Last week, the Oregon Supreme Court made it just a little easier for an insured to recover the attorney fees that it has been forced to spend in compelling an insurer to pay up. In Long v. Farmers Ins. Co. of Oregon, the Supreme Court resolved an old ambiguity about what “recovery” means under the fee-shifting rule in Oregon’s insurance statutes. This decision should put to rest at least one opportunity for gamesmanship by insurers in Oregon.
Continue Reading

Last week, the Florida Supreme Court put policyholders’ minds at ease in Sebo v. American Home Assurance Co. by overturning a lower appellate court’s decision holding that the concurrent cause doctrine had no place in Florida first-party property claims.

Raindrops is licensed under CC 2.0.

Until the appellate court’s decision in 2013, Florida courts had routinely applied the concurrent cause doctrine in deciding whether a loss caused by two or more independent perils was covered under a property insurance policy. But that was turned on its head when the appellate court found the concurrent cause doctrine had no place in first-party insurance claims — regardless of whether the causes of loss were dependent or independent. Instead, the appellate court held the efficient proximate cause doctrine applied and remanded the case for a determination of the efficient cause of the loss.

So what are the concurrent cause and efficient proximate cause doctrines? How do these doctrines affect policyholders?
Continue Reading

It is common practice in Florida for companies offering emergency-restoration services to
take an assignment of the insured’s property-damage claim against the insured’s property policy in lieu of the insured paying the restoration company directly and then seeking reimbursement from an insurer.

For instance, imagine that a pipe bursts in your home, flooding a bedroom. The restoration company will come out, remove the water and damaged property, take an assignment of your claim against your insurer (and, depending on your deductible, you paying the deductible), and then seek payment directly from the insurer. Usually this goes off without a hitch. But recently Security First Insurance Company (“Security”) wanted to test this method, and it failed.
Continue Reading

Bad-faith claims against an insurer open the door to many more issues, and a lot more discovery about those issues, than insurers would lead you to believe. Insurers routinely clam up about anything in any of their files — even ones related directly to an insured’s claim — the moment the insured drags the insurer into court. My colleague, Kyle Sturm, recently posted an article here about a pending decision by the Oregon Supreme Court regarding an insurer’s attempt to bury its claims file.

But the claims file, the insurer’s correspondence, reports, and notes about a particular claim, tells only part of the story. That is, these documents will show an insured how he was mistreated by the adjusters. Another rich source of information powering bad-faith claims lies in what the adjusters were supposed to do, what the insurer’s own procedures and training manuals dictate should be done in handling a claim.
Continue Reading

Last week, the Sixth Circuit Court of Appeals affirmed a ruling denying insurance coverage to a homeowner for damages resulting from a fire when a medical-marijuana operation inside the home caught fire.  The case, Nationwide Mut. Fire Ins. Co. v. McDermott (Feb. 24, 2015), revolved around whether coverage for property damage under a homeowner’s policy was properly denied because of the owner’s failure to inform the insurer of her husband’s operation of a medical-marijuana grow and distribution facility inside her home.  The Court answered that question in the affirmative, finding that the policy required the homeowner “to notify [Nationwide] as soon as possible of any change which may affect the premium risk under th[e] policy,” including, but not limited to, “changes … in the occupancy or use of the residence premises.” (emphasis in the original).

According to the homeowner, the policy language was never intended to require her to inform her insurance company of every possible change in the use or occupancy of her home.  The insured argued that, under the insurer’s interpretation, homeowners would be required to notify the insurer anytime they invited guests over to stay at the home, or introduced a new house plant.  The Sixth Circuit didn’t buy this hypothetical:
Continue Reading

The Oregon Court of Appeals yesterday issued an opinion confirming that Oregon law remains faithful to the bedrock principle in coverage disputes that ambiguities in a policy must be resolved in favor of the insured.

In Patton v. Mutual of Enumclaw Ins. Co. (Oct. 8, 2014), an insured seeking coverage under his homeowner’s policy found himself between a rock and hard place, at least under the insurer’s erroneous attempt to link two unconnected policy provisions to deny coverage. Lowell Patton’s house burned down on November 8, 2001 and he sought the full value to rebuild under the “replacement cost” coverage written by Enumclaw.

Continue Reading

No Privacy Protections in Response to Insurer’s Demand for Information

Safeco isn’t the NSA, but it doesn’t think that insureds have the right to demand privacy protections in the context of the adjustment of a claim. And neither does the Oregon Court of Appeals. Last week, the Oregon Court of Appeals held in Safeco Insurance Co. v. Masood (July 2, 2014) that an insured cannot require the insurer to agree to keep “sensitive” financial information private as a condition to sharing this information with the insurer.

After Sohail Masood’s home burned down, his homeowner’s insurer, Safeco, provided security while the home was being cleaned up. Masood claimed that about $3.5 million in personal property was stolen while Safeco was providing security, and he filed a claim for this loss.
Continue Reading