“We can’t stop and we won’t stop.” Is this the refrain to a Miley Cyrus song, the creed of the thousands of firefighters currently battling California’s wildfires, or the mantra of the fires themselves? While any self-respecting Miley fan knows these are the lyrics to her hit “We Can’t Stop,” everyone who has seen the footage coming out of the California wildfires knows that the fires have been ferocious in their destruction, and the firefighters have been equally unrelenting in their efforts to contain them. Unfortunately, and fortunately, there is no wrong answer.
Thursday, November 15, 2018
Tuesday, October 16, 2018
The North Carolina Insurance Commissioner has activated the North Carolina Department of Insurance’s Disaster Mediation Program for first party claims in the wake of Hurricane Florence. The Program only becomes available if 1) a state of disaster has been proclaimed (by the Governor or the President) for all or part of North Carolina, within 60 days following the event, and 2) the Commissioner of Insurance subsequently orders Program activation. On September 14, 2018, the President of the United States issued a declaration of disaster for twenty-eight counties in North Carolina. The counties include: Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Greene, Harnett, Hoke, Hyde, Johnston, Jones, Lee, Lenoir, Moore, New Hanover, Onslow, Pamlico, Pender, Pitt, Richmond, Robeson, Sampson, Scotland, Wayne and Wilson counties. On September 27, 2018, the Commissioner of Insurance issued an order activating the Program. North Carolina has contracted with the American Arbitration Association to act as the Program Administrator.
On October 15, 2018, the Florida Office of Insurance Regulation issued an Emergency Order related to Hurricane Michael.
Monday, October 15, 2018
Hurricane Michael’s devastation of the Florida Panhandle and damage caused as it moved through the South and mid-Atlantic regions of the United States, will undoubtedly result in claims for lost income from the interruption of business. Whether these losses will be covered will depend on the policy wording used and the specific facts of each loss. Nevertheless, in anticipation of these claims, it is prudent to become familiar with the outcome of prior litigation arising out of business interruption and/or suspension of operations coverage disputes, as these cases can be instructive.
Wednesday, October 10, 2018
Hurricane Michael is making landfall in the panhandle of Florida as a wildly unexpected Category 4 hurricane. There will unquestionably be damage to structures caused by both storm surge/flood and wind. To the extent that one of the causes (e.g., storm surge/flood) is excluded and one cause (e.g., wind) is covered, this will inevitably lead to disputes over causation and the application of the concurrent causation doctrine.
On October 9, 2018, in anticipation of Hurricane Michael pushing through the panhandle of Florida and impacting the lower half of Georgia, Governor Nathan Deal issued a State of Emergency for most of the counties in the southern half of the state. Based on the size and intensity of Hurricane Michael as it makes landfall in Florida, it is likely that many of those counties will encounter intense winds and significant rainfall.
On October 7, 2018, Governor Rick Scott issued Executive Order 18-276 officially declaring a state of emergency in 26 counties including Escambia, Santa Rosa, Okaloosa, Walton, Holmes, Washington, Bay, Jackson, Calhoun, Gulf, Gadsden, Liberty, Franklin, Leon, Wakulla, Jefferson, Madison, Taylor, Hamilton, Suwannee, Lafayette, Dixie, Columbia, Gilchrist, Levy, and Citrus counties in response to potential landfall from Tropical Storm Michael. On October 8, 2018, Governor Scott issued Executive Order 18-277 which recognized the then Tropical Storm Michael would likely strike the Florida panhandle as a Hurricane and extended the previous Executive Order to include Baker, Union, Bradford, Alachua, Hernando, Pasco, Pinellas, Hillsborough, and Manatee counties.
Tuesday, September 25, 2018
Typhoon Mangkhut, a Category 5 storm that ravaged the Philippines and China earlier this month, got us thinking about just how bad typhoons and hurricanes may become if the predictions of climate scientists continue to be proven accurate. We’ve all seen the claims that a warmer atmosphere and warmer ocean waters will lead to stronger storms, higher winds, greater storm surge, and more rain and flooding. Typhoon Mangkhut and Hurricane Florence seem consistent with those predictions, and Mangkhut may even call into question whether a new level of storm classification will be appropriate in the future.
Wednesday, September 19, 2018
The flooding that has accompanied Hurricane Florence raised concerns about pollution from flooded ash dumps and hog farms. With confirmation of at least one failure of an ash dump and the breach of a lagoon holding hog waste those concerns have become a reality. How this pollution may impact first party property claims remains to be seen.
