Monthly Archives: November 2014

Failure to Promptly Rescind

Breach of Contract Not Enough for Summary Judgment When an insurance company receives facts that support rescission of an insurance policy it is imperative that the remedy be exercised promptly. When the claim comes it becomes necessary to complete a … Continue reading

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Thanksgiving

What I am Thankful For My family and I have much to be thankful for this year, not the least of which is you, my friends, clients and readers of my blog “Zalma on Insurance”, “Zalma’s Insurance Fraud Letter,” and … Continue reading

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Lie To Your Insurer – Lose All Coverage

Total Mold Exclusion Effective When a contractor installed a freezer that was improperly installed, leaked into an adjoining premises, and infested the property with mold the insured presented a claim for defense and indemnity. In Canopius U.S. Ins., Inc. v. … Continue reading

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Mold Damage Requires Proof

First Party Policy Does Not Cover Bodily Injury of Insured The Phelpses owned a two-story residence in Somerset, Kentucky, that was insured by Kentucky Farm Bureau Mutual Insurance Company (KFB). The residence had been in foreclosure since May 21, 2001. … Continue reading

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Illusory Policy Disfavored

Ambiguous Policy Term Construed Against Insurer Insurance companies must, when dealing with a claim, deal with the policy written not the policy they intended to write. When an insurer writes a policy that contains an ambiguous exclusion that it cannot … Continue reading

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Equitable Fraud Supports Rescission

It Doesn’t Pay to Lie To Your Insurer Even If You Didn’t Mean It An insurer sought declaratory relief because of several alleged misrepresentations that a recreational boat owner made on an application form when obtaining an insurance policy for … Continue reading

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Agent’s Obligations Limited

Insured’s Failure of Due Diligence Eliminates Case Against Agent People who buy insurance are trusting souls. They believe that if they ask an insurance agent to obtain a homeowners policy for them that the agent will do everything necessary to … Continue reading

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Insurer’s Language Used Against It

Terms Defined for Liability Policy Should Not be Used In First Party Cover Writing a clear and unambiguous insurance contract is a difficult task. To avoid problems insurers define special terms to prevent confusion. In Strauss v. Chubb Indem. Ins. … Continue reading

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Not All Relatives Are “Resident Relatives”

A Person Cannot Reside Primarily in Two Places In the 21st Century more grown, emancipated children are living with their parents. Automobile liability insurance policies are written to protect the parents insurer from providing coverage to a resident relative who … Continue reading

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No Good Deed Goes Unpunished

Duty of Good Faith Is Mutual Plaintiffs’ counsel have no problem suing insurers for breach of the covenant of good faith and fair dealing. Their clients see a legitimate insurance claim as an opportunity to profit from the claim by … Continue reading

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The Fight Against Fraud Continues

Zalma’s Insurance Fraud Letter – November 15, 2014 In the 22st  issue of its 18th year of publication of Zalma’s Insurance Fraud Letter (ZIFL) Barry Zalma, on November 15, 2014, continues the effort to reduce the effect of insurance fraud … Continue reading

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Bad Faith “Set-Up” Fails

Refusal of Policy Limit Demand Not Bad Faith The potential for punitive damages against an insurer who fails to pay policy limits after receiving a reasonable offer of settlement tempts plaintiffs’ lawyers to make policy limits demands quickly, and with … Continue reading

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Subrogation

The Equitable Remedy to Reduce Insurer’s Net Loss The following article is adapted from Insurance Claims: A Comprehensive Guide by Barry Zalma and available at the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary. The equitable doctrine of subrogation places the subrogee … Continue reading

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No Claim, No Settlement, No Coverage

When Is an Insured “Legally Obligated to Pay?” People without a great deal of knowledge about the danger of being exposed to mold are frightened when it appears in a residential property. When a condominium project with more than 190 … Continue reading

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Location of Injury & Employment Controls

Workers’ Compensation Applies in State of Injury When a party believes a trial court has erred it can petition an appellate court for an order directing the trial court to correct the alleged error. The process is called seeking a … Continue reading

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Clear & Unambiguous Language Controls

Court Refuses to Change Policy Wording Injured people who failed to purchase insurance to protect themselves will often seek to conflate the wording of an insurance policy issued to a relative to find coverage that did not exist. Sometimes, to … Continue reading

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Collapse or Sewer Backup

The Court Cannot Create Ambiguity Where the Terms of the Contract Are Clear Insurance policies, including those that are described as “all risk” or “direct risk of physical loss” policies, do not insure against all possible causes of damages. No … Continue reading

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Insured May Reject or Limit UM Coverage

Must Be Insured to Receive UM/UIM Coverage Insurers have the unquestioned right to select whom it will insure and for what risks it is willing to take. Often, believing they will never really need the insurance, consumers opt for the … Continue reading

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Incorrectly Denying Claim Not Bad Faith

Fraud Defense Requires Willful Intent Often an insured is his or her own enemy when it comes to the presentation of a claim. They will attempt to increase the amount of their claim by scheduling items claimed destroyed in a … Continue reading

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Erroneous Denial Not Bad Faith

Destruction of Property by Fired Employee Criminal acts exclusions result in litigation between insurers and their insureds. In Easy Corner, Inc. v. State Nat. Ins. Co., Inc., — F.Supp.3d —-, 2014 WL 5510319 (E.D.Pa., 11/3/14) the District Court for the … Continue reading

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Construction Defects an “Occurrence” in Texas

Contractual Liability Exclusion Trumped by Breach of General Duty Insurers have not been happy paying construction defect claims. They have rewritten their policies in an attempt to avoid paying for damages caused by an insured contractor who constructed a defective … Continue reading

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You Can Beat the IRS

Taxes and Insurance The Internal Revenue Service is not filled with insurance professionals. It might be said that no one at the IRS can define the term “insurance.” In Securitas Holdings, Inc. v. C.I.R., T.C. Memo. 2014-225, 2014 WL 5470747 … Continue reading

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Agent’s Duty

Low Premium Is Not Always Best When business is bad, when cash flow is inadequate, the first avenue cutting corners, is by reducing or not paying insurance premiums. The procedure works fine when there is no loss but causes extreme … Continue reading

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