Hunton Insurance Recovery Blog

Last week, just before Hurricane Milton made landfall, Florida state officials issued an emergency decree to all licensed insurance adjusters in the state to protect homeowners against “unfair and deceptive acts” and “post-storm fraud” by insurance carriers. According to The Washington Post, the Florida Department of Financial Services is requiring that all claim adjusters provide an explanation for each change they make to a consumer’s loss estimate, document those changes, and retain all versions of the estimate and identify who made those revisions. When processing claims, adjusters must also use an electronic estimating system that provides an itemized report of all damage, as well as labor, materials, equipment and supplies. Those costs should be consistent with what a contractor or a repair company in that particular area would charge.

The highest court in Massachusetts recently held that term “Flood” and the associated phrase “surface waters,” as used in two all-risk insurance policies, is ambiguous in the context of water that accumulated on a parapet roof and rooftop courtyard, thereby negating the insurers’ attempt to limit coverage to a sublimited coverage for “Flood.” 

Policyholders purchase insurance policies as a safety net, promising financial protection in times of need. However, that safety net can disappear when an insurer rescinds a policy—a devastating consequence for potentially innocent policyholders. We recently published a post following a Fourth Circuit decision addressing this issue. The Ninth Circuit has also addressed this issue, most recently in the decision discussed below.

Exercising its newly expanded jurisdiction that now permits Virginia’s intermediate appellate courts to hear insurance coverage disputes, the Court of Appeals recently reversed a lower court decision that allowed a two-year “Suits Against Us” provision to serve as a basis for an insurer’s refusal to reimburse repair and replacement costs incurred more than two years after the date of loss. Bowman II v. State Farm Fire and Casualty Co., Record No. 1256-22-3 (Nov. 21, 2023). CAV (unpublished opinion).

Major sneaker brands have capitalized on new trends in technology and social media to hype sneaker culture. As sneakers become more popular, sneaker collections increase in value, thus increasing financial exposure for collectors and other entities in the sneaker industry. One might first think of theft, authentication, fire, floods, or market valuation as the general risks associated with sneaker collections. But many sneaker companies have made headlines over the past few years with numerous lawsuits against other sneaker companies and entities with issues ranging from traditional patent battles to exhaustive fights against counterfeiters. Often overlooked by collectors and sneaker companies alike, insurance can and does play a critical role in helping both collectors and companies faced with unexpected liability related to sneaker culture.

Hurricane Idalia is rapidly approaching the west coast of Florida, expected to make landfall as a Category 4 hurricane this morning. While the exact track is still being determined, the storm will leave a path of serious damage in its wake. Now is the time to activate your disaster plan and ensure you have your relevant insurance policies in your possession and that you’ve reviewed critical deadlines. 

The Hunton Insurance Coverage team has put together a webpage of complimentary resources here for you and your company as you prepare to weather the storm, with tips to help your business ...

Hurricane Ian is rapidly approaching the west coast of Florida and is expected to make landfall as a Category 4 hurricane near the Tampa area within the coming days. While the exact track is still being determined, there is a chance the storm may also impact insureds in Georgia and South Carolina. Now is the time to activate your disaster plan and ensure that you have your relevant insurance policies in your possession and that you review them for critical deadlines. 

We put together an alert here with tips to help you and your business mitigate potential storm loss and maximize coverage.

The ...

From IRS rulings that “virtual currency” is taxed as “property” to an SEC lawsuit claiming that digital assets are “securities” under federal law, meteoric growth of the largely unregulated crypto industry has raised numerous questions about whether crypto-related risks are covered by insurance. In the latest example of the intersection of crypto and insurance, a California federal court recently held that cryptocurrency stolen from a Coinbase account did not constitute a covered loss under a homeowner’s insurance policy. The fundamental issue was whether the stolen crypto met the policy’s requirement for “direct physical loss to property” and, more specifically, whether the losses were “physical” in nature. The court ruled against coverage, reasoning that lost control of cryptocurrency is not a direct physical loss as a matter of California law.

