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July 25, 2017 | Blog Post| That Sinking Feeling: Sinkholes, Florida Law, and Some Questions Raised by The Recent Collapse in Land O' Lakes

The recent catastrophic ground cover collapse in Land O’Lakes attributed to a sinkhole highlights the unique aspects of Florida geology and the impact it can have on the risks faced by building owners and their insurers. In central and western Florida, the land generally consists of a layer of limestone topped by layers of clays and sands. The limestone is a vestige of the shells and skeletons of marine life deposited during prehistoric periods when that layer was at the bottom of shallow seas. Over time, limestone was formed and covered by layers of silts and sands. The limestone is slowly dissolved by groundwater, and constitutes part of the aquifer.

As cavities in the limestone form, sands immediately above the limestone can begin to ravel downward into them, a process which can eventually lead to movement in the sands close to or at the ground surface. As cavities in the limestone grow, portions can become susceptible to collapse, allowing the sandy overburden to sink along with anything that has been built upon it. In the case of the sinkhole in Land O’Lakes, the collapsing material was significant, impacting several nearby residential lots.

The risk posed by sinkhole conditions prompted the Florida Legislature to enact legislation making sinkhole coverage mandatory. Claims under the new coverage proliferated with often little evidence other than minor cracks in buildings equally consistent with normal settlement. To address the ever increasing claims, the Florida legislature amended the statute that required such coverage by distinguishing it from catastrophic ground cover collapse (which occurred in Land O’Lakes). Further refinements were made in 2011 where, for the first time, objective standards were adopted for the “structural damage” required for a claim under sinkhole coverage. The elements that are required for coverage under the mandatory catastrophic ground cover collapse were also defined.

According to reports, the recent Land O’Lakes sinkhole started on July 14, 2017 (Friday) as a depression in the surface of the ground that opened up behind the home located at 21825 Ocean Pines Drive. The first call to authorities was received at 7:21 a.m., and Fire Rescue crews arrived on scene at 7:36 a.m. The sinkhole stopped growing around 5 p.m. Friday. By Tuesday (July 18), no new activity had been observed and local officials concluded the sinkhole had stabilized. The next day, however, the sinkhole widened another ten feet, prompting officials to warn additional residents that they may need to evacuate. The sinkhole is now 235 feet in diameter and 50 feet deep. Two homes were destroyed, and five others have been tagged as unsafe and remain evacuated as of Monday morning. Fortunately, no injuries have been reported.

The catastrophic ground cover collapse in Land O’Lakes, coupled with reports that sinkhole activity had previously been identified at one of the properties, give rise to a number of questions.

The first question is whether an insurer that paid for a sinkhole loss on a property is obligated to a pay for a second loss if the property owner failed to properly “fix” the sinkhole after the first claim.  Where the policy provides coverage for damage to the home caused sinkhole activity, such coverage is often provided as an exception to exclusion for earth movement.  Where sinkhole activity causes structural damage to a home (a “sinkhole loss”), coverage includes the cost to stabilize the land and the building, and repair the foundation. An insured’s failure to address sinkhole conditions that results in subsequent damage from unaddressed conditions detected in the first loss could constitute neglect that should bar the subsequent claim.

Apart from sinkhole activity, Florida law requires homeowner’s policies to include coverage for “Catastrophic Ground Cover Collapse,” such as the loss in Land O’Lakes. This coverage is triggered only where there is all of the following:

  • The abrupt collapse of the ground cover;
  • A depression in the ground cover clearly visible to the naked eye;
  • “structural damage” to the dwelling, including the foundation; and
  • The dwelling is condemned and ordered to be vacated by the governmental agency authorized to issue such an order for that structure.

The question in a subsequent claim will be whether the sinkhole activity left unaddressed by the insured in the first claim is the same condition that resulted in a subsequent catastrophic ground cover collapse. That will be a factual question for experts.

The coverage analysis is the same whether the insurer at the time of the second loss is a new insurer or has issued a renewal policy. Sinkhole coverage provided by the policy for the cost to stabilize the land and the building, and repair the foundation, is triggered by structural damage to the insured building. As a practical matter, a properly repaired sinkhole may pose less risk than a property that has never been examined for sinkhole activity. Once an insurer elects to provide sinkhole coverage for a property, the question will be whether damage to the insured building occurred during its policy period and whether the insured’s neglect to address conditions detected in the previous claim caused the subsequent loss.

