Dec Page

The question of the month pertains to hurricane damage. Every year has its hurricane season and regardless of the name of the hurricane or where it makes landfall, insurance coverage for the damage is one of the most critical items to be examined.

In most of the coastal states, damage caused by windstorm is covered by the various states' windstorm or beach pools. Floor-related damage falls to FEMA and its National Flood Insurance Program. But, how do the standard homeowners policies or commercial property policies apply in this situation? What about business interruption and other consequential losses? How is debris removal to be paid for, and how are property policy deductibles to be applied?

For the answers to these questions, especially with reference to homeowners, auto, commercial property, business income, and workers compensation coverages, see the designated article in the Bulletins.

A court case from Oklahoma discusses the vacancy issue as it pertains to possible coverage for fire damage to houses that the insurer claimed were vacant or unoccupied for more than 30 days prior to the fires; the insured disputed this claim. In Colorado, an appeals court reviewed a claim over defective workmanship and whether this met the definition of an occurrence under a general liability policy; this was a matter of first impression in Colorado .

The next case discussed in the Dec Page dealt with a personal and advertising injury claim and the failure to pay rebates. This was a declaratory judgment action centering on whether the insurance policy's coverage for advertising injury applied to a lawsuit filed against the insured after it allegedly failed to fund rebates that it had offered on products sold to a customer. The court for the Southern District of Florida addressed this issue. In another declaratory judgment action, a Georgia appeals court handled a case where the insured, a home builder, brought a breach of contract action against its insurer, asserting that the commercial general liability policy provided coverage for the cost of replacing a defective roof on a house that the insured built.

And the final case is from the Supreme Court of Kentucky. The court accepted discretionary review in this auto insurance case to consider whether an insured's failure to bring suit against the tortfeasor within the limitations period violated an insurance contract provision whereby the insured undertakes to do nothing to prejudice the insurer's right to subrogation.

Questions and Answers

Is loss of payment when work is not complete covered by the crime section of commercial property forms? See Voluntary Parting Exclusion Blocks Coverage for Loss of Money. Vacancy provision may prevent coverage for frozen pipe situation. See Fire Protective Equipment, Frozen Pipes, and Vacancy Provision.

Only one deductible should be taken for loss that involves both scheduled tools and equipment and blanket tools and equipment on a BOP policy. See BOP Deductible Application under One Occurrence. A mold loss may be covered if the leak that led to it did not occur for more than fourteen days. See Mold Damage Claim under a Time Limit.

Warehouse Operators Legal Liability Coverage

The American Association of Insurance Services (AAIS) offers legal liability coverage for warehouse operators through the use of form IM-7650, edition date of April 2004. This policy with its insuring agreement, exclusions, and conditions is reviewed and analyzed. See Warehouse Operators Legal Liability Coverage.

Executive Liability Side A Coverage Form

The Insurance Services Offices (ISO) offers executive liability side A coverage on form MP 00 08 05 09. An analysis of this claims-made policy's insuring agreement, extensions, exclusions, limit of liability, defense and settlement, conditions, definitions, and related endorsements is provided in FC&S this month. See Executive Liability Side A Coverage Form.

Recognition of the Tort of Bad Faith in First Party Claims Against Insurers

An updated chart, indicating which of the fifty states and the District of Columbia recognizes the tort of bad faith in first party claims against insurers, is provided. See Recognition of the Tort of Bad Faith in First Party Claims Against Insurers.