Pugs’ button noses and claim recognition
Broad coverage grants and puppies who listen
Insurance policies tied up with strings
These are a few of our favorite things

Earlier this year, New York passed a law addressing dogs and homeowners’ insurance. Some insurers selling homeowners’ insurance policies will decide whether and how to issue coverage based on the type of dog residing with the homeowners. For example, these kinds of dogs may result in lower premiums or more favorable terms than other dogs: ^[1]

In American Reliable Insurance Company v. Lancaster, the Georgia Court of Appeals reversed the denial of a property insurer’s summary judgment motion concerning the insurer’s denial of a fire loss claim.  The basis of the denial was that the policyholders had failed to pay the policy premium.  The policyholders, Charlie and Wanda Lancaster, claimed that they had paid their policy premiums for several years to their insurance agent, Macie Yawn.  In October 2014, American Reliable mailed a renewal notice to the Lancasters notifying them that premium payments had to be made directly to the insurer.  After it did not receive payment from the Lancasters, American Reliable sent them a cancellation notice in December 2014, again notifying them that payments be made directly to the insurer.  The Lancasters denied having received either notice from American Reliable, but the record included a receipt for certificate of mailing.

Pennsylvania’s highest court recently rejected Erie Insurance Exchange’s argument that it had no duty to defend a claim arising out of a shooting because it did not involve an accident, and therefore, there was no “occurrence” under the policy. The court held that the duty to defend was triggered because the underlying allegations were not “patently outside the policy coverage.” This decision can have far reaching effects on other kinds of claims involving intentional conduct.

In the first part of a 3-part series, the Hunton insurance team discusses how policyholders can plan for this year’s hurricane season. Part 2 will address how to prepare a claim after a loss in order to maximize the potential recovery, including by taking photographs of any damage and tracking curfews that affect your operations.  Part 3 will discuss how to prevent denials of pending claims based on suit limitations periods.  The team’s goal is to provide a comprehensive outline that will guide policyholders before and after a loss.

The Georgia Supreme Court ruled this week that First Acceptance Insurance Co. need not pay a $5.3 million excess judgment against its insured, Ronald Jackson.  First Acceptance Ins. Co. of Georgia, Inc. v. Hughes, No. S18G0517, 2019 WL 1103831 (Ga. Mar. 11, 2019), even though Jackson’s insurer could have settled the claim for Jackson’s $50,000 policy limits.

In a March 13, 2019 article appearing in Law360, Hunton Insurance team head, Walter Andrews, explains the adverse impact of a Georgia Supreme Court ruling that attempts to clarify the rules governing settlement of insured liability claims under Georgia law.  As Walter explains, however, the decision stands to hinder settlements and potentially subject innocent insureds to staggering liability beyond that covered by their insurance.  In First Acceptance Ins. Co. of Georgia, Inc. v. Hughes, the Georgia Supreme Court ruled that policyholders must make a “valid offer” – that is, one that contains definite time limits and other terms - before an insurance company is required to settle.  As Walter told Law360, the court took “an overly narrow approach” that is “disturbing and is likely to act as a deterrent to settlements in the future.” He goes on to explain that insurance companies will actually have less incentive to settle, “which means that fewer cases will settle and cases will linger longer in court, which is not in the interests of either the injured parties or the insured defendants.”

Puerto Rico’s dire insurance situation more than a year after Hurricane Maria remains a constant reminder of why policyholders must diligently pursue their property and business interruption claims in the immediate aftermath of a storm.  The numbers are staggering.  On an island the approximate size of Connecticut, Hurricane Maria caused an estimated $100 billion in damage.  According to the Office of the Insurance Commissioner of Puerto Rico, the hurricane resulted in more than 287,000 insurance claims.  Roughly 11,000 of those claims, representing an estimated $2 billion in losses, remain unresolved.

In what appears to be a case of first impression, an Ohio trial court ruled in Kimmelman v. Wayne Insurance Group, that the crypto-currency, Bitcoin, constitutes personal property in the context of a first-party homeowners’ insurance policy and, therefore, its theft would not be subject to the policy’s $200 sublimit for loss of “money.”

Hurricane Florence will affect the U.S. east coast later this week with significant damage to property and resulting business disruption.  Businesses far-removed from the impact zone also will be affected as manufacturing, retail, travel and supply chains, among other industries, are disrupted by the physical damage.  For those in the impact zone, knowing the fundamentals about your property insurance is critical.  For those in remote locations, now is a good time to refresh yourself as well, since post-storm disruptions and losses require prompt notice to insurers and fast action to help mitigate any resulting loss.  A failure on either front could jeopardize coverage.

