Coverage for Riot and Civil Commotion

The recent riots in Minneapolis, Atlanta, Detroit, Indianapolis and elsewhere have caused some business owners and homeowners to be concerned about insurance coverage for losses caused by violent acts of destruction of property.  The short answer is that many standard insurance forms do include coverage for such losses, but determining exactly what is covered is a matter of reviewing each individual policy in light of the circumstances of the actual loss and damage.

If your home or business (or auto) is damaged by a riot or “civil commotion”, there is usually coverage for such losses subject to important limitations contained in standard policy forms.  In one standard business coverage form, for example, “riot and civil commotion” are included within the definition of “Specified Causes of Loss”, and coverage for things like building damage and business interruption are available accordingly.

The same policy does not define what constitutes a “riot”.  Courts have reached differing conclusions on what constitutes a “riot” or “civil commotion.”  A riot is defined by Black’s Law Dictionary (9th ed. 2009) as:

An assemblage of three or more persons in a public place taking concerted action in a turbulent and disorderly manner for a common purpose (regardless of the lawfulness of that purpose).

An unlawful disturbance of the peace by an assemblage of usually three or more persons acting with a common purpose in a violent or tumultuous manner that threatens or terrorizes the public or an institution. 

The main thing to remember is that most business policies will provide coverage for building damages, business losses and extra expenses incurred as a result of a riot.  In the event of such losses, it is important to have your policy reviewed carefully by an insurance coverage professional.

Yes. Parr Richey is open for business. We are here for you.

Yes. Parr Richey IS open for business; and yes, we are taking on COVID-19 related cases.

The attorneys at Parr Richey want you to know we are ready to help you and your business recover from government-ordered shutdowns and the resulting significant interruption to your revenues and productivity.

The sooner you ask, the sooner we can help you get back on track.

Founded in 1899 in Lebanon, Indiana, by W. H. Parr, Sr. the lawyers at Parr Richey have served individuals, businesses and institutions for over 100 years – our strengths are your advantage.

Here are some of the ways we can help:

  1. Insurance policies and contracts review to determine whether and to what extent COVID-19 related business losses may be covered or mitigated through insurance or other contractual claims.  We represent policyholders each and every day in claims of all types and sizes and have the ability to answer your questions effectively and efficiently.
  2. Legislative relief determination and eligibility. The United States Congress has made an historic stimulus package available to qualifying businesses and individuals.  We can help you determine your eligibility and navigate the legal aspects of the process for getting help.
  3. Employment law. Parr Richey attorneys have been helping businesses and individuals resolve employment and labor related issues for decades and we stand ready to answer your questions about how to handle workforce issues large or small.

Contact Mike Schultz at mschultz@parrlaw.com or 317- 501-2233

Contact Jim Buddenbaum at jbuddenbaum@parrlaw.com or 317-439-1181

Insurance Companies Owe Duty of Good Faith and Fair Dealing to Additional Insureds

In a recent opinion, the Indiana Court of Appeals decisively ruled that insurers owe a duty of good faith and fair dealing to all insureds, even if an insured is not the policyholder.

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Many insurance policies extend coverage to individuals other than the person or persons specifically listed in the policy. For example, a driver’s automobile insurance policy may cover bodily injury to passengers in her vehicle, or a homeowner’s insurance policy may provide hazard coverage to the homeowner’s mortgage lender if the home suffers damage. In these instances, the individual or entity receiving coverage under another’s insurance policy is referred to as an “additional insured.”

In Schmidt v. Allstate Property and Casualty Insurance Company, Schmidt was injured while riding with a friend, who was insured by Allstate. She sued her friend and the driver of the other vehicle for negligence. Schmidt qualified as an insured under her friend’s Allstate policy, which defined “Insured Person(s)” as “any person while in, on, getting into or out of, or getting on or off of an insured auto with your permission[.]”

