Construction Insurance News

Additional Insured Clauses Need Care

September 22, 2016
Richard Korman – Engineering News-Record

The recent decisions in Collick v. Weeks Marine Inc. and its sister lawsuit, Weeks Marine v. Evanston Insurance Co., provide two examples of how careful companies must be when agreeing to contracts that employ the commonly used “additional insured” provisions that have led to so much confusion and been the subject of no less than 30 different standard forms for added coverage—the most recent made in 2013—by the Insurance Services Office.

Mr. Korman may be contacted at kormanr@enr.com


Ex-AIG Chairman Greenberg Looks for Vindication in N.Y. Battle

September 15, 2016
Chris Dolmetsch – Bloomberg

Even at 91, former American International Group Inc. Chairman Maurice “Hank” Greenberg isn’t ready to quit fighting.

Greenberg scrapped with regulators and the Internal Revenue Service and beat the federal government in what some called a no-chance suit. Now, he’s set to march into state court in Manhattan to defend an 11-year-old lawsuit accusing him of using sham transactions at AIG to hide the company’s financial troubles from shareholders. Opening statements are scheduled for Tuesday.


Louisiana Flooding Prompts Cleanup, Recovery

September 1, 2016
Tom Ichniowski & Debra K. Rubin – Engineering News-Record

As flood-battered Louisiana starts to recover from heavy August rains, housing, schools, other buildings and roads are among the hard-hit infrastructure sectors.

Reprinted courtesy of Tom Ichniowski, ENR and Debra K. Rubin, ENR
Mr. Ichniowski may be contacted at ichniowskit@enr.com
Ms. Rubin may be contacted at rubind@enr.com


Bad Faith Attorneys' Fees Decided After Verdict May Be Included in Punitive Damage Calculation

July 28, 2016
Tred R. Eyerly – Insurance Law Hawaii

The California Supreme Court considered whether the calculation for punitive damages may include attorneys' fees expended to obtain benefits determined after the jury has rendered its punitive damages verdict. Nickerson v. Stonebridge Life Ins. Co., 2016 Cal. LEXIS 3757 (Cal. June 9, 2016).

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Case Remanded After Insurer Fails to Carry Burden on Amount in Controversy

July 14, 2016
Tred R. Eyerly – Insurance Law Hawaii

The insured successfully remanded the case back to state court when the insurer could not substantiate that the amount in controversy would exceed $75,000. Puente v. State Farm Lloyds, 2016 U.S. Dist. LEXIS 58103 (S.D. Texas March 28, 2016).

The insured's property was damaged in a wind and hail storm. State Farm denied coverage because the claimed damages were not covered by the policy. The insured hired a public adjuster and submitted another claim for $29,870. State Farm continued to deny the claim.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Duty to Defend Continues After Response to 104 (e) Letter Submitted

June 30, 2016
Tred R. Eyerly – Insurance Law Hawaii

The Ninth Circuit held that the insurers' duty to defend did not cease after the insured submitted its response to the EPA in a section 104 (e) letter. Ash Grove Cement Co. v. Liberty Mut. Ins. Co., 2016 U.S. App. LEXIS 8663 (9th Cir. May 11, 2016).

Mr. Eyerly may be contacted at te@hawaiilawyer.com


In Minnesota, a Tenant may, Depending on the Language of the Lease, be Liable to the Landlord for Property Damage to the Tenant’s Apartment but not for Damage to the Rest of the Building

June 22, 2016
Michael L. DeBona – White and Williams LLP

In Melrose Gates, LLC v. Chor Moua, et al., 875 N.W.2d 814 (Minn. 2016), the Supreme Court of Minnesota, applying the factors the court first articulated in RAM Mutual Insurance Company v. Rohde, 820 N.W.2d 1 (Minn. 2012), analyzed whether the parties to an apartment lease reasonably expected that the tenants would be liable in subrogation for fire damage caused by the tenants’ negligence. The Melrose Gates court held that, based on the language of the lease, the type of insurance the parties purchased, and the fact that the building was a multi-unit structure, the parties intended that the tenants would be responsible for damage to their leased unit but not for damage to other property. Thus, while the landlord’s insurer could recover the amount it paid to repair the damage to the tenants’ unit, it could not recover the amount it paid to repair other units or common areas of the building.

