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  • April 11, 2017
    by Vanessa Ross, Esquire with the Stockham Law Group, Sarasota, FL.

    Did you know that if a roof was installed improperly, there may be coverage for the water damage that occurred as a result?  Did you know that where an insured has failed to maintain the exterior of the building, there could be coverage for water damaged interior walls? Have you encountered negligently installed sliding glass doors that allow water into a dwelling?  There could be coverage for the resulting damage!

    Ensuing loss coverage is often misunderstood. The law in Florida has been consistent in its definition, but it has been misapplied and misinterpreted by in-house insurance adjusters and public adjusters alike. Let's begin with a basic definition provided by Webster's Dictionary.   "Ensuing" means "to take place afterward or as a result".  How does this definition apply when interpreting coverage under a homeowner's or commercial policy? 
    Generally speaking, an ensuing loss provision does not cover damage to the excluded cause of loss itself (i.e., the broken pipe), but rather covers loss caused to other property wholly separate from the defective property itself (water damage). 4 Bruner & O'Connor Construction Law § 11:211. For example, there would be coverage for water damage which occurs "afterward or as a result" of a faulty or defective roof flashing. In this regard, coverage for water damage-a covered cause of loss-resulting from faulty workmanship or installation-an excluded cause of loss-is a logical interpretation of the ensuing loss provision in the Policy. Selective Way Ins. Co. v. Nat'l Fire Ins. Co., 988 F. Supp. 2d 530, 538 (D. Md. 2013).

    Recent case law in Florida has explained the ensuing loss provision of a homeowner's policy as follows: "if the [Insureds] suffered consequential loss as a result of the corroded pipe and that consequential or "ensuing" loss is not excluded under another provision of the policy; the loss is covered. Homeowners Choice Prop. & Cas. v. Maspons, 42 Fla. L. Weekly D 203 (Fla. 3d DCA 2017); Murray v. State Farm Fire & Cas. Ins. Co., 219 Cal App. 3d 58, 64, 268 Cal. Rptr. 33 (Cal. Ct. App. 1990).

    The crux of these cases, and probably the reason there are so many incorrect interpretations of coverage in this context, is that the insured must show damage separate and distinct from the excluded cause of loss. In other words, where there is an improperly installed drain line, roof flashing, sliding door or stucco, the insured should make the carrier aware that those items are not in the claim.  Rather, the water damage, mold damage, sewage back up, or rain water intrusion, which occurred and damaged other building components is the basis of the claim. The claim is not for the defective roof flashing, the defective or improperly installed sliding doors or defective stucco, for example, but instead the claim is for the damage which occurred as a result of those improperly installed items. For instance, damaged drywall, wood framing, plywood, sheathing, flooring, roof decking, beams, and other items that were damaged "afterward or as a result" of the original faulty construction.

    The Florida Supreme Court defined ensuing loss in  Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 167-168 (Fla. 2003).  In Swire the Court addressed whether the policy's design defect exclusion clause barred coverage for the cost of repairing the structural deficiencies in the condominium building balconies. The Court held that it did. More importantly, the Court held that the ensuing loss clause was not ambiguous.  In Swire, the Court found that the condo association's sole claim was an attempt to recover the expenses incurred in repairing a design defect. No ensuing loss resulted to invoke the exception to the exclusionary provision. Under the precise terms of the policy, the Court found that there was no coverage for the claim because "[no] loss separate from, or as a result of, the design defect occurred" Id at 168 (emphasis added). Therefore, the court concluded that "under the clear contractual provisions along with the authority of the numerous courts noted above, which we find persuasive, Swire is not entitled to recover the expenses associated with repairing the design defect". Id. However, as the Court stated, if there were losses that occurred separate from or as a result of the construction defect, there would be coverage. The Swire court did not apply a requirement that the chain of proximate cause be broken for the ensuing loss exception to apply. It only required that the ensuing loss "occur subsequent to, and as a result of, a design defect." Id.

    Also, as explained in Murray v. State Farm, the Court dealt with a similar clause that provides the homeowner with coverage for losses which flow from an excluded loss, as long as the "ensuing" loss is not also specifically excluded. Thus, the exclusion for "deterioration" means that State Farm is not obligated to compensate the Murrays for their corroded water pipe. If  however, the Murrays suffered consequential loss as a result of the corroded pipe and that consequential or "ensuing" loss is not excluded under another provision of the policy, the loss is covered. Id at 488.

    It is important to keep in mind that ensuing loss is covered, even when the loss was originally set in motion by an excluded cause of loss. The Bartram, LLC v. Landmark Am. Ins. Co., 864 F. Supp. 2d 1229, 1233, (N.D. Fla. 2012). In other words, ensuing loss is usually an exception to an exclusion. In The Bartram, the Court explained that this means that "ensuing losses, if they resulted from a covered cause, are covered under the policy regardless of whether the loss was naturally set in motion by an excluded cause of loss". The Court concluded that where "the faulty workmanship resulted in water intrusion that subsequently resulted in ensuing losses, the cost to repair the faulty workmanship is excluded but the ensuing losses from the water intrusion are covered. This interpretation is consistent with Swire and the weight of authority interpreting the ensuing loss exception". Id at 1235 citing Harbor Communities, LLC v. Landmark Am. Ins. Co., No. 07-14336-CIV, (S.D. Fla. 2008); Eckstein v. Cincinnati Ins. Co., 469 F.Supp.2d 455 (W.D. Ky 2007); Alton Ochsner Med. Found. v. Allendale Mut. Ins. Co., 219 F.3d 501, 505-06 (5th Cir. 2000).

