Property Insurance News

12/04/2023 12:00 PM
Florida Crackdown on Roof Insurance Fraud Leads to Multiple Arrests
Florida authorities have apprehended four individuals linked to a scheme involving deliberate roof damage for insurance claims, alongside the arrest of Ricky Lynn McGraw, owner of South Florida Restoration Services (SFR). McGraw, known for his numerous lawsuits against property insurers, faces charges of grand theft and insurance fraud. His company has been involved in various disputes with Florida carriers, including a notable case with Tower Hill Prime Insurance Co., where a judge found SFR concealed cost information in a condominium claims dispute. McGraw plans to appeal this decision. Meanwhile, the Florida Department of Financial Services (DFS) announced the arrest of four associated with Castle Roofing Co., including Paul and Kiana Vautour. They are accused of systematically damaging roofs to fabricate insurance claims. DFS’s investigation revealed training methods for employees to create roof damage. Citizens Property Insurance Co. CEO Tim Cerio and Florida CFO Jimmy Patronis emphasized the significant impact of such fraud on insurance rates and urged homeowners to be vigilant. This series of arrests underscores the challenges facing Florida’s insurance industry, particularly in combating fraudulent activities that inflate costs and affect honest policyholders.

12/04/2023 11:21 AM
Illinois Supreme Court Ruling Reshapes CGL Coverage for Construction Defects
A recent Illinois Supreme Court decision has significantly altered the landscape of commercial general liability (CGL) insurance coverage in the context of construction defects. This ruling challenges the long-standing view of Illinois courts that damages caused by construction defects do not constitute a covered "occurrence" under CGL policies. The case in question involved Acuity, a mutual insurance company, and its denial of a claim related to water damage allegedly caused by defective construction by H&R Exteriors in Hanover Park, a Chicago suburb. The lower courts had previously ruled in favor of Acuity, supporting the notion that such damages were not occurrences warranting CGL coverage. However, the Illinois Supreme Court’s unanimous decision called into question the rationale behind these prior rulings. The court emphasized the need to adhere strictly to the policy’s language rather than leaning on public policy considerations. This decision aligns Illinois with other states like Florida, Texas, and Colorado, which have interpreted CGL policies to cover construction defect damages. The court’s analysis pivoted on policy language, particularly focusing on the "subcontractor exception" in modern CGL policies, which has evolved significantly from standard forms written in the 1960s and 1970s. The implications of this ruling are substantial for the construction and insurance industries, with policyholders gaining a significant advantage. This decision not only challenges previous court interpretations in Illinois but also potentially sets a precedent for how CGL insurance is applied to construction defects across the United States. The court’s prioritization of policy language over public policy in determining coverage could prompt a reevaluation of how construction-related insurance claims are handled nationwide.

12/01/2023 11:17 AM
DuPont and Affiliates Settle Ohio Lawsuit for $110 Million Over Toxic Chemical Releases
DuPont, along with spin-offs Chemours and Corteva, has agreed to a $110 million settlement with the state of Ohio over environmental hazards posed by PFAS chemicals. PFAS, long-lasting compounds linked to serious health risks, were used in products like nonstick coatings and firefighting foam. This settlement, subject to court approval, addresses Ohio’s concerns about PFAS releases from DuPont’s former facility in West Virginia. The majority of the funds will go towards restoring natural resources impacted by the Washington Works facility, with a portion set aside for addressing statewide PFAS issues. This follows a prior agreement with Delaware, requiring an additional $25 million payment for environmental projects. The lawsuit, initiated by Ohio in 2018, targeted DuPont and Chemours for the historical use of PFOA at the Washington Works site, implicating them in environmental damage and health issues. The financial responsibility for the settlement is divided among the three companies, reflecting a 2021 agreement on shared PFAS liabilities. This case exemplifies ongoing legal and environmental challenges associated with PFAS pollution, marking a significant step in holding corporations accountable for their impact on public health and the environment.

12/01/2023 10:15 AM
Scrutiny on Florida’s Citizens Property Insurance Amid Climate Change Concerns
The U.S. Senate’s Budget Committee, led by Chairman Sheldon Whitehouse, has launched an inquiry into Florida’s Citizens Property Insurance Corp, focusing on its strategies for managing potential underwriting losses from extreme weather events. This scrutiny comes amidst growing concern over Florida’s exposure to climate-related property losses and the expanding market share of Citizens. Whitehouse expressed apprehension that federal bailouts might be sought if Citizens cannot cover its losses, posing a significant risk to American taxpayers. In response, Citizens’ officials assert the firm’s financial robustness, citing Florida law that mandates surcharges on policyholders to cover deficits, thus precluding the possibility of insolvency. Despite concerns, Citizens’ outlook appears to be improving, with recent legislation aiding in reducing claims lawsuits and increasing flexibility in managing reserves. However, Whitehouse’s letter to Citizens’ CEO and Florida Insurance Commissioner stresses the long-term economic impacts of climate change on property values, insurance premiums, and federal finances, echoing the deep-seated challenges faced during the 2008 financial crisis.

12/01/2023 09:12 AM
Why to Use Alternative Dispute Resolution
During the pandemic, agents and brokers found themselves in the unenviable position of needing to find ways to reduce the soaring costs being incurred by their construction clients. While certain inflationary factors, such as the cost of supplies, were out of agents’ and brokers’ control, they could explore new options for workers’ compensation insurance. Workers’ compensation claims are one of the most inefficient and costly aspects of a construction project. According to Insureon, construction carries the highest workers’ compensation costs of any industry. While construction presents more risk for workers than most other industries, there are also issues with the traditional workers’ compensation claim process that drive costs without yielding better results.

