the insurer did not make the proposal for settlement in good faith and the trial court agreed based on the $1,000 nominal amount.  

But, on appeal, the Third District reversed finding that after two years of litigation and discovery and moving for summary judgment shortly after serving the proposal for settlement, the insurer had an understanding of its risk exposure.  And, based on this risk exposure, the insurer found its risk limited hence the $1,000 proposal for settlement.  Stated differently, the Third District held that the insurer had a reasonable basis at the time it made its $1,000 offer to conclude that its liability was limited.  Based on this  reasonable basis, the Third District found that the insurer was entitled to its reasonable attorney’s fees against the insured. 

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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If You are a Contractor that Subcontracts Work, You WANT the Subcontractor Exception to the “Your Work” Exclusion

As a contractor you need to appreciate the “your work” exclusion in your CGL policy.  It is an exclusion that will absolutely come into play if there is a latent construction defect claim asserted against you.  You also need to appreciate the subcontractor exception to the “your work” exclusion in your CGL policy.  This is a must-have exception, particularly if you subcontract out portions of your scope of work.  This exception carves out from this exclusion “your work” performed by subcontractors.  

Without this exception, all of your work is excluded as the contractor in this post-completion water intrusion case found out when the court held its CGL insurer had NO duty to defend or indemnify it from the owner’s construction defect claims.  This is a double ouch!!! Not having insurance coverage to defend you in an expensive construction defect case is one thing.  It is another knowing that your insurer has no obligation to pay for any property damage because there is no coverage.  Do the smart thing — consult your insurance broker regarding the “your work” exclusion and the subcontractor exception to this exclusion.  If your policy does not contain the subcontractor exception, consider the harsh implications of what your policy will and will not cover in a latent construction defect 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.

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Presentation on BAD FAITH when Dealing with Property Insurance Claims

Recently, I participated in a webinar relating to bad faith insurance claims when dealing with a first-party property insurance carrier.  A portion of the powerpoint presentation I put on can be seen here.  Please visit the link and review the presentation–you may find it helpful from a caselaw standpoint.

If you are dealing with a property insurance claim, do yourself a favor and hire counsel to make sure your rights moving forward are best preserved.  If you believe your insurer is unreasonably denying your claim or short-changing the amount you believe should be covered, consult counsel today, not tomorrow!

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 should Consider Proposal for Settlement / Offer of Judgment from Insurer

When an insured sues its insurer, the insured seeks its attorney’s fees pursuant to Florida Statute s. 627.428(1).  The statute provides for one-way attorney’s fees in favor of an insured if it obtains a judgment in its favor against its insurer.   If the insurer prevails, on the other hand, the insurer is not entitled to its attorney’s fees pursuant to this statute. As a result, an insurer will typically serve an offer of judgment / proposal for settlement to create an argument to recover its attorney’s fees if it prevails.

In the case of Tower Hill Signature Insurance Company v. Javellana, 42 Fla. L. Weekly D2597a (Fla. 3d DCA 2017), this is exactly what happened. The insured, in a property insurance dispute, sued its property insurer claiming the insurer breached the terms of the insurance contract by failing to pay the actual cash value of covered damage. (Actual cash value is a method used to value an insured’s property by deducting the depreciation value from the replacement cost.) The insured, as is often the case, also included claims for declaratory relief asking the court to render certain declarations relating to the policy. The thrust of the lawsuit, however, was the insured’s claim for monetary damages under its breach of contract claim. During the litigation, the insurer served a proposal for settlement / offer of judgment on the insured to create an argument to recover attorney’s fees. The insured did not accept the proposal.

The jury disagreed with the insured and rendered a verdict in favor of the insurer. The insurer then moved for its attorney’s fees pursuant to the proposal for settlement / offer of judgment it served on the insured. The trial court denied this motion. On appeal, the Third District reversed the trial court on this issue ruling that the insurer was entitled to attorney’s fees pursuant to its proposal. Because the primary relief sought by the insured was monetary damages per its breach of contract count, the insurer’s proposal for settlement / offer of judgment was valid and the insurer’s motion for attorney’s fees should have been granted.

As an insured, consider the risks associated with an insurer’s proposal for settlement.  The risk is simple:  you can potentially be liable for your insurer’s attorney’s fees based on a decision not to accept a proposal for settlement / offer of judgment.  Make sure to consult with your counsel regarding this risk.