Florida Statue § 627.706 requires the insured to make available, for an appropriate additional premium, coverage for sinkhole losses on any structure and the personal property inside it. The insurer can require an inspection of the property before issuing a policy and, if it elects to insure the property, restrict catastrophic ground cover collapse and sinkhole loss coverage to the principal building, as defined in the applicable policy.  Despite having extended such coverage, an insurer may disclaim coverage where the insured concealed or misrepresented material facts relating to the “repaired” sinkhole in order to obtain the policy. However if the material facts relating to the “repaired” sinkhole were disclosed, and the insurer elected to provide coverage, there would be no basis to disclaim coverage.

A subsequent purchaser can sue a seller for a failure to disclose a sinkhole that wasn’t fully repaired. The “Seller’s Property Disclosure – Residential” published by Florida Realtors advises: “Florida law requires a seller of a home to disclose to the buyer all known facts that materially affect the value of the property being sold and that are not readily observable or known by the buyer.” In support, the form references Johnson v. Davis, 480 So.2d 625 (Fla. 1985), where the Florida Supreme Court held a vendor’s false representation of material fact, made with knowledge of its falsity, that caused the purchasers to rely upon it to their detriment, was a false representation which required return of deposit payments to purchasers.

Florida Statutes expressly require a seller to disclose being paid on a prior claim for a sinkhole on the property. Section 627.7073(2)(c) directs a seller of real property, upon which a sinkhole claim has been made by the seller and paid by the insurer, to disclose to the buyer, before the closing, that a claim has been paid and whether or not the full amount of the proceeds was used to repair the sinkhole damage.

Failure to disclose sinkhole conditions in the sale of a home can also result in criminal penalties. In 2015, a Florida husband and wife were found guilty of wire fraud for selling their Springhill home without disclosing the existence of an unremediated sinkhole on the property. In 2010 Glenn and Kathryn Jasen accepted an insurance payment of $153,745 for sinkhole damage, but spent only about $30,000 on repairs. In 2014, the Jasens sold the house to Thomas Jaje for $64,900, denying any sinkhole claims on the disclosure forms. For their failure to disclose, the Jasens were sentenced to five years of probation and six months of house arrest.

The recent catastrophic ground cover collapse in Land O’Lakes damaged a number of properties.  This fact raises the question of whether a neighbor could sue, or whether the neighbor’s insurer could seek subrogation against a property owner who failed to properly fix a sinkhole when he or she was on notice that the sinkhole should have been “repaired.”  There is no reason why not.  Once the insured is aware of an unrepaired sinkhole on his or her property the sinkhole is no different than any other potentially dangerous condition that may implicate a duty of the property owner to take action.  However, catastrophic ground cover collapse is relatively rare. 

The issue in a suit by a neighbor or subrogation action will be whether the insured should have known that sinkhole activity that caused minor damage to the insured’s house would, years later, result in catastrophic ground cover collapse that would extend beyond the insured’s property. There will also be a question of whether negligence will be attributed to an insured who implemented a “repair” based upon advice of an “expert.” Where there is a subsequent catastrophic ground cover collapse, the question will be whether that collapse was the result of the same conditions that caused the previous loss or deeper or more widespread activity that was undetected by the experts who provided advice to the insured on the first loss.

The news reports on the Land O’Lakes sinkhole indicate that, after the first loss in 2012, one engineer advised the insured to grout the property, while another advised that the house could be stabilized using subsurface pins.  After the second loss, another interesting question is whether the engineer who recommended pinning the house -- rather than grouting the land -- could face liability for the subsequent loss to the original homeowner and his or her neighbors. 

An engineer is obligated to perform his or her duties according to a particular standard of care. Whether or not an engineer’s work product meets that standard of care in any particular case is ultimately a question for a jury to resolve. Whether the recommended “fix” was appropriate will depend on the results of the testing at the time of the initial loss.  Pinning might be appropriate where testing has detected loose soils but no voids in the underlying limestone. On the other hand, a subsequent catastrophic ground cover collapse such as the one in Land O’Lakes prompts the question of whether the results of the inspection after the first loss implicated a wider duty for the engineer to homeowners other than to the owner of the property where the remediation work in question was to be performed.

The recent catastrophic ground cover collapse in Land O’ Lakes, has likely left more than one homeowner, engineer, and property insurer with a sinking feeling as they contemplate what was actually done to address a past sinkhole and protect an insured property from further loss.  Others no doubt will be thinking about what repairs should be made in future cases.   Only time will tell whether past choices of repair were correct or whether homeowners and their neighbors will find their property slip sliding away.

