1 / 40

HANDLING FIRST PARTY PROPERTY INSURANCE CASES

HANDLING FIRST PARTY PROPERTY INSURANCE CASES. Wildfires destroy homes in California. OCTOBER 2003 WILDFIRES. 2003 Wildfires. In 2003, the “Old Fire” in the San Bernardino Mountains around Lake Arrowhead destroyed 993 homes.

tann
Download Presentation

HANDLING FIRST PARTY PROPERTY INSURANCE CASES

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. HANDLING FIRST PARTY PROPERTY INSURANCE CASES

  2. Wildfires destroy homes in California

  3. OCTOBER 2003 WILDFIRES

  4. 2003 Wildfires • In 2003, the “Old Fire” in the San Bernardino Mountains around Lake Arrowhead destroyed 993 homes. • The Cedar Fire in San Diego County burned 280,278 acres, 2,820 buildings (including 2,232 homes).

  5. FIRST PARTY PROPERTY INSURANCE • First party property insurance is the insurance coverage that homeowners have under their policy when their property is damaged or destroyed. • Third party coverage exists when another person has been injured and is making a claim against the homeowner.

  6. FIRST PARTY COVERAGES IN A HOMEOWNER’S POLICY • Dwelling Coverage • Other Structures • Personal Property • Alternative Living Expenses (“ALE”) • Building Code Upgrade • Landscaping

  7. Insurers cannot “bundle” coverages • Each coverage must be adjusted separately. • An insurer that withholds payment on an undisputed claim until resolution of disputed claims acts in bad faith. (Beck v. State Farm Mut. Auto. Ins. Co. (1976) 54 Cal.App.3d 347.)

  8. Undisputed amounts should be paid • The California Supreme Court has repeatedly held that an insurer acts in bad faith by the unreasonable withholding of policy benefits due. • Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910 (insurer acted in bad faith withholding undisputed amount of $10,000 from the $15,000 uninsured motorist coverage). • See also Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 819; Waller v. Truck Ins. Exch. (1995) 11 Cal.4th 1, 36; Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 721.

  9. DWELLING COVERAGE

  10. Many insureds find out only after a claim is made they are underinsured The insurance policy limits are insufficient to rebuild or replace the home

  11. A survey by United Policyholders, a consumer advocacy group, said 75% of California homeowners affected by the 2007 wildfires in San Bernardino and Riverside counties were underinsured by an average of $240,000.

  12. TYPES OF DWELLING COVERAGE • Actual Value • Cost of repair minus depreciation. If the dwelling is destroyed, it pays the fair market value of the dwelling, up to the limits specified in the policy. • Replacement Cost • Cost to repair or replace the damaged or destroyed dwelling without deduction for physical depreciation, up to the limits of the policy. • Extended Replacement Cost • Provides additional (extended) coverage usually up to a stated percentage of the dwelling coverage limits. • Guaranteed Replacement Cost

  13. DWELLING COVERAGE (CONT.) • Guaranteed Replacement Cost Coverage • this coverage pays the full cost to repair or replace the damage or destroyed dwelling regardless of the dwelling limits.

  14. DISCLOSURE OF DWELLING COVERAGE(Cal. Ins. Code § 10102.) • The type of dwelling coverage must be identified on a disclosure form sent pursuant to the provisions of California Insurance Code section 10102. • The disclosure must be no less than 10-point typeface • Shall be provided prior to or concurrent with, the application for a policy of residential property insurance,” and if the application is made by telephone, within three days.

  15. Genuine Dispute Doctrine • Claimed by insurers on motion for summary judgment/ adjudication when they have retained experts to investigate a claim who have rendered opinions which the insurer claims they reasonably relied upon. • Note: Separate jury instructions should not be given pertaining to the genuine dispute doctrine, because it is subsumed within the concept of reasonableness as set forth in CACI 2331 and 2332. (McCoy v. Progressive West Ins. Co. (2009) 171 Cal.App.4th 785, 792.)

  16. Wilson v. 21 Century (2007) 42 Cal.4th 713 • “The genuine dispute rule does not relieve an insurer from the obligation to thoroughly and fairly investigate, process and evaluate the insured's claim . . .” • An insurer must “fully inquire into possible bases that might support the insured's claim before denying it.”