Tuesday, September 18, 2018
The devastating impact of Hurricane Florence may be felt well beyond North and South Carolina Boasting over 460,000 manufacturing workers, North Carolina has the largest manufacturing workforce in the Southeast, and the 10th largest in the U.S. Manufacturing accounts for 20 percent of the state’s GSP, fifth-highest in the nation. North Carolina is home to more than 290 automotive manufacturing establishments and a workforce of over 26,000. North Carolina’s automotive manufacturing industry grew 25 percent in the past five years.
Monday, September 17, 2018
The evacuation orders issued in both North and South Carolina in advance of Hurricane Florence and the extensive flooding following its landfall will no doubt give rise to business interruption claims. Typically, coverage for these claims will fall under coverage for “civil authority” or “ingress/egress.” Coverage for “civil authority” is usually an extension of coverage with similar language to the following:
Friday, September 14, 2018
With formidable winds, tremendous storm surge and prolonged rain, the damage caused by Hurricane Florence will no doubt reignite the age-old debate: what happens when damage is caused by both covered and excluded perils? The two predominant cause tests utilized in multiple cause scenarios are the “efficient proximate cause” test and the “concurrent causation” test. Under the “efficient proximate cause” test, if the efficient proximate cause of the damage is a covered peril, then there is coverage for the damage. Under the “concurrent causation” test, if a covered and excluded peril contribute concurrently to the damage, then the damage is covered, regardless of the degree of damage caused by the respective perils.
Wednesday, September 12, 2018
As Hurricane Florence, now a Category 3 hurricane, with winds in excess of 120 mph, approaches the Carolinas, it is almost certain that there will be widespread and prolonged power outages throughout both states. This will inevitably lead to commercial insureds seeking coverage for business interruption losses arising from the disruption of power to their businesses. Whether these losses are covered will depend on the policy wording used and the specific facts of each loss. Nevertheless, in anticipation of these types of claims, it is prudent to become familiar with the outcomes of prior litigation arising out of service interruption coverage disputes. While there is a dearth of case law on this issue coming out of the courts of North Carolina and South Carolina, several decisions are instructive in evaluating claims arising from Hurricane Florence.
Tuesday, September 11, 2018
With the Imminent Arrival of Hurricane Florence in South Carolina, Insurers Should Keep in Mind the Following Requirements Contained in the South Carolina Insurance Code:
With the Imminent Arrival of Hurricane Florence in North Carolina, Insurers Should Keep in Mind the Following Requirements Contained in the North Carolina Insurance Code:
Monday, September 10, 2018
Just as the Atlantic hurricane season reaches its climatological peak, the National Hurricane Center upgraded Hurricane Florence to a Category 4 hurricane with 130 mph winds and is expected to strengthen to 150 mph just before the anticipated landfall Thursday night. “The storm is already 500 miles wide — meaning a large area will be at risk when it nears land.”
Thursday, September 6, 2018
Tropical Storm Gordon - Impact of Area-Wide Economic Conditions on Business Interruption Coverage in Louisiana and Mississippi
As Tropical Storm Gordon made landfall in Louisiana with wind speeds near hurricane strength, its impact will likely be felt across many states. Unlike the traditional business interruption loss, where the focus is on the impacted business and its pre-loss performance, when tropical storms and hurricanes hit, issues surrounding the impact of the storms on the overall economy can come into play. How courts deal with this issue can vary significantly based on the policy language used to define how the business interruption loss is to be calculated.
Thursday, August 23, 2018
About 90% of the world’s earthquakes take place in the Ring of Fire, an area surrounding the Pacific Ocean laced with volcanoes. Though the name might conjure images of earthquakes spouting fire through cracks in the ground (or of Johnny Cash), this area is also prone to water damage in the form of tsunamis: 4 out of 5 tsunamis occur around the Ring of Fire. The 2004 Indonesia tsunami and the 2011 Japan tsunami have been perhaps the most notable of the 21st century
Wednesday, July 25, 2018
Additional Data Highlights Risk and Severity of a Mega-Cat Earthquake Event in the Pacific Northwest
We’ve previously noted the risk of a major earthquake in the Cascadia Subduction Zone, which runs from Vancouver, Canada to Northern California. This week, our friends at Temblor.net cited additional recent studies providing further evidence that such an event is a real threat, and particularly so for the major population centers of Seattle and Portland. Those cities are uniquely at risk of suffering considerable, widespread damage in a mega-quake event.
