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.

Do You Have Flood Coverage?

Hurricanes Harvey and Irma have brought catastrophic flooding to parts of Florida and Texas, and the storm surge has affected other areas such as Charleston, South Carolina where high tides hit almost 10 feet on September 11th, about 3 feet above flood stage.  Flooding is everywhere in the news.

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Some water losses are not excluded in typical homeowners policies

What happens when you have a flood – particularly in areas not typically prone to flooding?  Do you have coverage under your homeowner’s insurance policy?

Probably not.  The typical homeowner’s policy excludes damage caused by what we typically consider to be a “flood”.  This includes water pushed over the land by waves or tides.  But flood insurance is available through the National Flood Insurance Program (“NFIP”).  There is a wealth of information available here. Unfortunately, not many affected homeowners are enrolled in NFIP.

Does this mean that if you suffer a water-related loss that you are automatically out of luck?  Not necessarily.  There may be many situations where damage that is covered by your policy occurs at or around the same time as the flood damage occurs, and it is necessary to carefully analyze the language in your policy to determine whether and under what circumstances there may be coverage for your water-related loss.  And, if the policy is unclear, that can benefit you as the policyholder.  For example, in Indiana, the law clear that ambiguities in insurance contracts are resolved in favor of the insuredSee Erie Ins. Exch. v. Sams, 20 N.E.3d 182, 187 (Ind. Ct. App. 2014) (citing Meridian Mut. Ins. Co. v. Auto-Owners Ins. Co., 698 N.E.2d 770, 773 (Ind. 1998)). This is particularly true with unclear provisions that limit or exclude coverage. Id. Where provisions limiting coverage are not clearly and plainly expressed, the policy will be construed most favorably to the insured. Id. This strict construal against the insurer is driven by the fact that the insurer drafts the policy and foists its terms upon the customer. Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind. 1996), reh’g denied. (quoting American Economy Ins. Co. v. Liggett, 426 N.E.2d 136, 142 (Ind. Ct. App. 1981)).

The bottom line is this:  If you have suffered a water-related loss, it may be important to seek a legal interpretation of your policy before communicating with the insurance company.

Tornado Damage Insurance Claims: The Twist May Be in the Policy Language

Indiana has just been clobbered – again – by fierce, widespread tornadoes. The website of the National Weather Service has excellent data you can review to track the history of the storms and the damage they caused in your area. For example, visit: http://www.weather.gov/ind/august242016severestorm track dataWhen the time comes to finalize your claim with your commercial or homeowners insurance carrier for the damage caused to your property by these strong storms, there are some common pitfalls to be aware of about what is or may be covered.

For example, depending on the scope or extent of the damage to your property, there may be additional dollars over and above the limits of your property coverage available to pay for the cost of debris removal. Policies provide this coverage in different ways and it is important to read and understand how your policy works when you are negotiating with your insurer. Here is one example of how a property policy may provide debris removal coverage:

Debris Removal Language

Language like this appears simple enough on first reading, but look again.  Let’s say you incurred expense removing debris following a storm, and assume the cost of removing the debris was actually more than the damage caused to your structure.  This policy appears to limit the available dollars for debris removal to 25% of the “amount we pay for the direct physical loss of or damage to Covered Property.”  The capital letters means “Covered Property” is defined somewhere else in the policy.  Defined as what?  The building?  The building and outbuildings?  It is important to know.  Also, when this policy provides 25% of the amount of direct loss or damage “plus” the “deductible in this policy applicable to that loss or damage” does that mean 25% of the deductible or 100% of the deductible?  Again — this is important to know when you are settling with your insurance company.

What if all you have is trees down, but (thankfully) they missed your house?  Homeowners policies often provide limited coverage for damage to trees and shrubs. The straight-line winds that accompanied recent storms brought down many, many trees – both living and dead – and the cleanup cost can be staggering. Yet, your homeowner’s policy from that “good neighbor” company that is “on your side” may only provide you with very limited policy proceeds for the cleanup of trees, and then only under very limited circumstances.

Here is some typical language from a standard homeowner’s policy:

We will also pay your reasonable expense, up to $1000, for the removal from the “residence premises” of:

1)  Your tree(s) felled by the peril of Windstorm or Hail or Weight of Ice, Snow or Sleet; or

2)  A neighbor’s tree(s) felled by a Peril Insured Against under Coverage C; provided the tree(s):

3) Damage(s) a covered structure;

4) Does not damage a covered structure, but:  a) Block(s) a driveway on the “residence premises” which prevents a “motor vehicle”, that is registered for use on public roads or property, from entering or leaving the “residence premises”; or  b) Block(s) a ramp or other fixture designed to assist a handicapped person to enter or leave the dwelling building.