There was nothing ambiguous in former U.S. Supreme Court Justice David Souter’s ruling in AIG Property Cas. Co. v. Cosby, No. 17-1505 (1st Cir. June 7, 2018), where, sitting by designation, Justice Souter ruled that AIG Property and Casualty Co. (“AIG”) must defend Bill Cosby in suits brought by eight women alleging that Cosby defamed them after they accused him of sexual misconduct.  Cosby held two insurance policies issued by AIG:  a homeowner’s policy and a personal excess liability policy (the “umbrella policy"”).  Under each policy, AIG has a duty to “pay damages [Cosby] is legally obligated to pay [due to] personal injury or property damage caused by an occurrence covered[] by this policy anywhere in the world . . . .”  Both policies define “personal injury” to include “[d]efamation” and require AIG to pay the cost of defending against suits seeking covered damages.  Both policies also contain so-called “sexual misconduct” exclusions.  The homeowner’s policy’s exclusion bars coverage for liability or defense costs “arising out of any actual, alleged[,] or threatened . . . [s]exual molestation, misconduct or harassment[,] . . . or . . . [s]exual, physical or mental abuse.”  The umbrella policy contained similar wording.  However, that policy also contained another “sexual misconduct” exclusion under the “Limited Charitable Board Directors and Trustees Liability” coverage part.  That exclusion applied more broadly to claims for damages “[a]rising out of, or in any way involving, directly or indirectly, any alleged sexual misconduct” (emphasis added).

As we have previously written, students accused of hazing can obtain coverage under a parent’s homeowners’ policy. See our prior post. A recent New York decision provides the latest example.

In an article published September 12, 2017 in South Florida’s Daily Business Review, Hunton & Williams insurance lawyers Walter Andrews and Andrea DeField explained why it is critical that policyholders act fast to maximize insurance recovery for their hurricane-related losses.  They also provided a checklist to guide policyholders through the claim process.  As Andrews and DeField explain, in addition to providing prompt notice to all potential insurers, policyholders should collect all loss-related receipts and document the damage with photographs.  Good organization of ...

It has been almost a week since Hurricane Harvey came barreling down the Texas coastline as a Category-4 storm. Since that time, parts of Texas and Louisiana have been inundated with flood waters as Harvey continues to wreak havoc. Despite the fact that many of those affected have been unable to reach their homes or business to fully assess the damage because of road closures and flood waters, insureds whose businesses or homes were in the storm’s path should notify their insurers in writing now. The initial written notice should include the following information:

• Name and contact information for the insured;
• The location of the loss;
• The date and time of the loss (to the extent known); and
• A brief description of the loss.

As Texas and other Gulf coast areas make final storm preparations, now is a good time to gather insurance information and policies.  Hunton & Williams attorneys, Michael Levine and John Eichman provide important information in the linked article published by The Texas Lawbook concerning insurance issues that are likely to arise in the storm’s wake, including potentially applicable coverages that could go overlooked without proper guidance.

For more information, please visit our Hurricane Insurance Recovery and Advisory center.

As Texas and other Gulf coast areas make final storm preparations, now is a good time to gather insurance information and policies. Hunton & Williams insurance attorneys, Michael Levine and Andrea DeField provide important information in this linked Client Alert concerning insurance issues that are likely to arise in the storm’s wake, including potentially applicable coverages that could go overlooked without proper guidance.

For more information, please visit our Hurricane Insurance Recovery and Advisory center.

Since our first report last year, Lemonade Insurance, a tech start-up that planned to offer peer-to-peer insurance products, has launched in four states, offering homeowners and renters insurance in New York, California, Illinois, and New Jersey. Lemonade’s cutting-edge use of technology and its alternative business model could prove disruptive to the insurance industry.

Last week, my partner, Syed Ahmad, commented on some of the biggest insurance rulings of the year in a Law360 feature article that can be found here.  Among those decisions is USAA Texas Lloyd’s Co. v. Menchaca, where the Texas Supreme Court ruled that that policyholders may recover for bad faith in the absence of coverage under their policy.  Ahmad also discussed the Connecticut appeals court decision in R.T. Vanderbilt Co., Inc. v. Hartford Acc. And Indem. Co., and its ruling that insurers may not force policyholders to act as an insurer during policy periods in which insurance was not ...