After Allstate refused to pay Schmidt the policy limits for underinsured motorist coverage, she amended her lawsuit to include a bad faith claim against Allstate. Allstate argued that it did not owe a duty of good faith and fair dealing to Schmidt since she was not named in the applicable insurance policy.

The Indiana Court of Appeals rejected Allstate’s argument. When a policyholder enters into an insurance contract, the court reasoned, they expect that their family and friends will be treated fairly by their insurance company. The court channeled Gertrude Stein to declare that “an insured is an insured is an insured is an insured” for purposes of an insurance company’s duty of good faith and fair dealing. The court therefore affirmed that additional insureds may be entitled to compensation if an insurance company fails to deal with them in good faith.

Indiana Court of Appeals Addresses Damages for Inherent Diminished Value of Personal Property

On February 19, 2020, the Indiana Court of Appeals issued an opinion that clarified whether plaintiffs can recover damages for the inherent diminished value of personal property caused by the negligence of a tortfeasor. In Shield Global Partners-G1, LLC v. Lindsay Forster, the defendant rear-ended a pickup truck and admitted the accident was her fault. The truck was repaired after the accident occurred and was appraised twice in order to determine its diminished value. The plaintiff then filed a negligence action against the defendant to recover damages for the inherent diminished value of the truck following repairs.

The trial court initially denied the plaintiff’s claim for damages for the diminished value of the truck by equating these damages to “stigma” damages, which are not recoverable unless the property is permanently damaged. However, the Indiana Court of Appeals interpreted the case relied on by the trial court, Wiese-GMC, Inc. v. Wells, to reach a different conclusion.

The Wells case established, among other things, that diminished value damages are recoverable when “repair will not restore the item of personal property to its fair market value before the causative event.” The Indiana Court of Appeals therefore read this case to mean that, “even if the repair restores the property to its previous condition, damages may still be recovered if there is a resulting loss of fair market value to the property as a result of it having been damaged and then repaired.”

The Court of Appeals went on to discuss how property that has been damaged is likely to have a lesser fair market value even if repaired. In other words, recovering the cost of repair is not always sufficient to make an injured party whole again. Even after repairs, an owner may not be able to sell the vehicle at its fair market value before the accident. The Indiana Court of Appeals therefore clarified that when the cost of repair will not restore personal property to its fair market value, the diminution in value may be recovered as well.

Seventh Circuit Finds Coverage “Illusory” in Commercial E&O Policy

In an opinion handed down on September 23, 2019, the United States Court of Appeals for the Seventh Circuit has held that an exclusion for professional malpractice that applied to claims or suits “based upon or arising out of” a breach of contract was so extremely broad as to render the coverage illusory, requiring a remand to the district court to determine the reasonable expectations of the insured.

The carrier involved, Crum & Forster Specialty Insurance company, had agreed to pay “those sums that the insured becomes legally obligated to pay as damages or cleanup costs because of a wrongful act to which the insurance applies.”  In the policy, “Wrongful act” was defined to include a failure to render professional services, and “professional services” was defined as “those functions performed for others by you or by others on your behalf that are related to your practice as a consultant, engineer, [or] architect … .”

The Seventh Circuit observed that “such a provision is a common one, and essentially provides coverage for professional malpractice.”

architecture building building site business

Photo by PhotoMIX Ltd. on Pexels.com

But under the circumstances of the case, which was governed by Wisconsin law dealing with the interpretation of insurance contract language, the exclusion was deemed to be so broad as to completely eliminate the insured’s reasonable expectation of coverage.

The opinion may have far-reaching implications for other E&O policies that contain exclusions that include the “based upon or arising out of” language involved in this case.

A complete copy of the opinion is available here.

Questions about the coverage afforded in your E&O policy?  Contact the policyholder attorneys at Parr Richey

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Providing Timely Notice of Tort Claims

Tort Claim Notice is Critical to Preserve Rights

The Indiana Tort Claims Act (I.C. 34-13-3 et seq.) requires that notice must be filed before a plaintiff may bring a tort claim against any state agency or political subdivision. The timing of this notice is critical, as failing to file a tort claim notice within the applicable time limit will most likely bar an individual from seeking any remedy available under tort law.

