Posts Tagged ‘Insurance’

Tropical Storm Lee – Prepare for Insurance Claims

On September 4, 2011        

Contractors and property owners should be very knowledgable of the claims process after a natural disaster. Over the Labor Day weekend the New Orleans metro area, along with southern Louisiana experienced high winds and double-digit rainfall totals due to Tropical Storm Lee.

Contractors who have equipment, property and unfinished work need to report any flood, wind or wind driven rain damage to your general liability insurer in a timely fashion so that you may collect reimbursement for damages sustained from this storm. Your insurer will assign a claims specialist to assess the damage and this person is who you will work with to obtain reimbursement. Be sure to read the policy to make sure you follow all the specific guidelines, otherwise your insurer may use this against you as an excuse not to timely pay up on the claim.

Homeowners in south Louisiana should be well versed in the drill of making claims against your homeowners insurance. This, too is a situation whereby you must read the policy to make sure you follow the set guidelines and timely file a proof of loss. If the insurance company does not value your damage to a level where you are satisfied, then you may want to hire a public/private adjuster by searching the Louisiana Dept of Insurance – Public Adjusters search or reaching out to an reputable firm such as Louisiana Adjusters. The final step is to hire an attorney to escalate your claim.

Due to Hurricanes Katrina and Gustav, firms like the Wolfe Law Group have valuable experience with handling these matters. The mere hiring of an attorney will escalate your claim to another level within the insurance hierarchy and depending on your claim, it may render more effective results.

Remember that you typically have 60 days to file a satisfactory proof of loss and you have one year to file suit against the insurer, both from the date of the loss.  It is important to take photographs and video if possible before clean up to maintain evidence of your loss. Another important tip is to keep good records of invoices and receipts of all work performed on your repair. The insured (contractor or property owner) has a duty to mitigate its damages, so do what you can to prevent damage from getting worse once the storm has passed.

Remember to consult with an attorney or your insurance agent when reviewing the terms of your policy. The policy is the set of rules by which you and the insurer operate when making claims. Do not fight for your claim alone against your insurance company, hire an an attorney who can help you navigate the claim as well as the reconstruction of your property in an efficient manner. Whether you are a contractor or a property owner, contact Seth Smiley with the Wolfe Law Group to discuss your Tropical Storm Lee claims so that you get the results you deserve.

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Are Chinese Drywall Losses "Uninsured?"

On August 18, 2009        

Late in July, “ClaimsJournal.com” published an online article titled:  “Chinese Drywall:  Builders and Subs Face Huge Uninsured Losses.“   The article’s author takes its reader through a number of hot-button issues related to the insurance coverage available to homeowners and builders for Chinese Drywall damages.

Calling the per house damages “astronomical,” the article warns that many builder and homeowner polices may exclude damages based on the pollution exclusion or the “your work” exclusion.

In the past, we’ve discussed insurance coverage issues and the pollution exclusion here at the Chinese Drywall Blog.

From our experience in dealing with homeowner and builder claims, it seems the insurance industry is positioning itself to deny coverage for contaminated drywall exposure.   But more troubling than this is that many homeowners and builders are taking this position as a matter-of-fact.

While there are certainly legal challenges to recover against insurance companies for these losses, the insurance companies face legal challenges in excluding coverage.   Homeowners and builders have two things on their side:  (a) The insurance company has the burden of proving the applicability of its exclusion; and (b) Any ambiguities will be interpreted against the insurance company.

Homeowners and Builders should not consider the exclusion of coverage as a foregone conclusion, and should place their insurer on notice of the claim.   While litigation may result in coverage applying to this loss, without a timely claim and a lawsuit to enforce the same, builders and homeowners will lose their rights.

In Louisiana, with a one-year prescriptive period ticking very quickly against drywall claims, the insurance company’s best argument against coverage is soon-to-come.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Posted in:     Chinese Drywall  /  Tags: , , , , ,   /   2 Comments

Some Claim Insurance Will Not Cover Chinese Drywall Losses. Is it True?