  17. An insurer is not entitled to summary judgment . . . • When there are unreasonable delays and withholding of benefits • When its investigation and experts are biased • When it failed to conduct full, fair, and thorough investigation, and consider evidence or ignores evidence supporting plaintiff’s claim • When it misrepresents or conceals the nature of coverage or its investigation

  18. BIASED EXPERT AND INVESTIGATION “An expert’s testimony will not automatically insulate insurer from bad faith claim based on a biased investigation” Chateau Chamberay v. Associated International (2001) 90 Cal.App.4th 335, 348; Brehm v. 21st Century (2008) 166 Cal.App.4th 1225, 1240

  19. Number of Time Expert Retained • Q. But in terms of today, a hundred to 150, is that your best estimate without having gone back through your records to how many claims you’ve been retained by USSA? • A. I didn’t give you any estimates. I gave you for sure that it was more than 20 or more than 30, more than 40. After that, I said I’m not sure. So I will be happy to provide you with this estimate after I go back to my office. • Q. We’ll leave a blank in the transcript • A. Sure. (Information Requested) ________________326 Cases_________

  20. Failure to Conduct Full, Fair, and Thorough Investigation

  21. Expert does not consider all the evidence • “Q: But you did complete the report without the water records that you felt were important, is that right? • A: Yes • Q: And, in fact, we saw in your January 27, 2005 letter that you thought the remaining water records were necessary to have a rational evaluation of the magnitude of the leak, is that correct? • A: To attempt rational evaluation

  22. “Q: Did you ever ask to speak with any of the individuals who were working in the excavation and what they observed at the time the pipes broke? • A: No • Q: Did you ever interview the prior owner of the house? • A: No

  23. Q: Did you ever interview the real estate agent who sold the house? • A: No • Q: Ever interview any contractors who inspected the house? • A: No • Q: Ever ask for USAA to provide you with any underwriting information of what the condition of the house was when they sold the policy? • A: No • Q: And none of that information was relevant to you to come up with a conclusion that the crack had developed a long time ago, is that right? • A: This is correct.

  24. Misrepresenting And Concealing Coverage Or Nature Of Investigation To Insureds

  25. Bad faith may exist when there are misrepresentations by the insurance company in conducting their communications with the insured regarding the investigation. (Tomaselli v. Transamerica Ins. Co.(1994) 25 Cal.App.4th 1269, 1281

  26. When there is an issue of underinsurance There may be a claim for negligence or negligent misrepresentation against the agent or broker

  27. When insureds do not have Guaranteed Replacement Cost • Did the insurance company agent represent to the insured that they had full coverage or 100% coverage for their home? • Did they make a specific request full coverage or 100% coverage for their home?

  28. Fitzpatrick v. Hayes(1997)54 Cal.App.4th 916 • “The general rule in cases of this sort is …an insurance agent does not have a duty to volunteer to an insured that the latter should procure additional or different insurance coverage” • “The rule changes, however, when – but only when – one of the following three things happen:

  29. (a) the agent misrepresents the nature, extent or scope of the coverage being offered or provided (as in Free [v. Republic Ins. Co. (1992) 8 Cal.App.4th 1726], Desai [v. Farmers Ins. Co. (1996) 47 Cal.App.4th 1110, and [Paper Savers, Inc. v. Nacsa (1996) 41 Cal.App.4th 1090;

  30. (b) there is a request or inquiry by the insured for a particular type or extent of coverage (as in Westrick [v. State Farm (1982) 137 Cal.App.3d 685, 691])

  31. or (c) the agent assumes an additional duty by either express agreement or by ‘holding himself out’ as having expertise in a given field of insurance being sought by the insured.”

  32. Note that the three circumstances set forth in Fitzpatrick are in the disjunctive ((a), (b), or (c)).

  33. CACI 2361 (Negligent Failure To Obtain Insurance Coverage) • CACI 2361 states “1. That [name of plaintiff] requested [name of defendant] to obtain [describe requested insurance] and[name of defendant] promised to obtain that insurance for [him/her/it].”

  34. CACI 2361 does not describe the 3 circumstances identified in Fitzpatrick where negligence could be established ((a), (b), or (c)). It only discusses (a) and (b). • The use of the word “and” as opposed to “or” is improper. • The “Sources and Authority” do not cite Fitzpatrick

More Related