Justia Insurance Law Opinion Summaries

Articles Posted in Real Estate & Property Law
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Sheckler rented residential property from McIntosh. The lease provided McIntosh “shall maintain fire and other hazard insurance on the premises only” and that Sheckler was responsible for insurance on possessions contained in the premises. The lease's indemnification clause exculpated McIntosh from any damages or injury occurring on the premises. McIntosh obtained insurance from Auto-Owners; first-party dwelling coverage provided coverage for fire damage and third-party landlord liability coverage provided coverage for claims brought by third parties that the insured “becomes legally obligated to pay as damages because of or arising out of bodily injury or property damage.” The third-party coverage provided a duty to defend any claim covered by the policy, excluding “property damage to property occupied or used by an insured or rented to or in the care of, any insured.” The policy listed McIntosh as the only named insured. McIntosh claims no money received from Sheckler was used to pay the annual premium.Sheckler notified McIntosh that the gas stove was not working. McIntosh placed a service call. The technician’s efforts resulted in a fire that caused substantial property damage. Auto-Owners paid McIntosh for damages incurred due to the fire and lost rental income and filed a subrogation action against the technician (Workman), who filed a third-party contribution complaint against Sheckler. Sheckler tendered the defense to Auto-Owners, which rejected the claim. The Illinois Supreme Court reinstated the rejection of Sheckler’s claim. An insurer’s duty to defend or indemnify does not extend to the tenant of an insured property against a third-party negligence contribution claim when the tenant is not identified as a person insured under the policy. View "Sheckler v. Auto-Owners Insurance Co." on Justia Law

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The Supreme Court reversed the circuit court's grant of summary judgment in favor of Allstate Vehicle and Property Insurance Company's decision to rescind an insurance policy purchased for a derelict house Homeowner intended to remodel, holding that questions of material fact existed precluding summary judgment.After a fire occurred, damaging the house and some of its contents, Allstate announced that it was rescinding the homeowners' insurance policy issued to Homeowner, asserting that Homeowner digitally signed an application in which he falsely answered a request as to whether he would occupy the house within thirty days. Plaintiffs, including Homeowner, sued Allstate for breach of contract and unfair trade practices. The circuit court granted Allstate's motion to rescind the policy, concluding that there was no factual dispute that Homeowner had made false statements on his insurance application. The Supreme Court reversed and remanded the case for further proceedings, holding that questions of material fact existed regarding whether Plaintiff's answer to Allstate's thirty-day-occupancy question was false and whether the question was material to Allstate's issuance of the policy. View "McDowell v. Allstate Vehicle & Property Insurance Co." on Justia Law

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Plaintiffs filed a civil suit against an insurer based on allegations that the insurer negligently advised them that they did not need to purchase a builder's risk policy for a hotel project. The district court granted the insurer's motion for summary judgment, finding that the insurer had no duty to give advice about different coverages or to ensure that adequate coverage existed and that plaintiffs failed to show the existence of a special relationship between the agent and the insureds that would give rise to additional duties on the agent's part to ensure the insured had adequate coverage.The Eighth Circuit affirmed, finding that the trial court did not err in its resolution of the motion for summary judgment. View "I Square Management, LLC v. McGriff Insurance Services, Inc." on Justia Law

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The Supreme Court reversed the decision of the court of appeals in this appeal involving a dispute between a homeowner and an insurance company over prejudgment interest, holding that Minnesota standard fire insurance policy, Minn. Stat. 65A/01, entitled Homeowner to prejudgment interest in an amount that may result in a total recovery that exceeded the policy limit.Homeowner sought coverage from Insurer after fires damaged his home. Insurer denied coverage, leading Homeowner to bring this lawsuit. A jury found for Homeowner. The district court award awarded Homeowner prejudgment interest in a limited amount, finding that Homeowner's total recovery for his personal property loss could not permissibly exceed the policy coverage limit. The court of appeals affirmed. The Supreme Court reversed and remanded the case to the district court to recalculate prejudgment interest, holding that, consistent with past precedent interpreting the standard fire policy, prejudgment interest can lawfully begin accruing before ascertainment of the loss when the insurer denies all liability. View "Else v. Auto-Owners Insurance Co." on Justia Law

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The Court of Appeals held that an injured tort claimant's rights under a general liability insurance policy do not vest until the claimant has obtained a judgment against, or entered into a qualifying settlement with, an insured.CX Reinsurance Company issued commercial general liability policies to several Baltimore residential Landlords that included coverage for bodily injuries resulting from lead paint exposure at the Landlords' rental properties. CX field contract rescission actions against the Landlords, which the parties settled. Under the terms of the rescission settlements, the coverage for lead paint-related losses was substantially reduced. Claimants alleged they suffered bodily injuries from lead paint exposure while residing in the Landlords' rental properties, but the majority of claimants had not obtained final judgments against, or entered into settlements with, the Landlords before CX and the Landlords settled. The lower courts ruled that the Claimants were intended beneficiaries of the polices. The Court of Appeals reversed in part, holding (1) the Claimants who did not hold final judgments against or enter into approved settlement agreements with the Landlords were not the intended beneficiaries under the policies; and (2) the Claimants who obtained final judgments against their Landlords prior to the settlements of the applicable rescission cases may enforce the pre-settlement terms of the policies. View "CX Reinsurance Co. v. Johnson" on Justia Law

