Insurance Online : Sixth Circuit Finds No Coverage for Property Damage Caused by Faulty Workmanship

   The Sixth Circuit affirmed the lower court's order granting summary judgment to the insurer who denied a defense for a construction defect claim. Steel Supply & Eng'g Co. v. Illinois Nat'. Ins. Co., 2015 U.S. App. LEXIS 14363 (6th Cir. Aug. 13, 2015).     Steel Supply contracted with the Carmel Redevelopment Corporation to fabricate and erect steel for a construction project in Carmel, Indiana. After the steel was erected, an iron worker at the site discovered defects in the steel. Subsequent investigations revealed additional defects.     Carmel filed suit against Steel Supply for breach of contract. The complaint alleged that a critical connection that Steel Supply designed was inadequate to handle the forces coming onto it. Carmel claimed that the immediate need to remediate the steel damaged Carmel directly, and that other contractors sought damages from Carmel for harm caused by the delays.    Illinois National initially assumed the defense of Steel Supply, but later withdrew the defense. Supply Steel then sued Illinois National. The district court granted summary judgment to Illinois National.    In applying Michigan law, the Sixth Circuit affirmed. As a general matter, mere faulty workmanship did not constitute an occurrence. Michigan courts, however, recognized an exception: even mere faulty workmanship constituted an "occurrence" if it harmed a third party's property.     Steel Supply argued the exception applied here. First, it argued that photographs showed that the Steel Supply's faulty workmanship did damage property that belonged to neither Steel Supply or Carmel. Second, Carmel was suing for reimbursement for that damage by seeking fees for various professionals.     Both arguments failed. Here, there was no record that a third party sought contribution from Carmel. The underlying complaint did not explicitly claim reimbursement for any specific damage to third-party property. The photographs on which Steel Supply relied upon to prove damage did not show a causal nexus between damage and Steel Supply's work. 

Follow our page in Facebook "Insurance Online". from Insurance Law Hawaii

Read more.. bloggeradsenseo

Insurance Online : Joaquin the Line Between Danger and Safety

Yes, the Atlantic hurricane season has been quiet. That seems to be changing with Hurricane Joaquin, which reached hurricane status Wednesday morning. At best, the storm will dump more rain on a pretty soggy Southeast. At worst? Forecasters don’t seem to be sure because of a number of atmospheric features that could influence Joaquin’s track.

Right now, forecasters are looking at potential landfall sites in the U.S. from the North Carolina coast to the Northeast. The storm could still miss the U.S. altogether, too.

But for now, let’s assume it does make landfall somewhere along the East Coast – bringing thunderstorms, rain, wind, and storm surges along the coast. Here are some points homeowners should consider.

Hurricanes and home insurance

Is hurricane damage covered by standard home insurance? Yes and no.

On the ‘yes’ side, wind damage typically is covered by a standard policy. So is hail damage. Lightning strikes usually could be covered as well. The same goes for fires caused by the storm.

Water? It depends. If winds tore the roof off your house and rain drenched the insides, you likely would be covered by standard home insurance. However, if the rain or storm surge caused flooding, any resulting damage WOULD NOT be covered by your homeowners policy. For that kind of protection, you need a separate flood policy.

So should you rush out and buy a flood policy now? Not for Joaquin – flood policies don’t go into effect for 30 days after they’re purchased. But you could protect yourself through the rest of hurricane season, which lasts through November.

See our Disaster Guide for more information on how to protect yourself from hurricanes, tornadoes, snowstorms, earthquakes, and other disasters.

Do you have a hurricane deductible?

One final point to consider about hurricanes and home insurance: Some states along the East and Gulf coasts have hurricane deductibles. That could affect your claim should you suffer storm damage.

Some definitions:

• Deductible: The amount you agree to pay toward a claim before your home insurance provider helps, up to your policy limits. Say you have a $500 deductible and your roof suffers damage that will cost $2,000 to repair. You’d pay $500 and your provider would pay the rest.
• Hurricane deductible: These are set as a percentage of the value of your home, typically between 1% and 5%. If you own a house valued at $200,000 and have a hurricane deductible of 2%, you’d be on your own for the first $4,000 in damage caused by a hurricane.