Mr. DeBona may be contacted at debonam@whiteandwilliams.com


Coverage For Faulty Workmanship Not Saved Under Ensuing Loss Provision

June 9, 2016
Tred R. Eyerly – Insurance Law Hawaii

The policy's faulty workmanship exclusion barred coverage despite an ensuing loss provision. Gateway II LLC v. Hartford Fire Ins. Co., 2016 N. Y. Misc. LEXIS 1325 (Sup. Ct. N. Y. April 5 , 2016).

Water damage occurred at Gateway. The policy provided, "We will not pay for loss or damage caused by or resulting from any of the following. . . But if loss or damage by a Covered Loss results, we will pay for the loss or damage caused by that Covered Loss." Gateway argued that because of the exception, the damages should be covered under the policy's water-damage coverage.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Insurers Must Indemnify for Property Loss and Business Interruption

June 2, 2016
Tred R. Eyerly – Insurance Law Hawaii

The insured's motion for summary judgment was granted, paving the way for recovery for property loss and business interruption. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. TransCanada Energy USA, Inc., 2016 N.Y. Misc. LEXIS 1027 (N.Y. Sup. Ct. March 2, 2016).

TransCanada purchased a power plant on August 26, 2008, for generating electricity for the New York metropolitan area. On September 12, 2008, excessive vibrations from Unit 30 required that the unit be shut down. On September 16, 2008, a crack in the unit's rotor was discovered. After repairs, the unit was placed back into service on May 18, 2009.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Construction Activity Creates Opportunity for Carriers and Brokers

May 12, 2016
Beverley BevenFlorez-CDJ STAFF

According to Property Casualty 360, “[C]onstruction-focused carriers are cheering the multi-year run of positive news in the building sector. Growth in nonresidential construction is projected at more than 7.4% in 2016, according to the industry trade group Associated Builders and Contractors.” The article discusses four key areas of growth: “large commercial residential buildings, infrastructure projects, renewable energy, and transformation of manufacturing or other commercial facilities into new uses.”


Insurer Must Defend Despite Endorsement Limiting Coverage for Additional Insured

April 28, 2016
Tred R. Eyerly – Insurance Law Hawaii

The appellate court reversed, in part, determining that the insurer had a duty to defend. Cumberland Farms, Inc. v. Tower Group, Inc., 2026 N. Y. App. Div. LEXIS 2039 ( Supr. Ct. N. Y. App. Div. March 23, 2016).

In 2008, the underlying plaintiff was injured when he tripped and fell on a sidewalk in front of a gas station operated by Noori Auto & Fuel, Inc. Noori was a franchisee and lesser with Cumberland Farms, Inc. Noori was insured by Mountain Valley Indemnity Company. Cumberland was an additional insured under the policy.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Fraudulent Water Mitigation Claims

April 20, 2016
Beverley BevenFlorez-CDJ STAFF

Property Casualty 360 reported that fraudulent water mitigation claims are increasing nationwide. Some of these companies “pay ‘finder’s fees’ to plumbers, contractors—even insurance agents—generating false or inflated claims through an entire network of fraud.” Furthermore, Property Casualty 360 stated that “it’s often difficult to determine fair payment for each water damage claim” because “[t]here is no scientific model in use to calculate water mitigation costs, as there is for wind storm damage estimates.”