John V. Garaffa

A Partner at Butler Weihmuller Katz Craig LLP in Tampa, FL. John practices in our Construction, Cyber Losses, Extra-Contractual, First-Party Coverage, and Third-Party Coverage departments.

Jason M. Seitz

A Senior Associate at Butler Weihmuller Katz Craig LLP in Tampa, FL. Jason practices in our Construction, First-Party Coverage, and Reinsurance departments.

November 19, 2019 Blog PostA BRIEF REFRESHER ON APPRAISAL IN NORTH CAROLINA, SOUTH CAROLINA, AND GEORGIA

Most first party property coverage policies contain an appraisal provision that allows either the insured or the insurer to make a written demand for appraisal when the parties agree that covered property was damaged by a covered cause of loss, but disagree on the value of that damaged property...

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November 14, 2019 Blog Post"Slow and Steady" or "Fast and Furious": Repeated Seepage or Leakage Policy Exclusion Prevails

A recent ruling in a U.S. District Court in Missouri may suggest a new path for policy exclusions based on “continuous or repeated seepage or leakage of water.”...

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August 13, 2019 Blog PostThe Evolving Limitations on Appraisers in Florida: Analyzing State Farm Florida Ins. Co. v. Sanders

Appraisers are frequently involved in Florida property claims.  Accordingly, Florida courts continue to refine the roles and limitations with respect to appraisers and the appraisal process as a whole...

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May 10, 2019 Blog PostWhat Baseball Has Taught Me About The Insurance Appraisal Process

Anyone who has ever watched baseball knows that umpires sometimes make an incorrect call. In appraisal of a property insurance claim, sometimes the umpire can make a mistake as well.

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April 26, 2019 Blog PostBreaking News! Florida AOB Reform Explained

The Florida Legislature passed a bill that makes significant changes to the assignment of benefits (“AOB”) process in Florida.  Governor Ron DeSantis stated he will sign the bill into law.  The effective date will be July 1, 2019.

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March 07, 2019 Blog PostPennsylvania court rules insurer may still be responsible to pay RCV even if repairs never completed.

In situations where a property insurer denies coverage, the insured often complains that it is faced with a difficult dilemma – use its own money to fund repairs or avoid making repairs and risk having its recovery limited to actual cash value (ACV) if the insurer is later found liable for coverage.

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February 26, 2019 Blog PostTHE MARKOVITS DECISION: CONSIDERATIONS AND IMPLICATIONS

Recently, Florida’s First District Court of Appeal held that for purposes of determining the timeliness of a proposal for settlement, the complaint is considered served on the insurer when process is served upon the statutory agent, Florida’s Chief Financial Officer, and not when process is forwarded by the Chief Financial Officer to the insurer.  Markovits v. State Farm Mutual Automobile Ins. Co., 235 So. 3d 1018 (Fla. 1st DCA 2018) rehr’g denied (Feb. 5, 2018).

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February 26, 2019 Blog PostTHE MARKOVITS DECISION: CONSIDERATIONS AND IMPLICATIONS

Recently, Florida’s First District Court of Appeal held that for purposes of determining the timeliness of a proposal for settlement, the complaint is considered served on the insurer when process is served upon the statutory agent, Florida’s Chief Financial Officer, and not when process is forwarded by the Chief Financial Officer to the insurer.  Markovits v. State Farm Mutual Automobile Ins. Co., 235 So. 3d 1018 (Fla. 1st DCA 2018) rehr’g denied (Feb. 5, 2018).

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February 21, 2019 Blog PostNot Off the Hook...Trouble in Paradise for Puerto Rico Insurers

Recent legislative and judicial developments in Puerto Rico may very well have revived thousands of claims that insurers believed to be time-barred, per the terms of the Suit Against Us provisions of their Policies. Until the February 14, 2019, ruling issued by a San Juan court, residential property damage claims that had not escalated to suit within a year of the date of loss, had been considered time-barred. It would seem that it may not be the case anymore, and insurers should be prepared for a potential flurry of new litigation, even involving prior Hurricane Irma and Maria claims.

