Oregon federal Magistrate Judge Stacie Beckerman gave policyholders an early Christmas present on December 20, 2019, holding that the most commonly-used suit limitation clause in commercial property insurance is ambiguous, and that therefore the policyholder had two years from the discovery of hidden water damage to file suit against the insurer. This ruling provides additional clarity to the interpretation of a widely-used coverage form, in the context of one of the most common property-loss scenarios in the Pacific Northwest: hidden decay over many years due to water infiltration.
In Peoples v. USAA, decided on November 27, 2019, the Washington Supreme Court held that insurance companies can be liable under Washington’s Consumer Protection Act (RCW Ch. 19.86) if they violate Washington claims-handling regulations and wrongfully deny benefits, even if the underlying claim is for personal injuries. In this case the plaintiffs alleged that USAA’s computer algorithms wrongfully denied coverage for medical provider costs, which are generally covered under auto policies as “personal injury protection” or “PIP,” without any individualized assessment of the costs. Washington’s CPA prohibits “unfair or deceptive practices in trade or commerce” and allows anyone who is “injured in [their] business or property” to sue for damages (including treble damages) and injunctive relief, plus attorney fees. The insurer argued that even if their denials were wrong, they did not injure these plaintiffs’ “business or property,” as the underlying claims were for personal injuries. Announcing a new rule (and disagreeing with several previous federal-court decisions), the Washington Supreme Court held that “the deprivation of contracted-for insurance benefits is an injury to ‘business or property’ regardless of the type of benefits secured by the policy.” Continue Reading
Cannabis businesses don’t have many options when it comes to insurance, because major insurance players are staying out of the market until cannabis is reclassified under federal law. However, cannabis licensees are required to carry insurance by state law (discussed below), and often by landlords, lenders, customers or suppliers. Recent vaping-related bodily injuries have also highlighted both the need for products-liability coverage and the fact that most cannabis-liability policies contain significant exclusions – and below we provide a few ways to deal with these exclusions. Finally, we discuss some hope on the horizon in the form of increasing standardization of forms and federal crop insurance.
State Laws. These state-law requirements are not trivial: a licensee that fails to carry the proper coverage could lose its license. Continue Reading
Miller Nash attorneys Seth Row and Shanelle Honda were published in the Fall 2019 issue of the NAMC-OR Newsletter. The link to the full story is available below.
Construction contracts at all tiers usually include terms requiring certain types of insurance, and often contain related provisions about indemnity. This “boilerplate” can be important if a job goes south, so here’s a short explanation of some of the key terms and how they relate to one another.
Click here to read the full article (page 5).
The Washington Supreme Court recently issued a decision strongly reiterating the “made whole” doctrine under Washington law, which provides that an insurer cannot exercise its right of reimbursement from a third party who injured its insured, until the insured itself has been made whole by recovery of damages or losses it has incurred. In Daniels v. State Farm Mut. Auto Ins. Co., State Farm paid for damage to its insured’s vehicle in full, less a $500 deductible. State Farm then recovered 70% of the damage from GEICO, which had insured one of the parties whose negligence had caused the loss. (Another party was determined to be 30% at fault; all parties stipulated that Daniels—State Farm’s insured—had no fault). State Farm then reimbursed its insured 70% of the $500 deductible. Continue Reading
Insurance policies are famously obscure, full of non-sequiturs and jargon. Coverage disputes often feature disagreements about the meaning of policy wording. As a result, courts have developed a process for interpreting policies. In Oregon, the interpretation process (the Hoffman analysis, named for an important case) isn’t the same as for an ordinary contract. It focuses first on the plain meaning of a disputed term, then the immediate context of the disputed term, then the context of the term in the policy as a whole. Overlaid on that are the concepts of the “ordinary purchaser of insurance” among others. If a phrase is deemed ambiguous even after that analysis, the policyholder’s interpretation will prevail. Continue Reading
The cyber-insurance world is discussing the ins-and-outs of litigation going on between food manufacturing giant Mondelez International and Zurich over coverage for the ten billion dollar NotPetya cyber attack that crippled several multi-national companies. Zurich has apparently invoked what is colloquially known as the “act of war” exclusion to deny coverage to Mondelez under a property policy with cyber elements. Continue Reading
Once again Oregon legislatures are looking at removing the exemption of insurance companies from the Oregon Unfair Trade Practices Act. SB 728 makes violations of Oregon’s Unfair Claims Settlement Practices Act (the “UCSPA”) an unlawful trade practice subject to private rights of action. Currently, the Insurance Division is the only enforcement entity for the consumer protections in the UCSPA, but the Insurance Division does not have the resources to investigate and take corrective action on every instance of insurer misbehavior. Instead, without any real consequences, many carriers routinely fail to honor the claim communication timelines and reasonable settlement obligations under the UCSPA, leaving the impacted insured with little recourse. Continue Reading
Stormwater overflows and similar accidents are a frequent source of damage in Oregon and the Pacific Northwest generally. Insurers often deny coverage for resulting damage under the “surface and flood” waters exclusion. A recent case out of the U.S. District Court of Oregon held that surface and flood water insurance exclusions do not apply to man-made sources. In Veloz v. Foremost Ins. Co. Grand Rapids, Mich. (2018), the court held that surface and flood water exclusions apply to waters from natural—not man-made—sources. Veloz also implied that if the insurer wants to exclude water damage from a burst water main, the insurance policy must specifically state that man-caused waters are excluded.
When two companies agree to work together, they will try to allocate the risk of something going wrong to the company that’s in the best position to prevent that from happening. For example, in the construction industry a general contractor will usually try to push risks from construction defects onto the subcontractors. That risk-transfer usually occurs in two places in the subcontract: 1) in the indemnity language; and 2) in a requirement that the subcontractor makes the general contractor into an “additional insured” on the subcontractor’s liability insurance policy. (A similar scenario happens in a commercial lease: the landlord will want the tenant to provide “additional insured” liability coverage to the landlord.)