Umbrella Policy Deemed Excess Over Pooled Self-Insurance

April 6, 2016
Tred R. Eyerly – Insurance Law Hawaii

The municipal league's argument that an umbrella policy should contribute to a settlement funded by a municipal risk-pooling organization failed before the Illinois Court of Appeal. Illinois Municipal League Risk Management Ass'n v. State Farm Fire and Casualty Co., 2016 Ill. App. LEXIS 45 (Ill. Ct. App. Feb.2, 2016).

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Buyer Beware: Primary and Excess Insurance Coverage is Not Always Coextensive

March 30, 2016
Graham C. Mills – Newmeyer & Dillion, LLP

In Haering v. Topa Insurance Company, Case No. B260235 (Feb. 3, 2016), the Second District Court of Appeal examined which provisions of a primary insurance policy were incorporated by reference in an excess insurance policy, and which provisions were not. This question is often significant because excess policies tend to be brief and incorporate by reference the key terms of an underlying primary policy, which is a separate document often written by a different insurer. In theory, when an excess policy incorporates by reference the terms of a primary policy, both policies should work together to provide a continuous layer of coverage for the insured. Unfortunately, that is not always the case.

Mr. Mills may be contacted at graham.mills@ndlf.com


Hawaii Bill Proposes Procedures for Claim Adjusters

February 24, 2016
Tred R. Eyerly – Insurance Law Hawaii

HB 1991 would regulate the inspection procedures for utilizing claim adjusters for homeowners insurance claims. The complete bill is here.

The bill states that when a claim is filed, the insurer will select a claim adjuster mutually agreed upon by the parties and paid for by the insurer. In the event there is no agreement on the selection of the claim adjuster, the matter will be referred to the insurance commission, arbitration, or the circuit court to select a claim adjuster.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Investigating Mold Claims

February 17, 2016
Beverley BevenFlorez-CDJ STAFF

According to Property Casualty 360, the verdict against Ballard v. Fire Insurance Exchange, No. 99-05232 (Texas District Court, Travis County, June 1, 2001) has “caused a severe and pervasive fear of mold claims in the insurance industry,” which “resulted in various changes to policies with either thorough and detailed exclusions for mold or an agreement to coverage with a very small limit of liability.” However, according to the article, the high punitive damages in Ballard occurred because of claims-handling, not because of mold. Property Casualty 360 explains the process of investigating a mold claim including a list of when testing might be useful.


Insurance Reality Bleak for Airbnb Hosts

January 6, 2016
Beverley BevenFlorez-CDJ STAFF

Property Casualty 360 reported on insurance options for property owners who rent out their space through Airbnb. Galen Hayes, author of the article, wrote, “Forget your homeowners insurance. Homeowners coverage is not for business.” Further, Hayes analyzed the two types of “coverage” offered by Airbnb, including their Host Protection Insurance (HPI). One of the HPI terms states, “If you’d like more details on what’s not covered under the Host Protection Insurance program, please contact us.” When Property Casualty 360 contacted Airbnb for details, the customer service department directed them “back to the HPI page and stated they ‘do not have any further documents to provide with this.’”


Property Casualty 360's Technology & Insurance Predictions for 2016

December 30, 2015
Beverley BevenFlorez-CDJ STAFF

Greg Isaacs in Property Casualty 360 discussed likely insurance and technology scenarios to occur in 2016. For one thing, Isaacs believes that millennials, as adults, will have a greater buying power, which will lead to changes such as “more resources being invested in online customer service vs. call centers. We may also see companies adjust distribution methods to more accurately match millennials’ purchasing habits, which increasingly favor mobile devices over other purchasing platforms.” Isaacs also predicts that homeowner technology devices may have a “significant impact on homeowners insurance because devices will be able to flag preventable issues to homeowners before they happen.”


Insurer's Right to Repair Questioned, Successfully Challenged

December 17, 2015
Tred R. Eyerly – Insurance Law Hawaii

When the insurer opted to repair the insured's damaged property, the insurer did not agree with the scope of the repairs. The Florida Court of Appeal reversed the trial court's dismissal of the insured's lawsuit challenging the extent of the repairs. Robinson v. Florida Peninsula Ins. Co., 2015 LEXIS 16983 (Fla. Ct. App. Nov. 12, 2015).