Wednesday, June 27, 2018
Texas attorney going to prison for five years for committing insurance fraud and barratry in hail claims
Those of us in the trenches know that there is an epidemic of insurance fraud and barratry in Texas hail claims. Well, there is now undeniable proof. On Friday, well-known hail attorney Kent Livesay appeared in a Tarrant County courtroom and entered a guilty plea to insurance fraud and barratry occurring in Texas hail claims. As part of his guilty plea, Livesay accepted a 5-year prison sentence. YES, THAT’S RIGHT. A Texas attorney has pleaded guilty and is going to prison for five years for committing insurance fraud and barratry in hail claims. A copy of his plea agreement is available here . A 343 page listing of evidence accumulated by the TDI and Tarrant County District Attorney used to support the indictment is available here .
Tuesday, June 12, 2018
The photos and videos of Hawaii’s Kilauea volcano eruption have been mesmerizing and terrifying. Lava flows with unstoppable power devour homes, cars and anything else in their path. Bright red lava pools churn and bubble and launch scorching hot lava “bombs” high into the air. Towers of ash are propelled miles into the sky.
Thursday, May 31, 2018
2018’s first named tropical weather system already struck Florida and states near the Gulf of Mexico. Sub-tropical storm Alberto came a full week before the official start of the 2018 Atlantic Hurricane Season and serves as an unpleasant reminder of 2017’s devastating storm impact. Last year’s hurricane season was one of the most active and destructive in recorded history, producing seventeen named storms and causing over $250 billion of damage across the Gulf Coast and Puerto Rico. And, according to the National Oceanic and Atmospheric Administration’s (“NOAA”) forecast, this year’s hurricane season could be dangerously similar.
Tuesday, May 8, 2018
Mother Nature recently reminded California, as she often does, of how cruel she can be. In December 2017, the state experienced its largest wildfire in history. The wildfire, known as the Thomas Fire, burned more than 281,000 acres in Southern California and destroyed more than 1,000 structures. A month later, California experienced its heaviest rainfall in nearly a year. Experts posit that the heavy rains, coupled with the absence of vegetation from the fires, triggered catastrophic mudflows that killed 21 people and caused significant property damage to homes and infrastructure.
Tuesday, May 1, 2018
As Texas continues to rebuild in the aftermath of Hurricane Harvey, the extent of the damage Harvey left in its wake is just now being realized. To date, private insurers have seen more than 670,000 property insurance claims resulting from Harvey. The Texas Department of Insurance reports that insurers have paid out more than $4.5 billion in Harvey claims, with the expected number projected to increase to $15.7 billion by the time all claims are reported and settled. Of these claims, more than 354,000 are residential property claims, and around 37,000 are commercial property.
Thursday, April 26, 2018
When Hurricane Harvey headed for Houston, Texans braced for an expected large amount of rain and heavy winds. What they did not expect was the catastrophic flooding that took place in the city.
Wednesday, April 25, 2018
In the last week, there have been several news stories about the recent island-wide power outage in Puerto Rico, the tenuous condition of Puerto Rico’s power grid, and the fact that hurricane season is right around the corner. Last Wednesday, a construction vehicle removing a fallen electrical tower got too close to an energized line and caused an electrical ground fault that led to an island-wide blackout. Luckily, power was not out across the island for long, but the outage once again drew attention to Puerto Rico’s efforts to rebuild following Hurricane Maria. Puerto Rico faced difficulties with its power grid even before Hurricane Maria made landfall, but Maria’s high winds and flooding damaged 75 percent of the island’s distribution lines. Despite the progress that has been made since Maria struck, it is clear that Puerto Rico has not fully recovered from Maria’s devastation.
Friday, April 13, 2018
The Boom Shift - Chemical Plant Explosion Claims and the Possible Adoption of Corporate Regulation Where Government Regulation is Absent
On the morning of March 15, 2018, a large explosion erupted at the Tri-Chem Industries chemical plant in Cresson, Texas, approximately 25 miles southwest of Fort Worth. The explosion left two workers badly injured and another presumed dead. According to 2017 Hood County records of the company’s chemical inventory, it has been reported that Tri-Chem’s Cresson plant stored chemicals that were toxic, flammable and corrosive yet the company had no emergency response plans in its files.
Friday, March 30, 2018
In the six months since Hurricane Maria devastated Puerto Rico, much progress has been made. Water service has been restored to 99% of the island and electricity to 93%. Of the total losses in the Caribbean from Maria, about 85% are in Puerto Rico, which the local government estimates at $100 billion. Insured losses are estimated between $40 and $85 billion.