 

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 Denial of Coverage Means it Cannot Require You to Comply with Post-Loss Policy Conditions

When it comes to first-party property insurance policies, you want to make sure you comply with post-loss policy conditions in your insurance policy.  This includes agreeing to sit for an examination under oath, providing a sworn statement in proof of loss, or other post-lost conditions the policy requires. Non-compliance with post lost conditions can result in the preclusion of coverage.  On the other hand, if your insurer denies coverage, then the insurer does not get to require you to comply with post-loss policy conditions. The insurer waives the right to require you to comply with post-loss policy conditions if it denies coverage, i.e., takes the position there is no coverage under the policy.  Click here for more information.  Consult an attorney to ensure your rights are protected when it comes to insurance claims.

 

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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An Insured’s Noncompliance with Conditions Precedent Must be Pled Specifically

In an earlier posting I discussed the application of exclusionary language in an automobile liability insurance policy that contained an “other insurance” clause.  In yet another example dealing with an automobile liability insurance policy dealing with uninsured motorist coverage, the policy contained language that stated that if the insured was in a vehicle he/she does not own that is covered under another policy, this policy is excess but only after all other insurance is exhausted.  

In this case, the insured was in a vehicle she did not own and there was coverage under another policy.  The insurer argued that the other insurance policy was primary and because it was not exhausted, there was no uninsured motorist coverage under this policy.  The “other insurance” provision was not satisfied; thus, the insured failed to satisfy conditions precedent.  

However, the appellate court held that the insurer WAIVED the right to argue and rely on this provision because it failed to specifically assert as an affirmative defense that the insured failed to satisfy conditions precedent under the policy.  The defense of noncompliance with a conditions precedent — this this case, the insured’s failure to exhaust the other insurance–must be pled specifically as an affirmative defense.  The insurer’s failure to properly plead this affirmative defense resulted in a waiver of the defense!  See Schoeck v. Allstate Ins. Co., 42 Fla.L.Weekly D2182a (Fla. 2d DCA 2017).

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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Exclusions Bar Coverage even in Automobile Liability Insurance Policies

When an insurer believes it does not owe a duty to indemnify its insured, it is not uncommon that it (1) starts to defend the insured under a reservation of rights and (2) files an action for declaratory relief contending it does not owe its insured the duty to defend and indemnify.  An example of this can be found in the Eleventh Circuit’s opinion dealing with an automobile liability insurance policy in Southern-Owners Ins. Co. v. Easdon Rhodes & Associates, LLC, 2017 WL 4323277 (11th Cir. 2017).   The issue is one that many companies confront when procuring an automobile liability policy, that being whether the company’s policy insures personal automobiles that are insured under separate personal automobile liability policies.

In this case, a company was formed to provide maintenance and construction-related services. One of the  company’s members got into an automobile accident with his personal vehicle.   The member’s personal vehicle struck a motorcycle. The company was one of the defendants sued by the injured motorcyclist in a personal injury lawsuit. The company tendered the lawsuit to its automobile liability insurer. The insurer started to defend under a reservation of rights but then filed an action for declaratory relief contending it is not liable for defending and indemnifying the insured-company.

The company’s policy contained an endorsement that excluded from coverage automobiles where there was other insurance available that afforded similar coverage. The exclusionary language provided that coverage was provided if “you [insured] do not have any other insurance available to you which affords the same or similar coverage.” Since the member was driving his personal vehicle, he did have coverage under his personal automobile liability policy. However, the member’s personal liability policy had significantly lower limits than the company’s policy, i.e., the company had higher limits of insurance.

The Eleventh Circuit, nevertheless, held that the limits of liability were essentially irrelevant because the policies insured the same risk, thus, the member’s personal automobile liability policy was similar coverage. See Southern-Owners Ins. Co., supra, at *5 (“Instead, the Endorsement’s exclusion clause remains solely concerned with whether the other available insurance protects against the same risks as the Endorsement rather than whether it offers the same overall level of protection. If both the Endorsement and the other available policy specifically protect against the same or similar risk at issue, the exclusion clause would apply and eliminate Southern–Owners’ [insurer] obligations under the terms of the Endorsement.”)