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December 14, 2018 Blog PostDrone Accident Excluded Under CGL Policy's Aircraft Exclusion

In the most recent edition of our book, Butler on Drones, we reported that ISO has issued specific exclusions for unmanned aircraft for inclusion into CGL policies, but it was an open question whether a CGL policy’s standard aircraft exclusion already excluded coverage for liability arising from the use of a drone. A California federal district court has now weighed in on the question – the first to do so, as far as we are aware. And we like the answer.

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October 10, 2018 Blog PostRecent Federal Court Decision May Alter the Reservation of Rights Landscape in South Carolina

Only 15 months ago, in Harleysville Group Insurance v. Heritage Communities, Inc., the South Carolina Supreme Court fundamentally changed the reservation of rights landscape in South Carolina. Since Harleysville, two questions have remained: When must an insurer issue a reservation of rights letter to avoid waiving its rights, and what level of explanation is sufficient to avoid waiver?

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September 19, 2018 Blog PostHurricane Florence: Civil Authority and Ingress/Egress Coverage

The hurricane may trigger civil authority or ingress/egress coverage for businesses that are not directly damaged but lose income because they cannot access their operations for a period of time due to a governmental evacuation order.

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September 19, 2018 Blog PostHurricane Florence: Civil Authority and Ingress/Egress Coverage

The hurricane may trigger civil authority or ingress/egress coverage for businesses that are not directly damaged but lose income because they cannot access their operations for a period of time due to a governmental evacuation order.

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September 10, 2018 Blog PostHurricane Florence is aiming for the Carolinas

Once Hurricane Florence passes through the region, insurance professionals can expect a deluge of claims activity. While both North Carolina and South Carolina have felt the effects of recent Hurricanes Irene and Matthew, for example, many insurance professionals have limited familiarity with the particularized coverage issues which may arise in both states. Navigating the laws of both states, which can be both parallel and disparate, is going to be important in Florence’s aftermath.    

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September 10, 2018 Blog PostHurricane Florence is aiming for the Carolinas

Once Hurricane Florence passes through the region, insurance professionals can expect a deluge of claims activity. While both North Carolina and South Carolina have felt the effects of recent Hurricanes Irene and Matthew, for example, many insurance professionals have limited familiarity with the particularized coverage issues which may arise in both states. Navigating the laws of both states, which can be both parallel and disparate, is going to be important in Florence’s aftermath.    

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September 06, 2018 Blog PostFull Consent to Assignments

Consent Not Fully Given: Fourth District Court of Appeal Enforces Policy Provision Requiring Consent of All Insureds and Mortgagees to Any Assignment of Benefits

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April 18, 2018 Blog PostWHO REALLY OWNS THAT MITIGATION COMPANY? PENNSYLVANIA AND NEW YORK LAW SAYS IT MATTERS IF IT'S THE PUBLIC ADJUSTER

The legislatures are directing the public adjuster to focus on negotiating the insurance claim as opposed to profiting from remediation or remediation efforts and to ensure that all relationships are properly disclosed to the insured. This is certainly a move in the right direction.

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March 07, 2018 Blog PostFirst-Party Property Bad Faith in Florida - Podcast

Increasingly, property insurers in Florida are being sued for bad faith. What accounts for this increase?  Mainly, it has been driven by recent appellate court decisions that have eroded and all but eliminated any prerequisites to bad faith actions.  In part one of this two-part webinar series, we will outline the legal environment created by those decisions; attempt to define “bad faith”; explore the use and abuse of the civil remedy notice of insurer violation, and; discuss some things that can be done either to avoid a bad faith lawsuit altogether or, at least, to put the file in the best posture if a bad faith lawsuit can’t be avoided.

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February 23, 2018 Blog PostFlorida Court Rules Against Insurer on Seepage/Leakage Exclusion

Florida first-party property insurers have seen a dramatic rise in the number of reported water loss claims over the past five years.  Many insurance policies contain an exclusion for losses “caused by constant or repeated seepage or leakage of water over a period of 14 or more days.”  Today, one Florida appellate court ruled that “an insurance policy excluding losses caused by constant or repeated leakage or seepage over a period of fourteen days or more does not unambiguously exclude losses caused by leakage or seepage over a period of thirteen days or less.”

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January 16, 2018 Blog PostAOB Reform Bill Passes Florida House, Senate Future Uncertain

On January 12, 2018, the Florida House of Representatives passed a bill (HB 7015) that would dramatically affect the way contractors and their lawyers use assignments of benefits (“AOBs”) in first-party property insurance claims and lawsuits.  The biggest changes in the bill impact how AOBs must be written, new obligations on assignee contractors in the claim investigation process, limitations on when assignee contractors can file lawsuits, and how and when attorney fees are awarded (see all the details of the bill below). 