Robinson's homeowner's policy provided Florida Peninsula Insurance Company (FPIC) an option to repair damaged property rather than make a cash payment. Robinson reported damage to his home and FPIC determined the loss was covered. FPIC exercised its option to repair and attempted to coordinate repairs through its contractor. Robinson questioned the scope and sufficiency of the contractor's proposed repairs and requested an appraisal. FPIC did not respond and eventually denied coverage because of Robinson's refusal to allow the contractor to complete the proposed repairs. Robinson eventually completed the repairs at his own expense.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


AIG Said to Dismiss Real Estate Group's Chief, Other Executives

December 10, 2015
Sonali Basak – Bloomberg

American International Group Inc., the insurer that’s been slashing jobs to cut costs, dismissed four senior members of its real estate business including the group’s chief executive officer, Robert Gifford, according to a person familiar with the move.

AIG Global Real Estate’s head of Americas, Donald Huffner, and Brooks Mohrman, who managed investments in Mexico, were also let go as part of a plan to cut more than 300 senior positions, said the person, who asked not to be named discussing personnel matters. The group’s general counsel, Richard D’Alessandri, was also dismissed, the person said.


TigerRisk Hires Ex-AIG, Hanover CFO Bensinger for Dealmaking

December 2, 2015
Sonali Basak – Bloomberg

TigerRisk Partners hired insurance-industry veteran Steven Bensinger, who oversaw American International Group Inc.’s finances during the early part of the global credit crisis, to advise clients.

Bensinger, joining as a wave of consolidation reshapes insurers, will provide advice to clients in that business on topics including strategic deals, TigerRisk said in a statement dated Monday. He left AIG in October of 2008 amid an exodus of senior executives and later took the same post at Hanover Insurance Group Inc. He most recently was a senior managing director at advisory firm FTI Consulting Inc.


Insurers Unprepared for Global Warming, UN Climate Chief Says

October 28, 2015
Alex Morales – Bloomberg

Insurers are unprepared for the costs of climate change, the top United Nations climate diplomat said as world leaders make final preparations for a deal on global warming.

The agreement, which the UN expects to seal in Paris in December, won’t solve climate change because of the greenhouse gases already in the atmosphere, UN Framework Convention on Climate Change Executive Secretary Christiana Figueres said Tuesday in a speech at the Association of British Insurers in London.


Global Warming's Hurricane Tab in U.S.: $14 Billion and Counting

October 21, 2015
Alex Nussbaum – Bloomberg

Climate change has added billions to the toll of hurricane strikes on the U.S., according to a study that challenges the prevailing scientific view that the rising cost is mainly because more buildings, towns and businesses are in the way.

Stronger, more frequent storms may have accounted for as much as $14 billion of hurricane damage in 2005, the year Hurricane Katrina slammed into the Gulf Coast, according to research published Monday in the journal Nature Geoscience. The cost, as much as 12 percent of total U.S. damage that year, is over and above what can be explained by coastal development alone, the scientists said.


Discussing the Changes with Residence Premises

October 2, 2015
Beverley BevenFlorez-CDJ STAFF

Christine G. Barlowe, in Property Casualty 360, addressed the dilemma of residence premises. While “at first look [residence premises] seems straightforward…However, insureds move and don’t always advise their carriers. Insureds also generally do not read their policies and do not understand that in order for the property to be covered, the insured must actually be living in it.” However, Barlowe continued, “ISO has developed endorsements that fundamentally change that definition.”

Barlowe expressed concerns over some of the changes: “It opens up carriers to provide coverage for unattended houses on a large scale.” She suggested that carriers should “consider these endorsements very carefully before adopting them.”



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