On July 21, 2009        

The Controversy and Uncertainty

This much is clear:  it is not certain how the courts will interpret insurance policies and insurance policy exclusions, as they apply to Chinese Drywall claims.

Many predict that the insurance industry will rely on what is called a “pollution exclusion” to deny Chinese Drywall insurance claims.

A South Carolina Construction Insurer, Contractor-Insure.com, makes this claim in a recent press release:

Most contractor General Liability insurance policies contain the Total Pollution Exclusion.  All claims adjusters who have been interviewed will take the position that the sulfur dioxide fumes released by the defective Chinese drywall are ‘pollution’ and as a result all legal defense and damages under the General Liability policy will be denied.

While the press release largely discussed builder general liability policies, the same controversy exists for homeowners insurance policies.

Further, the controversy and predication are proving to be true, as across the country there are already suits on the issue.

As already reported on the Chinese Drywall Blog, in Baker v. American Home Insurance Company, a homeowner sued their insurance carrier claiming coverage for Chinese Drywall claims.   In Builders Mutual v. The Dragas Company, a builder’s general liability insurer brought a declaratory judgment action to have a judge declare that Chinese Drywall damage was not insured.

The claimed exclusion:  Pollution.

Both suits are very important to homeowners with Chinese Drywall claims.   But for Louisiana homeowners….how will the issue be resolved?

Why Louisiana Is Different

Unlike in South Carolina and most other states, Louisiana has very narrowly interpreted the pollution exclusion.   We reviewed the applicability of the pollution exclusion to Louisiana insurance claims in a previous blog post here:  Home Builders v. Insurance Pollution Exclusion.

There, we quoted the seminal case in Louisiana on this subject titled Doerr v. Mobil Oil Corp.  The long and short of things:  “Using the Doerr analysis, it seems that builders or suppliers would not be considered a “polluter” within the meaning of the exclusion” in Chinese Drywall claims.

For homeowners with Chinese Drywall, and builders with potential exposure, this is welcome news.    While the issue remains unresolved, the Doerr decision at least gives homeowners and homebuilders hope that Chinese Drywall losses may be insured, and therefore, within reach.

The problem now?   Getting homeowners and home builders to timely make claims and pursue recovery.

This article was originally posted on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

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Green Building and Risk Management

On April 29, 2009        

Just recently, the U.S. Green Building Council published an update to its readers explaining Risk Management issues to its readers, explaining that while green building is growing even in the current U.S. Economy, it presents unknowns that makes it difficult for the industry and insurance underwriters to manage risks.

Here is a snippet:

Underwriting insurance coverage is the art of understanding, assessing, and mitigating risk. Green building has presented challenges to insurance carriers stemming from the fact that green building design and construction is new. New things are tougher to understand from a historical loss perspective, requiring leading insurance carriers to take a proactive approach to understanding the possible ramifications of providing expanded coverage to meet the needs of firms engaged in the green building industry, while anticipating the market demand for these specialty insurance products.

As mentioned in previous posts, as the green building market continues to boom, green litigation and losses becomes more likely.   What if the planned LEED certification is not achieved?  What if the design is not as energy efficient as planned?

And the questions go on and on.

One question that is still unanswered, as hinted by the USGBC above, is with regard to Risk Management & Insurance.

In December 2008, Wolfe Law Group published an informative article on its Construction Law Monitor titled Green Building Insurance & Limiting Exposure.   The article discusses the need for specialty insurance, the packages available to contractors and the idea of green building performance bonds.

Just last week, ACE USA announced the launch of a Green-Specific Contractors Insurance Program, joining the ranks of companies like Fireman’s Fund, Travelers & AON.

Like everything else in the green building industry, the waters here are untested.   While we can read the policies and the brochures on the policies, it’s too early to determine what types of claims will be paid versus those denied, or the role green building insurance will play – or ever play – in protecting a contractor from professional liability losses.