11/30/2023 11:00 AM
Tragic Floorboard Collapse in South Carolina Reveals Hidden Well, Leading to Elderly Woman’s Death
In Salem, South Carolina, an 83-year-old woman tragically died after falling through rotting floorboards into a concealed well shaft inside a century-old house. The house, built in 1920, was being packed up for a move by the woman and her daughter when the incident occurred. The daughter, unable to locate her mother in the crawlspace, soon discovered the hidden hazard. Firefighters worked for almost four hours to retrieve the woman’s body from the 50-foot deep hole. Oconee County Coroner Karl Addis, with over three decades of experience, declared the death an accidental fall and noted the uniqueness of such an incident in the county. This case underscores the potential hidden dangers in older properties and the importance of thorough property assessments, especially in residences with historical significance.

11/30/2023 09:00 AM
Maximizing Accuracy in Weather-Related Insurance Claims with Forensic Meteorology
In the realm of hail and wind insurance claims, the role of forensic meteorology is increasingly pivotal. Howard Altschule, a Certified Consulting Meteorologist, and Steven Badger, a partner at Zelle LLP, highlight the importance of detailed weather analysis over generic reports. While starting with a $39 hail report is common, these experts stress that such reports should not be the endpoint, especially when the weather is a point of dispute. Forensic meteorology delves into an in-depth examination of historical weather data, aiding adjusters in making informed coverage decisions in the claims phase, even before litigation arises. Altschule points out that reliance solely on these standard reports can lead to discrepancies, as they often vary in methodology and outcomes. Non-meteorologists using these reports to prove or disprove the occurrence of hail at a property can lead to issues, as storm intensities frequently change. This underscores the value of forensic meteorology in providing accurate, localized weather assessments, thereby influencing the accuracy and fairness of insurance claim resolutions.

11/27/2023 08:30 AM
Understanding the Nuances of ’Falling Objects’ in Insurance Coverage
A condominium in a recent legal case argued that damage caused by excavated soil, which fell down a mountainside due to spring runoff, should be covered under their insurance policy’s ’falling object’ clause. However, the insurance company denied the claim, categorizing the incident as a mudslide or mudflow, which are typically excluded from such policies. The policy definition of a ’falling object’ does not explicitly include or exclude earth movements like mudslides, leading to ambiguity in the policy language. The court found the term ’falling object’ ambiguous in this context, necessitating a broader interpretation. However, it ultimately ruled that the mudflow was excluded as ’earth movement’ according to the policy’s exclusions. This case illustrates the complexity of insurance policy language and the challenges in interpreting policy terms like ’falling objects’. The ruling underscores the importance of understanding the specific language and exclusions in insurance policies, especially in scenarios involving natural disasters or uncommon incidents. The case also highlights the need for policyholders to be aware of the nuances in their insurance coverage, especially in areas prone to natural disasters. The broad interpretation of ’falling objects’ may not always favor the insured if other exclusions, like earth movement, apply to the situation. It’s crucial for insurance professionals and policyholders to thoroughly understand and consider all aspects of their coverage to ensure adequate protection against potential risks.

11/21/2023 09:00 AM
Chubb Report Reveals Misconceptions Among US Mid-Market Companies Regarding Flood Risks
A recent report from Chubb reveals a troubling gap in understanding among US mid-market companies regarding flood risks. The survey, which gathered insights from insurance brokers, found that 85% of these companies incorrectly believe their property insurance covers various types of flooding. This misconception is alarming, considering floods are the most common and costly natural disaster in the US, with expenses exceeding $850 billion since 2000. The survey also uncovered that a majority of businesses do not request flood insurance quotes, partly due to the mistaken belief that their current policies provide sufficient coverage. Additionally, there’s confusion about what constitutes a flood, with perceptions varying from water body overflow to heavy rainfall and tidal waves. This lack of understanding and consensus highlights the need for better education and clarification from the insurance industry on flood risks and coverage. Chubb emphasizes the urgency for businesses to assess their flood risks accurately, seek proper insurance coverage, and leverage tools and technologies for resilience and loss prevention. Regular engagement with insurers and brokers is recommended to adapt to the evolving nature of flood risks and ensure appropriate coverage and preparedness.

11/20/2023 05:35 AM
Rising Natural Disasters and Economic Factors Lead to Increasing Homeowners Insurance Costs
The Insurance Research Council’s recent brief reveals a notable increase in homeowners insurance costs, driven by a combination of more frequent and severe natural disasters, rising home repair expenses, and other economic factors. In 2020, the average U.S. household spent about 1.93% of their income on homeowners insurance, with significant variations across states. Utah emerged as the most affordable state, with households spending only 0.92% of their income on insurance, contrasting sharply with Louisiana, where the figure stood at 3.84%. This affordability gap is influenced by various factors, including regional differences in natural hazards, the frequency and average payout of claims, and risks covered by home insurance policies like theft and vandalism. Over the past two decades, there has been a clear trend of insurance premiums growing faster than personal incomes, exacerbating affordability issues. Although there was a slight dip in expenditure share in 2019 and 2020, the most recent data doesn’t reflect the ongoing rise in insurance costs. The situation is further complicated in some states by crises in insurance availability. Insurers, grappling with these affordability challenges, are either reducing their exposure or pulling out of certain markets. This response highlights the need for insurers and policymakers to scrutinize the factors driving claim costs to improve the affordability and availability of homeowners insurance. Dale Porfilio, president of IRC, emphasizes the importance of insurers being able to price policies in a way that reflects the risks they assume.