Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

July 2020 Archives

NEBRASKA INVALIDATES HOUSEHOLD EXCLUSION

In Shelter Mutual Insurance Co. v. Freudenburg 304 Nebraska 1015, 938 N.W.2d 92 (2020) the insurance company paid insurance policy in question had a sublimit of coverage in cases involving injuries to named insureds or their resident relatives. The sublimit was equal to the Nebraska's minimum financial responsibility limits. In question was Nebraska revised statute 60-310 which stated that no policy of automobile liability insurance was permitted to exclude, limit, reduce, or other otherwise alter policy coverage solely because the injured person was the named insured or a resident of the same household. In this case, the insurance company argued that its household exclusion sublimit should permitted because it did not violate Nebraska statute. The insurance company argued that the statute applied to "automobile liability insurance" which referred to the coverage mandated by the statute and not for amounts of coverage above the minimum statutory limits. The Nebraska Supreme Court invalidated the insurer's "partial" household exclusion after reviewing the legislative history of the statute.

CRACKING THE CONCEPT OF COLLAPSE IN A PROPERTY POLICY

In Valls v. Allstate Ins. Co., 919 F.3d 739 (2nd Cir. 2019) the 2nd Circuit construed the concept of collapse narrowly. The homeowner's insurance policy provided coverage for "the entire collapse" of a building structure, that "must be sudden and accidental" but the policy also excluded "cracking" from the definition of "collapse." Under that policy language the court found that building cracks in a basement's walls of the insured property, which was still standing, would not constitute collapse under the policy.

WASHINGTON COURT BRINGS NEW MEANING TO "DECAY"

In a case involving collapse under a property insurance policy, the Washington Court of Appeals in Feenix Parkside, LLC v. Berkley North Pacific, 438 P.3d 597 (Wash. App. 4/8/19) broadly defined the concept of "decay" in an insurance policy's coverage for collapse due to "decay." The court in Feenix held that where the term "decay" was not defined in the insurance policy, that the term needed to be interpreted in a manner consistent with the way the average purchaser of insurance would understand the term. Making this determination, the appellate court found that the trial court's ruling that "decay" meant some kind of decomposition of material was too narrow. The Court of Appeals adopted a broader definition of "decay" that included "a gradual decline in strength or soundness." Thus, in the state of Washington, where a property insurance policy covering collapse due to "decay" does not define the meaning of the term "decay" then the coverage is not limited to organic rot for purposes of determining collapse, but included in a broad sense the concept of "decay," meaning a gradual decline in strength or soundness.

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