Posted in:     Insurance  /  Tags: , , , , ,   /   2 Comments

Home Builders v. Insurance Pollution Exclusion on Chinese Drywall Claims

On April 22, 2009        

In the Chinese Drywall litigation world, the flame is getting closer and closer to contractors, suppliers and home builders.  Just this week it was reported that Lennar Co. was named in a Florida class action and a comment on this blog suggested that an individual suit against a builder had been filed.

As these actions continue to turn up, will insurance policies cover builders and suppliers for damages caused by the installation of Chinese Drywall?

Those monitoring the matter have predicted that insurance companies may attempt to rely on a broad pollution exclusion in most GL policies to deny coverage.   And in fact, the pollution exclusion clause makes a “center-stage appearance” in a lawsuit recently filed regarding insurance coverage for Chinese Drywall damages.

What is a “Pollution Exclusion”

Of course every insurance policy is different…but in the construction industry, a general liability policy usually has some form of “pollution exclusion” within it.   And generally speaking, it looks a little something like this:This insurance does not apply to:

(1) “Bodily injury”, “property damage”, “personal injury” or “advertising injury” which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a governmental authority or others for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of pollutants.

Pollutants means solid liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. [Pg 3] Waste includes material to be recycled, reconditioned or reclaimed.

This exclusion does not apply to “bodily injury”, “property damage”, “personal injury” or “advertising injury” caused by heat, smoke or fumes from a hostile fire. As used in the exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be.

Insofar as Chinese Drywall is concerned, the possible applicability of the pollution exclusion is clear:  The drywall has been alleged to emit gases that cause physical problems and deterioration of property.

Courts, therefore, will be called upon to determine whether the damages caused by Chinese Drywall is caused by a “pollutant” as contemplated by the insurance contract.

If it is, builders, suppliers and other construction professionals will be liable for the losses without the benefit of insurance coverage.

If it is not, involved parties will breathe a huge sigh of relief as the potential offset of expense will tally in the millions.

How Louisiana Will Interpret the Pollution Exclusion

The seminal case on insurance pollution exclusions in Louisiana is Doerr v. Mobil Oil Corp., a 2000 Louisiana Supreme Court decision.

In that decision, Chief Justice Calogero examines the history of the pollution exclusion in insurance contracts to conclude that “there is no history in the development of the exclusion to suggest it was ever intended to apply to anyone other htan an active pollutor of the environment.”

Overruling a Louisiana Supreme Court case decided just 1 year prior (Ducote v. Koch Pipeline Co., L.P., 730 So.2d 432, La. 1999), the Doerr court stated as follows:

In light of the origin of pollution exclusions, as well as the ambiguous nature and absurd consequences which attend a strict reading of these provisions, we now find that the total pollution exclusion was neither designed nor intended to be read strictly to exclude coverage for all interactions with irritants or contaminants of any kind. Instead, we find that “it is appropriate to construe [a] pollution exclusion clause in light of its general purpose, which is to exclude coverage for environmental pollution, and under such interpretation, [the] clause will not be applied to all contact with substances that may be classified as pollutants.” The applicability of a total pollution exclusion in any given case must necessarily turn on several considerations:

(1) Whether the insured is a “polluter” within the meaning of the exclusion;

(2) Whether the injury-causing substance is a “pollutant” within the meaning of the exclusion; and

(3) Whether there was a “discharge, dispersal, seepage, migration, release or escape” of a pollutant by the insured within the meaning of the policy.

Using the Doerr analysis, it seems that builders or suppliers would not be considered a “polluter” within the meaning of the exclusion.  However, as the Doerr court makes clear, this is a fact-based conclusion that must result after consideration of all relevant circumstances.

Additional Resources about Pollution Exclusions and Chinese Drywall

Since many are anticipating a fight over the applicability of the pollution exclusion to Chinese Drywall claims, there is a significant amount of commentary from lawyers across the Gulf Coast on the topic.   Here are some valuable resources for those interested in learning more on this topic:

Posted in:     Insurance  /  Tags: , , ,   /   2 Comments