If an individual’s tort claim involves the State or any state agency, notice must be served upon the attorney general or the relevant state agency within 270 days of the incident occurring. I.C. 34-13-3-6(a). Where a tort claim is against a political subdivision, notice must be given to the governing body of such political subdivision, as well as with Indiana Political Subdivision Risk Management Fund, within 180 days of the event occurring. The definition of a political subdivision can be found at IC 34-13-3-22.

In a case where an individual’s injury, or other circumstance, causes them to become incapacitated, or in the case where the injured party is a minor, the time limit tolls. I.C. 34-13-3-9. In such a case, the tort claims notice must be filed within 180 days after the incapacity ends, or in the case of a minor, 180 days after his/her 18th birthday.

It is important to note that whether a party is a state agency or a political subdivision is not always apparent. The Court of Appeals has held in one case that a state university is not an agent of the State, but rather a political subdivision subject to the 180 day tort claim notice deadline. Therefore, it is advisable that all tort claim notices be filed as soon as possible, ideally within 180 days.

The Civil Justice System: Protecting Your Family

Parr Richey Attorney Mike Schultz to present at upcoming seminar, “Insurance Coverage Litigation: Secrets Insurance Companies Don’t Want Attorneys to Know”

mls photo 2017On July 13, 2018, Parr Richey attorney Mike Schultz will speak on “Strategies Used to Delay/Deny Claims” and “Bad Faith and Breach of Contract Litigation” at an NBI continuing legal education seminar in Indianapolis.  Mr. Schultz is part of a distinguished panel of attorneys who regularly engage in insurance coverage litigation.  The seminar, which is presented by the National Business Institute, will be held at the Capital Conference Center, 201 N. Illinois Street, Indianapolis, IN 46204.

Complete seminar details, including the full agenda and list of speakers, can be found at this link.

Frozen Pipe Prevention and Water Damage Insurance Claims

With the recent biting cold, many property owners are taking steps to protect their investments to the best of their ability.  Some great information on how best to prevent disasters caused by freezing water pipes can be found in the Resource Links at the bottom of this article.

Recent research suggests a strong correlation between the loss of arctic sea ice and a particular pattern of the jet stream that causes the more frequent cold spells we feel here in Indiana.  But wherever you may fall on the never ending debate over global warming, one thing is beyond debate:  recent temperatures in Indiana have been unbearably and dangerously cold.  It is reasonable to expect that despite our best efforts a great deal of property damage will result from frozen and burst pipes.

Insurance claims involving frozen pipes, ice dams, and other cold-weather-related disasters can prove to be particularly frustrating for homeowners and businesses.  For example, many commercial policies include provisions that may limit or even exclude coverage for the catastrophic damage that can occur when pipes freeze, then burst.  If you have a dispute or potential dispute with your insurance company about coverage for frozen pipes or water damage, the time to seek advice and representation is now.  The property damage attorneys at Parr Richey are experienced with all aspects of these sometimes difficult claims and there is no fee charged for initial consultation.

The last time Indiana experienced the “polar vortex” the number of insurance claims for frozen and burst pipes skyrocketed.  Some estimated the cost to the US economy of such claims to exceed $5 billion.  Much of this loss is borne by individual homeowners and business owners who are not properly reimbursed for the loss and damage.  If you need help with your claim, Contact Us.

