When the SIU Goes Too Far – Part 2

“The use of ‘scare tactics’ by an insurance representative to discourage the filing of claims cannot be condoned.  Such actions are certainly clear and convincing evidence of oppression and justify the imposition of punitive damages.”  Liberty Mut. Ins. Co. v. Parkinson, 487 N.E.2d 162, 166 (Ind. Ct. App. 1985).

The opinion of the Indiana Court of Appeals in Liberty Mutual predated the Indiana Supreme Court’s specific recognition of the tort of bad faith in Erie v. Hickman by eight years but the holding stands to this day as good law.  It is obvious bad faith for an insurance company to use “scare tactics” to try to get out of paying an insurance claim, and Indiana law provides for compensatory and punitive damages when they do it.

We are seeing an increase in the number of cases where insureds are being subjected to lengthy interrogations by the “special investigation unit”, and in a few of those cases the investigator has gone so far as to use scare tactics to try to convince the insured to drop their claim.  If this happens to you or someone you know, they should immediately seek legal representation.  As the Indiana Court of Appeals observed, such tactics are evidence of “oppression.”

It is one thing for an insurance investigator to question an insured about legitimate concerns that may affect coverage for a loss.  There are many examples of questions that can be asked — and must ordinarily be answered — in the case law dealing with bad faith claim handling practices, but threats and intimidation cross the line every time.

 

First Ghost Ship Suits Filed

The San Francisco Chronicle reports the filing of the first lawsuit arising out of the tragic Ghost Ship fire earlier this month.  Details here:  Families of 2 Oakland warehouse fire victims file 1st lawsuits.

 

Tragic Warehouse Fire in Oakland

Parr Richey partners Mike Schultz and Jim Buddenbaum are closely watching the fire investigation, including the origin and cause determination, of the tragic and devastating fire at the warehouse party in Oakland, California.  636163610717597659-epa-usa-fire-oakland-california-1

Handout frame grab from video released via Twitter use @Oaklandfirelive showing fire crews arriving at the scene of the warehouse fire in Oakland, December 3, 2016.

The Associated Press reports that at least nine people are dead and as many as two dozen more may have perished in the fire, which occurred at a warehouse party.  The warehouse itself is reported to have been converted, illegally, into studio and living space for electronic music artists.  According to the AP report, “City officials confirmed Saturday that building authorities had opened an investigation just last month into complaints about the safety of the structure. That inquiry was ongoing when the fire struck.”

We will continue to follow this developing story.

 

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.

2014 Indiana Homeowners Insurance Complaint Index

NAIC # Company Name Premium Number Index
1 33898 Aegis Security Insurance Company 728,542 1 DNC
2 19240 Allstate Indemnity Company 2,498,961 2 19.71
3 19232 Allstate Insurance Company 45,755,099 4 2.15
4 17230 Allstate Property And Casualty Insurance Company 58,431,436 5 2.11
5 19275 American Family Mutual Insurance Company 81,690,022 4 1.21
6 38652 American Modern Select Insurance Company 5,188,327 1 4.75
7 19992 American Select Insurance Company 6,245,114 1 3.94
8 10052 Chubb National Insurance Company 7,680,181 1 3.21
9 29734 Conifer Insurance Company 4,560,272 1 5.40
10 40649 Economy Premier Assurance Company 1,393,820 1 17.67
11 22292 Hanover Insurance Company 1,171 1 DNC
12 13927 Homesite Insurance Company of the Midwest 18,528,214 2 2.66
13 22624 Indiana Farmers Mutual Insurance Company 45,541,821 1 0.54
14 42404 Liberty Insurance Corporation 11,949,914 1 2.06
15 33600 LM Insurance Corporation 11,019,915 1 2.23
16 23043 Liberty Mutual Insurance Company None 1 DNC
17 21229 MemberSelect Insurance Company 10,050,059 1 2.45
18 23353 Meridian Security Insurance Company 13,528,349 1 1.82
19 14621 Motorists Mutual Insurance Company 6,307,467 1 3.90
20 23779 Nationwide Mutual Fire Insurance Company 18,676,418 1 1.32
21 32700 Owners Insurance Company 26,433,189 3 2.80
22 32905 Property-Owners Insurance Company 23,933,789 1 1.03
23 11000 Sentinel Insurance Company, Ltd. 1,625,531 1 15.15
24 25143 State Farm Fire and Casualty Company 484,909,595 27 1.37
25 25178 State Farm Mutual Automobile Insurance Company None 1 DNC
26 40118 Trustgard Insurance Company 11,905,377 2 4.14
27 15288 United Farm Family Mutual Insurance Company 137,742,927 4 0.72
28 44393 West American Insurance Company (35,270) 1 DNC
Subtotal Premium and Complaints 1,036,290,240 72
162 Companies with Zero Complaints 737,032,294  
Total Premium and Complaints 1,773,322,534 72
Report does not include 162 companies with zero complaints
DNC- did not calculate (premiums under $1 million)
None – No premium was reported during 2014.
Premium information from Property & Casualty Annual Statement Page 19, Line 4, Column 1

The information contained in this table is based on figures published by the Indiana Department of Insurance on its website.  “Number” in the table above refers to the number of complaints as published by the IDOI.

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.

The Importance of Preserving Evidence after an Explosion or Fire

In the aftermath of a catastrophic explosion or fire, it is not surprising when victims or their family members do not think about the need to preserve evidence.  But in those cases where there is litigation to determine who or what may bear fault for causing the incident the efforts, or lack of efforts, to preserve and protect the evidence taken in the immediate aftermath of the fire or explosion will prove to be critical to the parties.  Test Data

Preserving the evidence is in everyone’s interest because the ultimate goal of any litigation is to determine the truth of what happened.  If it can be shown that the evidence was in the control of one party or another and the party in control failed to take appropriate steps to preserve the evidence so that other interested parties could examine it, the party in control may be accused of “spoliation” of evidence.  In that case, the court may ultimately instruct the jury that had the evidence been preserved and made available it would have been adverse to the party who could have preserved it — the so-called “adverse inference instruction”.

An enormous amount of information can be gleaned from what may appear to be unlikely sources.  Care must be taken to preserve even some materials that may seem to be inconsequential.  For example, lithium ion batteries such as those used in phones, tablets and laptops have a very high energy density. Although the electronic circuitry in chargers are supposed to prevent overcharging, those circuits can fail allowing the batteries to overheat and catch fire.  Yet, some fire investigators, focused on more obvious causes, can miss this evidence, which gets scooped up with all the other fire debris after the initial scene investigations have been concluded.

It is important for the victims of fires and explosions to have their own experts and investigators review the scene and not rely solely on those sent to the scene by their insurance company.  It is also important to act quickly, before the critical evidence is gone.

If you have questions regarding the need to preserve or protect evidence after a fire or explosion, contact an experienced attorney for help.