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January 08, 2018 Blog PostALL INSURANCE ADJUSTER OFFICES NOW NEED A HEAD HONCHO!: FLORIDA LEGISLATURE ADDRESSES ADJUSTING AND PUBLIC ADJUSTING FIRMS

Florida House Bill 911, “An Act Relating to Insurance Adjusters” became law on January 1, 2018. In large part, the new legislation deals with the internal operation of public adjusting firms. For example:

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November 06, 2017 Blog PostContingency Fee Multipliers: Florida Supreme Court Rejects Rare and Exceptional Circumstances Requirement

The United States Supreme Court analyzed the availability of contingency fee enhancements under fee-shifting statutes in Burlington v. Dague, 505 U.S. 557 (1992). There, the Court held that a contingency enhancement was not permitted under fee-shifting provisions of the Solid Waste Disposal Act and Clean Water Act. It reversed a 25% lodestar enhancement. Justice Scalia wrote the majority decision. He emphasized that fees are “certain” or “contingent.” Id. at 560. A fee is certain if it is payable without regard to the outcome of the suit; it is contingent if the obligation to pay depends on a particular result obtained. Id. at 560-61.

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September 01, 2017 Blog PostHurricane Hindsight is 20/20

It took years of depositions and other discovery to realize that that most of my 2004-2005 hurricane condominium association claims were much simpler to defend than I thought.   The center of gravity of these claims was the proper calculation of Actual Cash Value (ACV).

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September 01, 2017 Blog PostHurricane Hindsight is 20/20

It took years of depositions and other discovery to realize that that most of my 2004-2005 hurricane condominium association claims were much simpler to defend than I thought.   The center of gravity of these claims was the proper calculation of Actual Cash Value (ACV).

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August 09, 2017 Blog PostTO FEE OR NOT TO FEE, THAT IS THE QUESTION: THE FLORIDA SUPREME COURT FINDS COVERAGE FOR PROPOSAL FOR SETTLEMENT SANCTIONS IN FAVOR OF THE PLAINTIFF UNDER AN AUTOMOBILE LIABILITY POLICY IN MACEDO II

Due to its holding in Macedo II, the Florida Supreme Court created a situation where, arguably, many auto policies now provide coverage for attorney’s fees and expenses awarded against an insured following an adverse verdict triggering the penalties under a proposal for settlement.

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August 09, 2017 Blog PostTO FEE OR NOT TO FEE, THAT IS THE QUESTION: THE FLORIDA SUPREME COURT FINDS COVERAGE FOR PROPOSAL FOR SETTLEMENT SANCTIONS IN FAVOR OF THE PLAINTIFF UNDER AN AUTOMOBILE LIABILITY POLICY IN MACEDO II

Due to its holding in Macedo II, the Florida Supreme Court created a situation where, arguably, many auto policies now provide coverage for attorney’s fees and expenses awarded against an insured following an adverse verdict triggering the penalties under a proposal for settlement.

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August 08, 2017 Blog PostHoly Harleysville! – The Rules Governing RORs, Intervention, and More in South Carolina Have Just Changed

For insurers, litigating third party coverage disputes in South Carolina has always proved formidable.  Insurers can be liable for “bad faith” even if there is no coverage; they may be required to pay an insured’s attorney’s fees if the insurer commences a coverage action against its insured and loses ; and extra-contractual claims may proceed simultaneously with a breach of contract claim.

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July 26, 2017 Blog PostThe Continuing Saga of Sebo v. American Home Assurance Company: The Second District Court of Appeal Rules on Remand

On July 20, 2017, the Second District Court of Appeal issued an order that closed its books on the Sebo appeal.  Mr. Sebo made a homeowner’s claim to American Home contending construction deficiencies had allowed water to enter the residence at multiple points, causing, eventually, a complete destruction of the residence.  The trial court ruled the concurrent cause doctrine applied, and so that the combination of covered water damage and excluded faulty, inadequate and defective construction had resulted in coverage for the loss. 