Resource links:

https://www.in.gov/oucc/2421.htm

http://disastersafety.org/wp-content/uploads/Freezing-Bursting-Pipes_IBHS-White.pdf

http://www.redcross.org/get-help/how-to-prepare-for-emergencies/types-of-emergencies/winter-storm/frozen-pipes

https://www.wikihow.com/Prevent-Frozen-Water-Pipes

2016 Indiana Homeowners Insurance Complaint Index

The Indiana Department of Insurance publishes complaint indexes for each year.  According to the Indiana Department of Insurance:

The table uses the amount of each company’s premium and the number of closed complaints against the insurer during a calendar year to arrive at a complaint index. A complaint index of 1.00 means the insurer’s share of all complaints received is equal to its share of all the business written in Indiana. An index of 2.00 means that the insurer’s share of complaints is twice as large as its share of business written in Indiana. An index of 0.50 means that the insurer’s share of complaints is half as large as its share of business.

See the IDOI website.

Here is the Index for 2016 for Homeowners Insurance:

NAIC #                   Company Name                       Premium            # of Complaints    Index

19240 Allstate Ind Co 3,135,849 1 5.15
19232 Allstate Ins Co 39,591,393 3 1.22
17230 Allstate Prop & Cas Ins Co 45,547,280 5 1.77
37907 Allstate Vehicle & Prop Ins Co 49,856,801 8 2.59
19100 Amco Ins Co -8,748 1 DNC
19275 American Family Mut Ins Co 84,519,004 9 1.72
28401 American Natl Prop & Cas Co 3,655,934 1 4.42
42978 American Security Ins Co 227,871 1 DNC
10395 Citizens Ins Co Of The Midwest 11,915,176 2 2.71
29734 Conifer Ins Co 2,697,353 1 5.99
22640 Consolidated Ins Co 36,610,526 3 1.32
10921 CSAA Fire & Cas Ins Co 17,308,442 5 4.67
26263 Erie Ins Co 57,635,841 4 1.12
26271 Erie Ins Exch 47,829,824 4 1.35
14176 Hastings Mut Ins Co 14,902,465 1 1.08
13927 Homesite Ins Co Of The Midwest 16,020,294 3 3.03
29068 IDS Prop Cas Ins Co 7,122,894 4 9.07
21679 Illinois Farmers Ins Co 12,681,456 1 1.27
22624 Indiana Farmers Mut Ins Co 48,721,331 2 0.66
26123 Lightning Rod Mut Ins Co 9,917,072 2 3.26
33600 LM Ins Corp 11,695,953 1 1.38
34339 Metropolitan Grp Prop & Cas Ins Co 5,907,391 1 2.74
26093 Nationwide Affinity Co of Amer 19,378,362 1 0.83
23760 Nationwide Gen Ins Co 2,983,865 1 5.42
32700 Owners Ins Co 343,720 1 DNC
32905 Property Owners Ins Co 69,423,093 3 0.70
11215 Safeco Ins Co Of IN 80,179,080 3 0.60
19259 Selective Ins Co Of SC 10,859,545 1 1.49
23388 Shelter Mut Ins Co 13,640,080 1 1.18
42986 Standard Guar Ins Co 13,287 2 DNC
15199 Standard Prop & Cas Ins Co 5,376,584 1 3.01
25135 State Automobile Mut Ins Co 3,792,084 1 4.26
25143 State Farm Fire & Cas Co 505,746,115 24 0.77
28188 Travco Ins Co 40,455,080 3 1.20
27998 Travelers Home & Marine Ins Co 1,697,642 1 9.52
27120 Trumbull Ins Co 7,265,688 1 2.22
40118 Trustgard Ins Co 9,802,315 1 1.65
15288 United Farm Family Mut Ins Co 140,583,062 5 0.57
10861 Universal Prop & Cas Ins 5,432,316 2 5.95
15407 Wolverine Mut Ins Co 3,261,979 1 4.95

 

 

Subtotal Premium and Complaints 1,447,725,299 116
161 Companies with Zero Complaints 426,834,890  
Total Premium and Complaints 1,874,560,189 116

Report does not include 161 companies with zero complaints DNC- did not calculate (premiums under $1 million)

None – No premium was reported during 2016.

Premium information from Property & Casualty Annual Statement Page 19, Line 4, Column 1