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BT Policyholder Protection Blog
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17 Oct 2017 Insurance Carriers Exclude Color Matching Requirements from Policies

  The summer of 2017 saw a number of severe storms in the Midwest, with resulting insurance claims. As policyholders have made those claims, some have been surprised to see new provisions in their insurance contracts.   Things are not always black and white in insurance policies, especially when it comes to the impact of a Minnesota court decision that required insurers providing replacement cost coverage to reasonably match replacement siding. Since the Minnesota Supreme Court issued its opinion in Cedar Bluff Townhome Condominium Association, Inc. v. American Family Mutual Insurance Company, insurers have begun inserting language in their policies that expressly precludes the coverage requirement of matching based upon color, a change in product specifications, or other factors, in an attempt to circumvent this…

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08 Sep 2017 Anti-Concurrent Causation Clauses: Why the Value of Your Property Coverage May Depend on Your State

A powerful storm pummels your city with high winds and heavy rains. After more than two days of intense wind and rain, the saturated hill behind your factory finally gives way and crashes into it. The building is severely damaged and your business operations are put on hold pending repairs. You need insurance money fast and file a claim with your property carrier.   Even though the policy doesn’t exclude property damage caused by wind or rain, it does contain an exclusion for earth movement “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” The carrier denies coverage because of the earth movement exclusion.  Is the carrier right? As it turns out, the answer may depend on…

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15 Sep 2015 Property Damage Coverage Covers More Than Property Damage

Carriers employ many time-tested strategies to eliminate, or at least limit, their liability for covered claims. Policyholders must know their rights, and understand that the law is often on their side, if they want to enforce the policy as written and obtain the benefits for which they paid premiums and to which they are entitled.   One coverage-avoidance tactic we have seen carriers employ time and again is to try to limit their obligations for claims that allege both property damage, and other types of consequential damage such as lost profits or loss of reputation flowing from the alleged property damage. Carriers will try to avoid paying for the consequential losses – which can be a significant part of the value of the claim –…

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07 Aug 2015 MORE ON INSURERS’ FLOAT – AN ILLUSTRATION

My March 24, 2015, post discussed the “true value” of a property/casualty insurer’s float, which includes not only the return the insurer makes on the money borrowed from its policyholders to pay future claims (i.e., total premiums), but also the avoided cost of borrowing that money (i.e., the “use value”). A few years ago I illustrated this point to the Minnesota legislature by compiling the following data on several insurers during a 15-year period, showing that the true value of the insurers’ float during that period averaged 24.1 percent per year – substantially higher than their average reported return on investment of 13.8 percent per year, and far higher than the single-digit statutory rate of prejudgment interest in a number of states that promotes insurer…

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24 Mar 2015 THE TRUE VALUE OF INSURERS’ FLOAT

When a policyholder is forced to engage in several years of litigation over an insurer’s denial of property/casualty coverage, and ultimately prevails in proving the denial was erroneous, is it fair that the insurer is required to pay only what it owed in the first place? Should the insurer also be required to disgorge the true value of the money it kept during those years? Some states address this issue by imposing double-digit prejudgment interest rates on the insurer, thereby helping to reduce the insurer’s incentive to delay resolution of the claim. In other states, however, with relatively nominal prejudgment interest rates, the insurer is rewarded by delay.   In considering this issue, it’s important to understand the true value of a property/casualty insurer’s “float.”…

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05 Jan 2015 Color Match Arrives (Again) in Minnesota

Last month, the Minnesota Supreme Court issued an opinion addressing an insurer’s obligation to match replacement materials after homes suffered storm damage. The opinion in Cedar Bluff Townhome Condominium Association, Inc. v. American Family Mutual Insurance Company, –N.W.2d–, No. A13-0124, 2014 WL 7156914 (Minn. Dec. 17, 2014) stemmed from a hail storm in October 2011 that damaged buildings in the Cedar Bluff townhome neighborhood.   Cedar Buff sought coverage for complete replacement of the buildings’ siding. However, American Family (AmFam) took the position that the policy only required replacement of the individual panels actually damaged by the storm, even though the replacement panels would be slightly darker or lighter than the original panels. The district court granted summary judgment to AmFam, finding that the policy…

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27 Jun 2014 Minnesota’s Bad Faith and Insurance Interest Statutes Instrumental in Recovery for Barnes’ Client

  In February of this year, Christopher Yetka and Barnes & Thornburg obtained a $2,200,000 jury verdict against Delos Insurance Company in a hail and wind loss coverage claim on behalf of The Landings Homeowners Association, Inc.  The Landings is a nineteen building, fifty-eight unit, townhome complex between Target Field and the Mississippi River in downtown Minneapolis. The Landings purchased a replacement cost property policy from Delos that was in effect at the time a storm hit on May 10, 2011.  The storm was so severe that it halted the Twins game that was playing just a few blocks away, and generated hail up to two inches in diameter. The Landing’s expert testified that all of the roofs at the Landings were so heavily damaged…

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29 Apr 2014 Indiana Courts Wrestle with “Work” v. “No-Work” Distinction in Waiver of Subrogation Cases

When confronted with the argument that a party has waived its claims under an AIA standard waiver of subrogation provision, Indiana has traditionally applied a “Work” vs. ”No-Work” distinction when evaluating whether a project owner has waived its claims. Despite prior case law applying this distinction, on Feb. 14, 2014, the Indiana Court of Appeals, in Bd. of Comm’rs of the Cnty. of Jefferson v. Teton Corp., 3 N.E.3d 556 (Ind. Ct. App. 2014), held that a work vs. no-work distinction should not apply. Because the project owner failed to secure the insurance required under the contract, failed to give notice to the general contractor of the decision not to secure the insurance, and waived its subrogation claims, the court held the owner breached the…

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