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July 17, 2017 Blog PostThe Innocent Co-Insured: Underestimating Definite and Indefinite Articles

Four little words—a, an, any, and the—can mean a world of a difference with respect to coverage for an innocent co-insured.  A federal judge (applying Florida law) recently ruled that “that the phrase ‘any insured’ unambiguously expresses a contractual intent to create joint obligations.” Stettin v. National Union Fire Insurance Company of Pittsburg, PA, 2017 WL 2858768 (11th Cir., July 5, 2017) (emphasis added).  The Settin Court solidified a prior U.S District Court for the Southern District of Florida case, which held that an intentional loss provision precluded coverage for even innocent co-insureds when the intentional loss provision contained language prohibiting coverage for intentional acts by any insured.

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July 05, 2017 Blog PostEarth Movement: "Any" Means Any; Home-Owners Insurance Company v. Dominic F. Andriacchi (Michigan Court of Appeals)

For years, courts across the country have considered whether an earth movement exclusion in a policy applies only when the earth movement losses are caused by or stem from natural causes or phenomena, or whether it applies to earth movement losses from both natural and man-made causes.

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June 22, 2017 Blog PostBottini v. GEICO: Parties to Bad Faith Action Not Bound by $30.8 million-dollar Verdict Without Appellate Review

For years, when a bad faith action was brought pursuant to a jury verdict in excess of policy limits in the underlying UM claim, everyone assumed the jury verdict was binding in the bad faith action. Then, Bottini v. GEICO resulted in a $30.8 million-dollar verdict – over 600 times the policy’s UM limit of $50,000! GEICO appealed, and the Second DCA concluded that even if GEICO were correct that errors affected the jury’s computation of damages, any such errors were harmless in the context of this case.

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June 20, 2017 Blog PostFlorida's Third District Court of Appeals provides a warning: When insureds communicate about their policy needs, agents better listen and communicate back or insurance companies could be left holding the bag in a negligent procurement action.

In Kendall South Medical Center v. Consolidated Insurance Nation, No. 3D16-926, 2017 WL 1908376, *1 (Fla. 3d DCA May 10, 2017), the Third District Court of Appeals reversed the lower court’s fourth dismissal of Kendall South Medical Center’s complaint for negligent procurement, holding that there may be liability for negligent procurement where an agent fails to explain to an insured a coinsurance provision that could reduce coverage to less than the amount requested by that insured.

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May 19, 2017 Blog PostINSURANCE PROCEEDS PAYABLE TO TENANT DIVERTED TO PAY FOR PROPERTY OWNER'S BACK TAXES

The Third Circuit Court of Appeals sitting in Pennsylvania recently issued a precedential decision that interpreted the definition of a “named insured” under a tax delinquency statute to encompass tenants of a property even though the property owner, not the tenant, owed the delinquent taxes.

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March 23, 2017 Blog PostNebraska Supreme Court Rules that an Insurer Can Depreciate Labor in Determining Actual Cash Value

Property policies typically provide, if there is coverage, that the insured can recover for the costs to repair or replace the property damaged by loss.  But when an insured does not repair or replace the damaged property (or until such repairs are made), the insured is only entitled to the actual cash value of the property.  The calculation of actual cash value varies state to state, but generally courts either define it as replacement cost less depreciation or courts use the broad evidence rule. 

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March 21, 2017 Blog PostPennsylvania Superior Court adopts narrow interpretations of surface water exclusion and ensuing loss clause

In the Ridgewood Group LLC v Millers Capital Insurance Company, No. 1138 EDA 2016, February 27, 2017, the Superior Court of Pennsylvania analyzed two often troublesome policy provisions, the surface water exclusion and the ensuing loss cause .

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March 14, 2017 Blog Post2017 Florida State Legislature to Consider Bills Aimed at Assignments of Benefits, Water Losses, Appraisers, and Umpires

The 2017 Florida Legislative Session convened on March 7.  Of particular interest to property insurers are the following bills, which we are closely watching: SB 944, proposing licensing requirements upon appraisers and appraisal umpires; SB 1038 and HB 1218, proposing a statute concerning assignments of benefits; and SB 1218, proposing licensing requirements on those who perform water damage restoration and prohibiting policy provisions that preclude post-loss assignments of benefits.

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March 07, 2017 Blog PostFederal Diversity Jurisdiction: Proving Citizenship of Limited Liability Companies

Jurisdiction gives a federal court the power to hear a case. Jurisdiction matters at the outset of a lawsuit. It matters during discovery. It even matters after summary judgment. Jurisdiction matters because federal courts are courts of limited jurisdiction.

