The Second Department, Appellate Division, for the Supreme Court of New York, recently held in a matter of first impression, that an insurance company with a duty to defend may not recover defense costs after a determination that no duty to indemnify or further defend exists—even though the insurer expressly reserved its right to recoup such defense costs—unless the policy explicitly provides for such recovery. See American W. Home Ins. Co. v. Gjonaj Realty & Mgt. Co., 2018-03435, 2020 WL 7767944 (2d Dept., Dec. 30, 2020). Continue Reading New York Court Rules Duty to Defend Policies Must Explicitly Provide for Recoupment of Defense Costs

The legal media have been inundated with articles by lawyers who represent policyholders and insurance companies discussing business interruption claims arising from the COVID-19 pandemic. Some of this discussion has carried over into the mainstream media, including a recent Wall Street Journal article. Much of the discussion focuses on two issues. First, property insurance policies require “direct physical loss or damage” to property (either to the insured property, or non-insured property within a certain distance of the insured property for a coverage called “civil authority”). A virus has never been found to cause damage to property. Second, many (but not all) of these policies have a virus exclusion. I’m not going to write more here about those issues. Plenty of electronic ink has been spilled on them already. But I haven’t seen anyone write about another exclusion that seems likely to apply to these claims if policyholders can somehow convince a court that there was “direct physical loss or damage” to property: the ordinance or law exclusion. Continue Reading COVID-19 Business Interruption Insurance Claims – Don’t Overlook the Ordinance Or Law Exclusion

One practice that has plagued the insurance industry in recent years has been contractors soliciting homeowners to make insurance claims after a hailstorm, for example, and then obtaining an assignment of rights to the claim and pursuing litigation against the insurer. The Iowa Supreme Court recently ruled that a contractor’s attempt to obtain such an assignment of rights was void because the contractor was acting as an unlicensed public adjuster, in violation of state law. The line of argument made here may be useful to insurers in other jurisdictions faced with abusive practices by contractors. Continue Reading Assignments of Benefits Under Homeowners Insurance Policies: Iowa Supreme Court Rules that Assignment Was Void Because Contractor Was Acting as Unlicensed Public Adjuster

Although we cover a wide variety of topics and issues on this blog, one issue that recurs with some frequency is the appropriate application of suit limitation provisions that are found in most property policies. The latest case to confirm that suit limitation provisions are valid and enforceable, and to highlight the peril an insured may encounter by not recognizing or addressing those provisions during the course of a claim, is Consolidated Rail Corp. v. Aspen Spec. Ins. Co., et al., 2019 WL 2417704 (D.N.J. June 10, 2019). That case involved a dispute between Consolidated Rail Corporation, otherwise known as “Conrail,” and Hudson Specialty Insurance Company (among other defendants), one of Conrail’s three excess layer insurance carriers. Continue Reading The District of New Jersey Affirms Application of Suit Limitation Provision in Train Derailment

A new law represents a major step forward to remedy Florida’s assignment of benefits (“AOB”) crisis, which Florida Governor Ron DeSantis has described as a “racket” in recent years. On Thursday May 23, 2019, Governor DeSantis signed House Bill 7065, which addresses the abuse of post-loss AOBs for residential and commercial property insurance claims, by (among other things): Continue Reading New Statutory Framework Confronts Florida’s AOB Crisis

The United States District Court for the Southern District of New York recently granted an insurer’s motion for summary judgment in a case arising from Superstorm Sandy based on unambiguous policy language providing a significantly lower limit of liability for losses resulting from flood damage. In New York University v. Factory Mutual Insurance Co., 2019 U.S. Dist. LEXIS 45105 (S.D.N.Y. March 19, 2019), the court agreed with Factory Mutual (FM) that the policy’s $250 million and $40 million sublimits for flood damages applied to New York University’s (NYU) claim, rather than the policy’s $1.85 billion overall limit. Continue Reading The Southern District Finds Unambiguous Policy Language Controls NYU’s Superstorm Sandy Claim

In a recent decision arising out of Superstorm Sandy, the United States District Court for the District of New Jersey confirmed the enforceability of anti-concurrent causation provisions.  Zero Barnegat Bay, LLC v. Lexington Ins. Co., No. 14-cv-1716, 2019 U.S. Dist. LEXIS 43625 (D.N.J. Mar. 18, 2019). Continue Reading District of New Jersey Applies Anti-Concurrent Causation Provision to Superstorm Sandy Claim

While issues of fact can preclude summary judgment in some cases involving failure to cooperate and misrepresentation, a New York federal court recently granted summary judgment to an insurer in this context. In D’Andrea v. Encompass Ins. Co. of Am., No. 15-CV-467-MJR, 2018 U.S. Dist. LEXIS 146446, 2018 WL 4095098 (W.D.N.Y. Aug. 28, 2018), the insured was seeking property insurance coverage for a fire loss that occurred at a two-unit residence purportedly owned by the insured and rented to tenants. In submitting his insurance claim, the insured provided three sworn statements in proof of loss, including one for the loss of the dwelling and one for loss of use of the dwelling. The dwelling proof of loss requested $225,000 in damages and listed the insured as the owner of the premises. Continue Reading Failure to Cooperate and Misrepresentation: New York Federal Court Grants Summary Judgment Finding Insured Explanations for False Statements “Dubious”

A New York trial court recently granted an insurer’s motion for summary judgment pursuant to the “Residence Premises Condition” contained in a homeowner’s insurance policy.  Aschmoneit v. Adirondack Insurance Exchange, 2018 N.Y. LEXIS 3418 (August 7, 2018), The court found that the insured did not reside at the home despite an affidavit asserting that he spent “most weekends” making repairs to the home. Continue Reading Residence Premises Condition: New York Trial Court Grants Summary Judgment Based On a Finding of A “Feigned” Affidavit

Under New Jersey law, an insurer cannot be held liable for bad faith in denying an insurance claim if the claim is “fairly debatable.” Therefore, unless a plaintiff can establish a right to summary judgment on the underlying cause of action for breach of contract, the coverage denial is considered “fairly debatable” and the court must dismiss the bad faith claim. See Pickett v. Lloyd’s, 131 N.J. 457, 473 (1993); Tarsio v. Provident Ins. Co., 108 F. Supp. 2d 397, 401 (D.N.J. 2000). Continue Reading District of New Jersey Finds Post-Denial Communications By Insurer’s Counsel Insufficient to Sustain Bad Faith Claim