There is exclusionary language in all insurance, automobile liability insurance being no different.  Understand the impact of exclusions in your policies.

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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Contingency Fee Risk Multiplier in Insurance Coverage Disputes

Contingency fee arrangements are used outside of personal injury disputes. They are a performance-based attorney’s fees arrangement where the attorney only gets paid if the client gets paid. There are numerous ways such arrangements can be structured, and if interested in learning more about innovative attorney’s fees arrangements, check out my ebook.

 

One advantage of a contingency fee arrangement for the attorney is the potential benefit of a contingency risk multiplier. This is where the court can award a multiplier to the amount of attorney’s fees based on the complexity of the issues that essentially serves as an added bonus to the attorney for handling the dispute on contingency.

 

In a recent insurance coverage dispute whether the insured prevailed, the appellate court held that the insured’s lawyer was not entitled to a contingency fee multiplier because the fee agreement was neither a full contingency nor partial contingency fee agreement. See Florida Farm Bureau Casualty Ins. Co. v. Gray, 42 Fla. L. Weekly D2086 (Fla. 1st DCA 2017). But, in addressing the issue of the contingency fee multiplier, the appellate court delved into a key discussion explaining when the multiplier is applied:

In Florida Patient’s Compensation Fund v. Rowe, 472 So. 2d 1145, 1150-51 (Fla. 1985), the supreme court discussed the “lodestar process” of determining attorney’s fees, the factors to be considered in determining a reasonable fee, and contingency risk factors. The supreme court explained, “Because the attorney working under a contingent fee contract receives no compensation when his client does not prevail, he must charge a client more than the attorney who is guaranteed remuneration for his services.” Id. at 1151. In determining whether a multiplier is necessary, a trial court is to consider: (1) whether the relevant market requires a contingency fee multiplier to obtain competent counsel; (2) whether the attorney was able to mitigate the risk of nonpayment in any way; and (3) whether any of the factors in Rowe are applicable, especially the amount involved, the results obtained, and the type of fee arrangement between the attorney and his client. Standard Guar. Ins. Co. v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990).

***

In Lane v. Head, 566 So. 2d 508, 510 (Fla. 1990), the supreme court explained that one of the purposes of Rowe was to encourage attorneys to take cases under contingency fee arrangements, “thereby making legal services more widely available to those who otherwise could not afford them.” The supreme court explained that a multiplier is within the trial court’s discretion in those instances in which the “contingency-fee arrangement is only partial” because “this policy also will encourage attorneys to provide services to persons who otherwise could not afford the customary legal fee.” Id. at 510-11. 

If you are in an insurance coverage dispute, there are creative ways outside of straight hourly attorney’s fee billing to explore with your counsel.  Don’t be afraid to be creative or consider different options. The value of a full or partial contingency fee arrangement is that it can provide the attorney an opportunity to obtain a contingency fee risk multiplier.  

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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Maybe NOW is the Time to Consider Business Interruption / Income Insurance

After dealing with the fury and unpredictability of Hurricane Irma, are you thinking that now may be the time to procure business interruption / income insurance? If not, maybe you should give it strong consideration. I am sure after dealing with Hurricane Irma or Hurricane Harvey many businesses wish they obtained this insurance.

Think of the income lost due to the natural disaster of a hurricane– from dealing with her potential course to remediating her aftermath, whether wind damage, flood damage, or storm surge damage.   Business interruption  / income insurance can be a crucial insurance product dealing with the risk of a hurricane or natural disaster when factoring how an extended period of lost income could adversely impact your business. Business interruption / income insurance can cover you for actual lost income associated with dealing with a natural disaster. Oftentimes, it is an endorsement to a property insurance policy (called a business income endorsement) which, of course, requires additional premium.  But that is ok, because as with any insurance product, it is a risk worth insuring.  In a nutshell, this type of insurance can cover continued operating expenses as well as documented income (as defined by the policy) that would have been earned but for the natural disaster or peril that shut down your operations. It can also cover relocation expenses. If you do not have this endorsement or rider to your property insurance policy, I suggest you consult with your insurance broker. This can be worthwhile coverage, particularly when you have to deal with the consequences of hurricane damage or the damage from a covered peril.

 

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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