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March 07, 2017 Blog PostFederal Diversity Jurisdiction: Proving Citizenship of Limited Liability Companies

Jurisdiction gives a federal court the power to hear a case. Jurisdiction matters at the outset of a lawsuit. It matters during discovery. It even matters after summary judgment. Jurisdiction matters because federal courts are courts of limited jurisdiction.

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February 16, 2017 Blog PostSurplus Insurers, Too, Can Rely on the Application to Interpret Policy

Section 627.419 of the Florida Statutes provides that “[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any application therefor or any rider or endorsement thereto.”  This statute has not applied to surplus lines insurers since the “Zota-fix” legislation of 2009, which generally exempted surplus lines insurers from Chapter 627.

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January 11, 2017 Blog PostWhat Is An Offer of Judgment And Can It Really Lower the Cost of or Shorten Litigation?

Insurance coverage litigation today is often time consuming and expensive.  Many cases include claims for “bad faith” damages, and some cases seek punitive damages.  To support their allegations, litigants will usually seek a wide-array of documents and testimony.  Accordingly, litigating such matters can also become expensive. 

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June 24, 2016 Blog PostTreading Water: Florida Office of the Insurance Consumer Advocate Holds Forum on Florida's Ongoing Water Loss Crisis

The state of water loss claims abuses in Florida, the water loss marketplace, and water loss damage claims on a national scale were presented by the Division of Insurance Fraud, Bureau of Property & Casualty, and the National Insurance Crime Bureau, respectively. 

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October 28, 2015 Blog PostWhen Revenge Is Not So "Sweet": The Wages of "Revenge Porn" under Florida's New Cyber Harassment Statute

Policyholders who seek coverage for the monetary consequences of a violation of the statute under the “personal and advertising injury” or general liability coverage in their insurance’ policies are likely to find themselves looking elsewhere for funds.

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September 08, 2015 Blog PostNJ: Insurers Still On The Hook To Pay Innocent Parties Under Fraudulent Policies

The decision offers further guidance in the somewhat inconsistent world of rescission and automobile policy statutes, which – when accounting for the application misrepresentation, policy, and statutes – can be a tricky process.

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September 08, 2015 Blog PostNJ: Insurers Still On The Hook To Pay Innocent Parties Under Fraudulent Policies

The decision offers further guidance in the somewhat inconsistent world of rescission and automobile policy statutes, which – when accounting for the application misrepresentation, policy, and statutes – can be a tricky process.

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August 27, 2015 Blog PostLa. Federal District Court Greatly Expands the Duty to Preserve in Response to a Litigation Hold Notice

Takeda appealed the ruling to the Fifth Circuit Court of Appeals, but it reached a settlement in the MDL litigation in May of 2015 before appellate briefing commenced.  The Actos ruling is isolated to date; no other court has applied this holding or followed its interpretation.

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August 11, 2015 Blog PostInsurers Don't Sleep on Your Rights: Insurer's Motion to Intervene Denied as Untimely

The court noted that Cincinnati had been defending the action since 2012, but did not file the motion until 2015 and only on the eve of trial.  With regard to the damage interrogatories themselves, the parties argued that neither party’s expert had broken down the damages in the manner proposed by Cincinnati.

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June 10, 2015 Blog PostPost-Complaint Communications by Insurer's Employees Protected from Discovery in Bad Faith Litigation

The insured failed to articulate any type of argument that he could not obtain the substantial equivalent by other means without undue hardship.  The court recognized that the insured has the opportunity to conduct bad faith discovery, which may include deposing State Farm adjusters, to obtain the substantial equivalent...

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April 09, 2015 Blog PostCan an Insured Sue His Adjuster When the Insured is Injured Cleaning Debris, Because the Adjuster Incorrectly Denied Coverage for Debris Removal?

Imagine a gigantic tree limb weighing over 7,000 lbs falling onto your home.  You dutifully call your insurance company to report the loss. So when the adjuster inspects your home and (verbally) tells you that debris removal is not covered by your policy and that you need to clean up the debris (glass, limbs, branches) all by yourself, you clean it up yourself, right?  And when you hurt your hand in the process ...

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April 08, 2015 Blog PostFourth Circuit Sets Stage For Interpreting Contingent Business Interruption

CBI insurance provides coverage for loss of sales or revenue sustained when business is interrupted due to property damage that occurs away from the insured premises and, consequently, disrupts the flow of goods and services from/to a supplier or customer (referred to as the “dependent” or “contributing” properties). There are a limited number of cases discussing issues relating to CBI insurance; and the Fourth Circuit’s ruling provides greater clarity as to what constitutes a “direct” supplier, which is a common...