The $1000 limit is the most we will pay in any one loss regardless of the number of fallen trees. No more than $500 of this limit will be paid for the removal of any one tree.

Say that again?!

If you need assistance untangling the language of your policy and working to resolve your claim with your insurance company, the policyholder attorneys of Parr Richey are always ready to help. Call Mike Schultz or Jim Buddenbaum toll free at 888-337-7766.

The Business Activity Exclusion

What happens if you operate a business – say an auto repair shop – as a means of making a living, and then suffer a fire loss to personal property located in that business? Assume the fire occurs as a result of working on a car in your repair shop, but that at the time of the fire you were not actually engaged in business; rather, you were working on your own car, or perhaps helping a friend to work on her car as a favor. Would the business activities exclusion in your homeowner’s insurance policy preclude you from recovering for the loss of your personal property?

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The rule in Indiana is that “an insured is engaged in a business pursuit only when he pursues a continued or regular activity for the purpose of earning a livelihood. American Family Mutual Ins. Co. v. Bentley, 352 N.E.2d 860, 865 (Ind. Ct. App. 1976) (emphasis added); see also Asbury v. Indiana Union Mut. Ins. Co., 441 N.E.2d 232, 239 (Ind. Ct. App. 1982) (same). Further, “[w]hether an activity is a ‘business’ or property is ‘business property’ under an insurance policy is almost always a factual question presented for determination by the trier of fact or jury.” Id., at 243. The question, then, should turn on what you were doing at the time, and not just on the fact that the loss occurred at your business.

In a 2012 decision the district court for the Northern District of Indiana rejected the argument that personal property that is the same as an insured’s business property automatically means a business exclusion applied to preclude coverage for the loss. In Bachman v. AMCO Insurance Company, 2012 WL 4322746 (N.D.Ind. Sept. 20, 2012), the insured sued AMCO for breach of contract after the insurance company applied a $10,000 limitation in its policy applicable to property located in the residence premises used mainly for “business” purposes. Following a theft, the insured, who sold sports cards out of his home, made a claim under his homeowner’s policy for some $150,000 worth of Fleer basketball cards. The cards had been purchased with money from his business, but the insured considered the particular cards stolen to be his “personal collection”. Id. at *1-2. The insured even admitted that he considered his personal collection to be “investments” that he planned to sell one day when he was “ready to retire.” Id., at *1.

The insurance company argued that the $10,000 business property limitation in its policy applied to the stolen basketball cards and, “[r]elying on excerpts from [the insured’s] examination under oath, . . . contend[ed] that the subject property was business property because it was stored in a manner indistinguishable from the business inventory and was acquired with resources from [the business] with the intention of eventually being sold through the company.” Id., at *5. The insurance company relied on Asbury v. Ind. Union Mut. Ins. Co. (and two other cases) to support its argument. Id.

The district court first noted that the cases relied on by the insurance company (including Asbury) “actually support the denial of summary judgment.” Id. The district court went on to reason as follows:

To the extent that AMCO argues that the Fleer basketball cards automatically fit within the business property limitation at issue simply because Mr. Bachman operated a sports memorabilia business out of his home on a consistent basis at the time of the burglary, the argument cannot result in the granting of summary judgment in AMCO’s favor. No one disputes that Spectator Sportscards, Inc. constituted a “business” and that Mr. Bachman regularly and continually sold sports memorabilia from his home office to third persons for the purpose of earning a livelihood. . . . However, the limitation in AMCO’s policy plainly depends on the use of the property at issue.

Id., at *7 (emphasis in original; internal citation omitted).

Issues like this can arise in many contexts.  The application of exclusions in policies is not necessarily simple or obvious, and sometimes the coverage is actually more broad than it seems.  If you have suffered a loss and are involved in a dispute with your insurance company about what is covered and what is excluded by your policy, whether it is a homeowners policy or a commercial policy, you should contact an attorney with experience reading and interpreting the coverages, conditions, limitations and exclusions. Sometimes the insurance company takes a position that looks correct at first glance, but they may not be looking at the whole picture.