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

October 2020 Archives

DEPRECIATING LABOR COSTS IN DETERMINING ACV IN NORTH CAROLINA

The North Carolina Supreme Court in Accardi v. Hartford Underwriters Ins. Co., 373 N.C. 292, 838 S.E.2d 454 (2020), held that a property insurer was allowed to depreciate the cost of labor in calculating ACV under a policy. In this case, a storm caused damage to the roof of the insured's home, siding, and garage. Under the homeowner's policy, the insurer was obligated to initially pay ACV for the loss, and then once the property was repaired or replaced, the policy obligated the insurer to pay the RCV. The policy contained a separate endorsement limited to roof damage, which was silent on the issue of labor costs. The insurance company argued that its policy language nevertheless unambiguously allowed it to depreciate both the cost of materials and the cost of labor. The insured argued that the insurer was required to separately calculate the materials and labor costs of repairing or replacing the damaged property and depreciate only the material costs and not the labor costs. 

TEXAS SUPREME COURT REJECTS THE USE OF EXTRINSIC EVIDENCE IN DECIDING THE DUTY TO DEFEND BY UPHOLDING A STRICT EIGHT-CORNERS RULE

Recently, the U.S. 5th Circuit Court of Appeals certified the following question to the Texas Supreme Court: "Is the policy-language exception to the eight-corners rule articulated in B. Hall Contracting, Inc. v. Evanston Ins. Co., 447 F.Supp.2d 634 (N.D. Tex. 2006), a permissible exception under Texas law?" In the B. Hall case, the eight-corners rule did not prohibit consideration of extrinsic evidence under the eight-corners rule unless the insurance policies in question explicitly required the insurer to defend "all actions against its insured no matter if the allegations of the suit are groundless, false, or fraudulent." See, B. Hall Contracting, Inc. v. Evanston Ins. Co., 447 F.Supp.2d 634, 645 (N.D. Tex. 2006).

RETROACTIVE PAYMENT CURES FAILURE TO DEFEND

The Wisconsin Supreme Court in Choinsky v. Employers Insurance Co. of Wausau, 390 Wis. 2d 209, 938 N.W.2d 548 (2020), held that an insurance company's retroactive payment of its insured's defense costs satisfied the insurer's duty to defend, thereby insulating the insurer from liability.

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