Ride and homesharing technologies like Uber and Airbnb are now ubiquitous. Slice, an on-demand insurance provider, seeks to fill the gap between the demands of these on-the-go services and traditional insurance contracts, which may not cover home rental or car sharing. Slice users can pick and choose the dates for which they receive coverage. So, for example, a homeowner that rents her home to Airbnb renters for two nights can obtain coverage solely for those two nights.

Policyholders are often surprised to hear that their policies cover more than the run-of-the-mill claim. For example, a general liability policy may cover a cyber-related loss. See our prior post. As a more recent example, a federal court in South Carolina found that a parent’s homeowners’ policy obligated an insurer to defend a college student against hazing allegations. Allstate Ins. Co. v. Ingraham, No. 7:15-cv-3212 (D.S.C. Mar. 14, 2017).

Last week, nearly 200,000 people were evacuated from areas downstream of the Oroville Dam in Northern California. Today, separate recommended and mandatory evacuation orders continue for roughly 50,000 San Jose residents due to rising flood waters along Coyote Creek. Between the Oroville Dam crisis and the torrential storms battering Northern California, California businesses face significant loss arising from the flooding, the threat of flooding, landslides and the like. Fortunately, some of the damage to property and businesses can be mitigated by insurance.

On February 22^nd, Hunton insurance team partner Syed Ahmad and Mary Borja of Wiley Rein LLP will be speaking at the DC Bar’s CLE program “What Every Litigator Should Know About Insurance and How It May Impact Your Case Strategy.” The two hour class will discuss what steps an insured should take to protect claims, the role of insurance in defending and settling claims, and how to preserve attorney-client privileges. To learn more about the event, please visit: http://bit.ly/2k8SCQT.

Date and Time:
Wednesday, February 22, 2017 from 6 pm to 8:15 pm

Location:
D.C. Bar Conference ...

Two decisions issued on December 21, 2016, drive home the critical significance that policy-based “suit limitations” provisions can have on an insurance claim. In both instances, federal courts rejected policyholders’ attempts to obtain coverage for plainly covered losses simply because they failed to follow their policies and filed their lawsuits after the proscribed cutoff. These decisions serve as sharp reminders that policyholders must not only read their insurance policies, but they must understand how they work and, most importantly, calendar critical dates and time periods.

On December 1, 2016, the Florida Supreme Court held that the concurrent cause doctrine applies where multiple perils combined to create a loss even where one of those perils is excluded by the terms of the all-risk property insurance policy. The decision is a significant victory for Florida policyholders, especially where other jurisdictions have struggled to apply the efficient proximate cause doctrine after natural disasters like Hurricane Katrina. For detailed analysis of the Sebo v. American Home Assurance Co., Inc. decision, see Andrea DeField’s client alert

On October 7, 2016, an article by Hunton & Williams’ insurance lawyers Walter J. Andrews, Michael S. Levine and Andrea DeField, discussing insurance recovery options for those affected by Hurricane Matthew, was published in the Daily Business Review.  The full article is available here.  In the article, the authors discuss the types of coverage that may be available to affected policyholders and some of the pitfalls they should look out for as they mitigate their losses and navigate the claim process.  The authors can be contacted directly for follow up at wandrews@hunton.com ...

Florida’s Second District Court of Appeals ruled on Friday that a homeowner’s insurance policy provision restricting assignment without the insurer’s consent does not restrict the post-loss assignment of policy benefits to an emergency water mitigation company, reversing the trial court’s ruling on summary judgment. In Bioscience West, Inc. v. Gulfstream Prop. & Cas. Co., the homeowner suffered a water loss and hired Bioscience to perform emergency water mitigation. Case No. 2d14-3946 (Fla. 2d DCA Feb. 5, 2016). In return for its services, the homeowner assigned the benefits of her insurance policy to Bioscience under an agreement permitting Bioscience to directly bill the insurer. The insurer, Gulfstream Property and Casualty Company (Gulfstream), refused to pay Bioscience as assignee, citing the policy’s assignment provision. Bioscience sued Gulfstream for breach of contract. The trial court granted summary judgment in favor of Gulfstream, finding that the policy’s assignment provision precluded the post-loss assignment to Bioscience without the insurer’s consent.