Monday, March 19, 2018
Following a catastrophic event (such as a hurricane, tornado, or earthquake), insureds sometimes will not have the resources up front to make the repairs to their property. In many states, an insured can hire a contractor to perform the work in exchange for a post-loss assignment of benefits (AOB) whereby the insured assigns their rights in their insurance claim to the contractor making the repairs. From there, the contractor, not the insured, pursues payment of the claim from the insurer.
Friday, March 9, 2018
Almost a month to the day after the now-infamous January 4, 2018 “bomb cyclone”, another “bomb cyclone” (Quinn) hit the East Coast. On March 2, 2018, a monster storm slammed into the New England states causing major coastal damage, including erosion and flooding, as well as massive power outages.
Tuesday, February 27, 2018
Most commercial and residential insurance policies contain exclusions for earth movement, flood or surface water. At first glance it may appear clear that these policies would not cover damage from a mudslide. However, as the recent mudslides in Santa Barbara County, California demonstrate, the answer may not be so clear. Those mudslides, which killed more than 20 people and damaged or destroyed hundreds of homes, followed the Thomas Fire that scorched almost three hundred thousand acres.
Wednesday, February 14, 2018
On Thursday, May 3, 2018, the Dallas office of Zelle LLP will host an all-day seminar at the Hyatt Regency Reunion titled “2018 Texas Hail and Harvey Claims/Litigation Seminar.” The seminar will bring together insurance industry professionals to share information and knowledge concerning Texas Hail and Hurricane Harvey claims and litigation. The seminar has been held every other year since 2012. Over 500 attendees are expected.
Wednesday, January 24, 2018
2017 saw approximately USD 330 billion in losses from natural disasters worldwide, of which around USD 135 billion were insured, according to a Munich Re report. It was the second costliest year on record, only surpassed by 2011. Latin America was no exception to the trend, as a number of natural catastrophes hit the region last year.
Wednesday, January 17, 2018
The Florida House of Representatives struck another blow against abusive, unequitable, and baseless assignment of benefits (“AOB”) litigation when it voted overwhelmingly in favor of reform by a margin of 82-20 last Friday. Undeterred by the failure of previous attempts to reform AOB litigation in Florida, (Senate Bill 596, filed October 21, 2015, died in judiciary on March 11, 2016; House Bill 1097, filed January 4, 2016, died in the Regulatory Affairs Committee; House Bill 1421 filed March 7, 2017, died in Committee on Banking and Insurance on May 5, 2017; Senate Bill 1218, filed on February 24, 2017, died on May 5, 2017 in Committee on Related Industries), on January 12, 2018, Florida legislators acted decisively to address the AOB problem that has plagued the insurance industry in Florida.
Friday, January 12, 2018
2017 was a year of records for sure. Most notably, professional eater Joey Chestnut set a new record by eating 55 glazed doughnuts in eight minutes. At a university in Ohio, 972 people set a record by dressing as penguins. And, Ayanna Williams of Texas set a record thanks to her fingernails reaching a combined total length of 18 feet, 10.9 inches. Unfortunately, the U.S. also set a record in 2017 with a total of $306 billion in damage resulting from several natural disasters. In fact, the 2017 season was the first time that three Category 4 hurricanes — Harvey, Irma, and Maria — made landfall in the United States and its territories in a one-year period.
Thursday, January 11, 2018
Under Florida law, insurance coverage cannot be created by estoppel; however, enforcement of a forfeiture clause may be waived by an insurer’s conduct. Axis Surplus Ins. Co. v. Caribbean Beach Club Association, Inc., 164 So. 3d 684, (Fla. 2nd DCA 2014), 164 So. 3d 687. Generally, a forfeiture clause is one that requires an insured to take specific action (e.g., a notice provision or a cooperation clause) as a prerequisite to coverage under the policy. An insured’s failure to comply with the clause can result in the forfeiture of coverage for a claim that otherwise would have been covered under the policy. Lloyds Underwriters at London v. Keystone Equip. Fin. Corp., 25 So. 3d 89, 92-93 (Fla. 4th DCA 2009).
Friday, January 5, 2018
Move over Snowmageddon and make way for the “bomb cyclone” which hit the East Coast January 4, 2018. While the official name of this winter storm is “Grayson”, the media focused on the phenomenon (bombogenesis) that increased Grayson’s wrath and fury, converting it from a run-of-the-mill Nor’easter into a “bomb cyclone.”
Tuesday, January 2, 2018
As the urgency to repair immediate physical damage to commercial property subsides, and businesses begin to get back to business as normal in the wake of Hurricanes Harvey, Irma, and Maria, we will undoubtedly see claims to recover lost revenue, or extra expenses incurred as a result of the storm. These claims arise under a general claim for business interruption coverage.