What you can do now for Joaquin?

Find your policy and put it in a safe place in case you need to access it after the hurricane. Go over your evacuation plan with your family, putting special emphasis on where you will meet outside the house. Consider boarding up windows, and secure lawn furniture and grills inside a shed or garage.

If you have time, update your home inventory – a listing of your possessions, complete with photos, descriptions, and any receipts you may have. This can help greatly should you have to file a claim for covered losses incurred during the storm.

Keep yourself informed of Joaquin’s progress, and follow instructions issued by local authorities. Above all, stay safe.

Photo credit for preview image: Flickr user/David Prasad

Follow our page in Facebook "Insurance Online". from Home Insurance Blog

Read more.. bloggeradsenseo

Insurance Online : Joaquin the Line Between Danger and Safety

Yes, the Atlantic hurricane season has been quiet. That seems to be changing with Hurricane Joaquin, which reached hurricane status Wednesday morning. At best, the storm will dump more rain on a pretty soggy Southeast. At worst? Forecasters don’t seem to be sure because of a number of atmospheric features that could influence Joaquin’s track.

Right now, forecasters are looking at potential landfall sites in the U.S. from the North Carolina coast to the Northeast. The storm could still miss the U.S. altogether, too.

But for now, let’s assume it does make landfall somewhere along the East Coast – bringing thunderstorms, rain, wind, and storm surges along the coast. Here are some points homeowners should consider.

Hurricanes and home insurance

Is hurricane damage covered by standard home insurance? Yes and no.

On the ‘yes’ side, wind damage typically is covered by a standard policy. So is hail damage. Lightning strikes usually could be covered as well. The same goes for fires caused by the storm.

Water? It depends. If winds tore the roof off your house and rain drenched the insides, you likely would be covered by standard home insurance. However, if the rain or storm surge caused flooding, any resulting damage WOULD NOT be covered by your homeowners policy. For that kind of protection, you need a separate flood policy.

So should you rush out and buy a flood policy now? Not for Joaquin – flood policies don’t go into effect for 30 days after they’re purchased. But you could protect yourself through the rest of hurricane season, which lasts through November.

See our Disaster Guide for more information on how to protect yourself from hurricanes, tornadoes, snowstorms, earthquakes, and other disasters.

Do you have a hurricane deductible?

One final point to consider about hurricanes and home insurance: Some states along the East and Gulf coasts have hurricane deductibles. That could affect your claim should you suffer storm damage.

Some definitions:

• Deductible: The amount you agree to pay toward a claim before your home insurance provider helps, up to your policy limits. Say you have a $500 deductible and your roof suffers damage that will cost $2,000 to repair. You’d pay $500 and your provider would pay the rest.
• Hurricane deductible: These are set as a percentage of the value of your home, typically between 1% and 5%. If you own a house valued at $200,000 and have a hurricane deductible of 2%, you’d be on your own for the first $4,000 in damage caused by a hurricane.

What you can do now for Joaquin?

Find your policy and put it in a safe place in case you need to access it after the hurricane. Go over your evacuation plan with your family, putting special emphasis on where you will meet outside the house. Consider boarding up windows, and secure lawn furniture and grills inside a shed or garage.

If you have time, update your home inventory – a listing of your possessions, complete with photos, descriptions, and any receipts you may have. This can help greatly should you have to file a claim for covered losses incurred during the storm.

Keep yourself informed of Joaquin’s progress, and follow instructions issued by local authorities. Above all, stay safe.