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April 08, 2015 Blog PostFourth Circuit Sets Stage For Interpreting Contingent Business Interruption

CBI insurance provides coverage for loss of sales or revenue sustained when business is interrupted due to property damage that occurs away from the insured premises and, consequently, disrupts the flow of goods and services from/to a supplier or customer (referred to as the “dependent” or “contributing” properties). There are a limited number of cases discussing issues relating to CBI insurance; and the Fourth Circuit’s ruling provides greater clarity as to what constitutes a “direct” supplier, which is a common...

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April 06, 2015 Blog PostIt's a "Storm Surge" -- not a "Flood"!

Both parties cited to the SEACOR Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675 (5th Cir. 2011) case. The SEACOR case held that flood limits did not apply to Hurricane Katrina-generated water damage. In the SEACOR policy, there were definitions for flood, windstorm and named windstorm. The definition of windstorm and named windstorm did not include the phrase “storm surge,” but the definition of flood included wind-driven water. The SEACOR court held that all damage caused by Katrina was the result of a named windstorm...

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April 06, 2015 Blog PostIt's a "Storm Surge" -- not a "Flood"!

Both parties cited to the SEACOR Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675 (5th Cir. 2011) case. The SEACOR case held that flood limits did not apply to Hurricane Katrina-generated water damage. In the SEACOR policy, there were definitions for flood, windstorm and named windstorm. The definition of windstorm and named windstorm did not include the phrase “storm surge,” but the definition of flood included wind-driven water. The SEACOR court held that all damage caused by Katrina was the result of a named windstorm...

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September 26, 2014 Blog PostWhen It Comes to Sinkholes, Contracts, Statutes and Regulations Do Matter

On August 21, 2014, the United States Court of Appeals for the Eleventh Circuit vacated the decision of the U.S. District Court for the Middle District of Florida in Shelton v. Liberty Mutual, Case number 13-15371 / D.C. Docket No. 8:12-cv-02064-JSM-AEP. This decision confirms that the statutory definitions for structural damage under the May 17, 2011 amendments to the Florida sinkhole statutes apply to property policies issued after those amendments were enacted. The court’s order reversed the positions taken by the District Court that seemed bent on plotting a new course for Florida jurisprudence.

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September 26, 2014 Blog PostWhen It Comes to Sinkholes, Contracts, Statutes and Regulations Do Matter

On August 21, 2014, the United States Court of Appeals for the Eleventh Circuit vacated the decision of the U.S. District Court for the Middle District of Florida in Shelton v. Liberty Mutual, Case number 13-15371 / D.C. Docket No. 8:12-cv-02064-JSM-AEP. This decision confirms that the statutory definitions for structural damage under the May 17, 2011 amendments to the Florida sinkhole statutes apply to property policies issued after those amendments were enacted. The court’s order reversed the positions taken by the District Court that seemed bent on plotting a new course for Florida jurisprudence.

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July 24, 2014 Blog PostThe Emperor's New Property Damage?

For many years, Florida courts appeared to say that general liability insurance policies did not cover a subcontractor’s faulty work that damaged other parts of a general contractor’s work. That all changed with the Supreme Court of Florida’s decision in United States Fire Insurance Company v. J.S.U.B., Inc., in 2007. In J.S.U.B. the court found that present GL policies covered the faulty work of a subcontractor that damaged other parts of a general contractor’s work. The reasoning used by the J.S.U.B. court to reach that conclusion would seem to also apply to claims for property damage to a subcontractor’s work that resulted from the subcontractor’s faulty work. However, courts applying Florida law have not yet found this to be so, and in fact say just the opposite.

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July 22, 2014 Blog PostFeng Shui: Direct Physical Loss Does Not Include Damage to Invisible Forces

A federal judge recently ruled that an insurer was not obligated to pay $50,000 for a feng shui consultant following a fire loss in a dentist’s office. Patel v. American Economy Insurance Co. et al., No. 12-cv-04719, 2014 WL 1862211 (N.D. Cal. May 8, 2014). While the cost to repair the physical damage from the fire was insured under the policy, the court found that the cost to repair damage to any invisible forces that may have been at work in the office was not.

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