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Plaintiff Crystal Point Condominium Association, Inc. obtained default judgments against two entities for construction defect claims. Kinsale Insurance Company was alleged to have insured those entities, under the Direct Action Statute, N.J.S.A. 17:28-2. The relevant policies both contained an arbitration agreement providing in part that “[a]ll disputes over coverage or any rights afforded under this Policy . . . shall be submitted to binding Arbitration.” Crystal Point filed a declaratory judgment action against Kinsale, alleging that it was entitled to recover the amounts owed by the entities under the insurance policies issued by Kinsale. Kinsale asserted that Crystal Point’s claims were subject to binding arbitration in accordance with the insurance policies. Kinsale argued that the Direct Action Statute did not apply because Crystal Point had not demonstrated that neither entity was insolvent or bankrupt. In the alternative, Kinsale contended that even if the statute were to apply, it would not preclude enforcement of the arbitration provisions in the policies. The trial court granted Kinsale’s motion to compel arbitration, viewing the Direct Action Statute to be inapplicable because there was no evidence in the record that either insured was insolvent or bankrupt. An appellate court reversed the trial court’s judgment, finding the evidence that the writs of execution were unsatisfied met the Direct Action Statute’s requirement that the claimant present proof of the insured’s insolvency or bankruptcy and determining that the Direct Action Statute authorized Crystal Point’s claims against Kinsale. The appellate court concluded the arbitration clause in Kinsale’s insurance policies did not warrant the arbitration of Crystal Point’s claims, so it reinstated the complaint and remanded for further proceedings. The New Jersey Supreme Court determined Crystal Point could assert direct claims against Kinsale pursuant to the Direct Action Statute in the setting of this case. Based on the plain language of N.J.S.A. 17:28-2, however, Crystal Point’s claims against Kinsale were derivative claims, and were thus subject to the terms of the insurance policies at issue, including the provision in each policy mandating binding arbitration of disputes between Kinsale and its insureds. Crystal Point’s claims against Kinsale were therefore subject to arbitration. View "Crystal Point Condominium Association, Inc. v. Kinsale Insurance Company " on Justia Law

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The First Circuit affirmed the decision of the district court granting summary judgment in favor of Acadia Insurance Company in this action brought by Railroad Avenue Properties, LLC for breach contract to recover additional insurance proceeds for property damage sustained from a fire at one of Railroad's commercial buildings, holding that there was no error.Although Acadia insured the building at issue and paid Railroad for damages arising out of the fire Railroad claimed that it was entitled to additional payment under the terms the insurance policy in the form of a depreciation holdback and code upgrade coverage. The district court granted summary judgment for Acadia. The First Circuit affirmed, holding that Railroad was not entitled to relief on any of its allegations of error. View "Railroad Avenue Properties, LLC v. Acadia Insurance Co." on Justia Law

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After a fire destroyed Merechka's home, Vigilant denied his insurance claim, which sought $634,000 for the dwelling and $475,500 for its contents. During its investigation, Vigilant discovered that Merechka had filed for bankruptcy about four years earlier. According to his bankruptcy petition, he had around $9,000 in personal property, well short of the more than $600,000 (or $325,825, according to a third-party appraiser) that he reported to Vigilant. Without an explanation for the discrepancy, Vigilant suspected insurance fraud. Merechka assured Vigilant that he had acquired nearly all of his personal property after the bankruptcy using several sources of income: $700 per week he received for working for his brother, a $1,300 monthly social-security payment, and periodic payments from an investment account. The numbers did not add up, so Vigilant denied coverage under the policy’s concealment-or-fraud provision.Merechka sued. Vigilant filed a counterclaim, seeking reimbursement for the nearly $400,000 it had paid to Merechka’s mortgage lender. Applying Arkansas law, the district court determined that neither side owed anything. The Eighth Circuit reversed in part and remanded Vigilant’s claim. No reasonable juror could believe that Merechka acquired so much property in such a short time on his modest income; the circumstances indicate that the falsehood was intentional. View "Merechka v. Vigilant Insurance Co." on Justia Law

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William Greenwood was in the business of salvaging valuable materials from old buildings. Greenwood was insured by Mesa Underwriters Specialty Insurance Company through a policy sold by Dixie Specialty Insurance. Greenwood was later sued by adjoining building owners who complained he had damaged their property, and Mesa denied coverage based, in part, on a policy exclusion for demolition work. Greenwood later brought suit against his insurers alleging breach of contract and bad-faith denial of coverage. Greenwood averred that his business was actually “deconstruction” rather than demolition, but the trial court granted summary judgment to the insurers. Finding no reversible error in that judgment, the Mississippi Supreme Court affirmed the trial court. View "Estate of Greenwood v. Montpelier US Insurance Company, et al." on Justia Law

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A congregation of the hierarchical Church of God purchased an insurance policy from GuideOne Specialty Mutual Insurance Company (GuideOne) covering the risk of fire damage to a church building that was held by the congregation, as agent of the greater church, in trust for the benefit of the larger church body. After the local congregation voted to sever its relationship with the Church of God, a regional oversight authority took over as the agent/trustee holding the property on behalf of the greater church, after which the previously affiliated local congregation moved out, and the new agent added the property to its own insurance policy, with Church Mutual Insurance Company (Church Mutual), covering the same risk. Fire destroyed the building while both policies were in effect. Church Mutual paid the claim. GuideOne denied coverage on the ground that the former local congregation no longer had an insurable interest in the property. The issue this case presented for the Court of Appeal was whether Church Mutual was entitled to contribution from GuideOne. The trial court concluded the answer was no. While the appellate court disagreed with certain aspects of the trial court’s statement of decision, it concluded the trial court reached the correct result. The Court of Appeal also concluded the trial court correctly determined Church Mutual was not entitled to prevail against GuideOne on a separate subrogation cause of action. View "Church Mutual Ins. Co. v. GuideOne Specialty Mutual Ins. Co." on Justia Law