Photo credit for preview image: Flickr user/David Prasad

Follow our page in Facebook "Insurance Online". from Home Insurance Blog

Read more.. bloggeradsenseo

Insurance Online : Overruling Henkel, California Supreme Court Validates Assignment of Policies

   In a major ruling, the California Supreme Court applied a statutory provision to overrule its prior decision in Henkel Corp. v. Hartford Accident & Indemn. Co., 29 Cal. 4th 934 (2003) and ruled that liability policies can be assigned despite non-assignment provisions. See Fluor Corp. v. Superior Court, 2015 Cal. LEXIS 5631 (Cal. Aug. 20, 2015). The Hawaii Supreme Court relied on Henkel when it also found anti-consent provisions valid. See Del Monte Fresh Fresh Produce (Hawaii), Inc. v. Fireman's Fund Ins. Co., 117 Haw. 357, 183 P.3d 734 (2007) [see posts here and here].    For decades, Fluor Corporation performed engineering, procurement, and construction (EPC) operations through various corporate entities and subsidiaries. Beginning in 1971, Hartford issued up to 11 CGL policies to Fluor from 1971 to 1986. Each policy contained a consent-to-assignment clause reading: "Assignment of interest under the policy shall not bind the Company until its consent is endorsed hereon."     Beginning in the mid-1980s, Fluor Corporation was sued in numerous lawsuits claiming personal injury from asbestos exposure. Fluor Corporation tendered the early lawsuits to Hartford, which accepted the defense. Fluor Corporation subsequently went through a reverse spinoff under which a newly formed subsidiary, Fluor 2, took over the continuation of the company's EPC businesses. The original Fluor transferred all of its EPC-related assets and liabilities to Fluor-2, making Fluor-2 the parent of the EPC subsidiaries. The transaction did not except any insurance rights from the transfer of "any and all" assets.     In 2001, six months after the reverse spinoff, Fluor-2 notified Hartford of the transaction. For seven years, Hartford continued to defend Fluor-2 against claims triggered by occurrences during the terms of the original, expired policies issued to Fluor, and provided defend and indemnity for those claims.    The parties became embroiled in litigation in the mid-2000's on various issues. Hartford filed a second amended cross-complaint in 2009, presenting for the first time the argument that it had no obligations under the policies because it had never consented to the assignment of the policies to Fluor-2. The trial court granted summary judgment to Hartford based on Henkel and the appellate court affirmed.    Relying upon Insurance Code section 520 - a statute dating back to 1872, but never considered by the court in Henkel - the court overruled Henkel. Section 520 restricted an insurer's ability to limit an insured's right to transfer or assign a claim for coverage "after a loss has happened."     Henkel held that the consent-to-assignment clause was enforceable and precluded the insured's transfer of the right to invoke coverage without the insurer's consent after the coverage-triggering even had already occurred. Fluor-2 argued that when an assignment took place after a third party's exposure to asbestos, resulting in personal injury for which the insured may be liable, "a loss has happened" within the meaning of section 510. Accordingly, the insurer could not rely on a consent-to-assignment clause to avoid the effect of the assignment.     The Supreme Court agreed. The decision in Henkel, which considered the proper application of a consent-to-assignment clause under common law principles, could not survive in light of the controlling statutory provisions of section 520. Even where the dollar amount of the loss was unknown or undetermined and not yet established by a judgment or settlement, the requirement that the insurer consent to an assignment was invalid under the statute.    Whether the Fluor decision would cause the Hawaii Supreme Court to revisit the Del Monte decision seems unlikely. Del Monte was also based, in part, upon a statutory provision, Haw. Rev. Stat. 431:10-228 (a), which provides that "[a] policy may be assignable or not assignable, as provided by its terms." 

Follow our page in Facebook "Insurance Online". from Insurance Law Hawaii

Read more.. bloggeradsenseo

Insurance Online : The Cyber Risk Insurance Market & the DHS Industry Working Session

The Department of Homeland Security sponsored an insurance industry working session (see here) to find ways to generate a more robust Cyber Risk Insurance market. The result so far has been a readout report (here). According to the Insurance Working Session Readout Report three areas could lead to a more robust market: Cyber incident information sharing/data repository – the idea here is to create a secure method to pool and share cyber incident information on an anonymized basis in a database accessible by insurers. Cyber incident consequence analysis – New data and modeling techniques would help insurers assess the loss value of a cyber-attack on critical infrastructure, and also the impact of various cyber risk management techniques. Most importantly, the...

Follow our page in Facebook "Insurance Online". from Specialty Insurance Blog

Read more.. bloggeradsenseo