    Therefore, when dealing with claims that initially seem to be excluded, look further, and determine whether there are ensuing losses, or losses that occur "afterward or as a result" of the initial excluded loss. These damages are separate from the work needed to simply fix the faulty workmanship or lack of maintenance. Finally, it is important to determine whether tear out is needed to access the defective or otherwise excluded condition. If tear out is needed to access the damage, then an ensuing loss provision may help you recover the cost of the tear out as well as the cost to repair the resulting loss.
      
    Vanessa Ross is an attorney representing only property owners to assist them in achieving favorable results against their insurance companies. She has analyzed and litigated literally thousands of insurance claims on behalf of insurance companies and now brings her knowledge and experience to the consumer.  To contact Vanessa and discuss any coverage issue, she can be reached at 941-217-7580 or by email at vross@stockhamlawgroup.com.
  • April 3, 2017

    We are happy to report that Utah Governor Gary Richard Herbert signed into law a new omnibus consumer protection insurance bill on Wednesday March 22nd that affects public adjusters and policyholders. Legislators in both chambers worked very hard to see HB 42 pass before the end of the Utah Legislative Session which ended on March 10th.  We had the opportunity to speak with the sponsor of HB 42, The Honorable James A. Dunnigan, and Representative and communicate with The Honorable State Senator Curtis S. Bramble expressing our support of HB 42.

    AAPIA also wants to recognize Commissioner Todd E. Kiser and Deputy Commissioner Brett Barratt for their exceptional oversight in working with the General Assembly to see this omnibus Bill become an effective consumer protection law in the State of Utah.

    The new law provides for conflict of interest rules between public adjusters and contractors, imposes contract requirements that follow the NAIC Model Act, and, similar to Texas proposals, has a restriction on soliciting business for the primary purpose of referring the claim to an attorney. In addition, the most striking change to the law is the ability under the new law for public adjusters to charge a percentage fee. AAPIA proudly supports legislation such as this, which benefits consumers, and also strengthens the public adjuster license.  

    Beware the new contract and disclosure requirements so that you are not caught unaware of the changes! Click Here for a complete copy of the law.  Utah requires a copy of your contract to be filed with the state, and you want to make sure that you are in compliance with the new law.
     
    AAPIA Advocates for Public Adjusters so You Can Advocate for your Clients: it is because of our strong membership that we are able to monitor legislation in every state each and every day to ensure that the laws being promulgated are in the best interest of consumers and the public adjuster industry we serve.

    Our tireless advocacy for the value of the public adjuster results in positive measures such as this one from state departments of insurance. Please consider becoming member today so that we can continue to work for you.

    Join TODAY! By visiting our website www.aapia.org 

    Can AAPIA count on your membership? 

  • March 16, 2017

    Miss the Webinar on Ohio's Groundbreaking Law?

    Watch Preserving Our Neighborhoods: An Educational Webinar on Ohio's Recently Passed HB463

    In early January, Ohio Governor John Kasich signed HB463, a groundbreaking law that bans plywood boarding and helps communities mitigate blight.

    In order to better understand the implications of this bill and what it means for the property preservation industry, the Greater Ohio Policy Center hosted a free webinar, Preserving Our Neighborhoods: An Educational Webinar on Ohio's Recently Passed HB463. 

    I, along with other industry experts, outlined the positive and dramatic impact this bill will have on blight, communities and the property preservation industry.

  • March 7, 2017

    AAPIA is proud to announce our newest endeavor, the Legal Alliance.  The AAPIA Legal Alliance will give your firm the exposure and industry connections you need to attract more business.  AAPIA currently has 20 open membership opportunities available for firms like yours, with expertise in the property damage industry. This is direct exposure to the Public Adjuster Industry and first party claims cases. Our members, gathered from coast to coast, are the leading Pipeline for Law firms handling first party property damage claims. Don’t wait for the next Hurricane to get your firm in the Legal Alliance. Property Attorneys have never had this type of exposure, and with your support of the number one, Policy holder rights advocate, you gain direct access to its most influential professionals.

    As a result of our industry accolades, Law firms like yours are now able to be part of our national association. AAPIA’s sole mission is to protect and defend the rights of all Public Insurance Adjusters and policyholders alike so that they may practice in a free and open marketplace.  Every day, we are fighting adverse legislation that could cripple our industry.

    Take this moment and put yourself at the top and join AAPIA in this battle by becoming a member of the Legal Alliance.  

    Legal Alliance members:  Direct affiliation with The American Association of Public Insurance Adjusters.  The opportunities are endless:

    • Our Blog:Your passions will be directly published on our website recognizing your business and highlighting your expertise and encouraging traffic and business directly to you.
    • Preferred Professionals:Policyholders and Public adjusters contact us on a 24/7 basis seeking all types of services, primarily legal assistance.  With this relationship, you will be on the front line! 
    • Banner Ad: On our website and social feeds.
    • AAPIA Logo Use:You will receive a Proud Member in Good Standing AAPIA Multi-colored Logo to display on your website and letterhead and window cling logo to proudly display at your office.
    • Event Notifications:If your firm offers continuing education courses why not post them on line at www.aapia.orgso more public adjusters can learn about the valuable services you provide

    Legal Alliance Yearly Partnership: $500.00

    If you have time in the very near future I would like to interview you and place our interview on the AAPIA web site www.aapia.orgfor all to listen to, just our way to say thank you for listening!  

    I look forward to working with you.

    Best in Life Always,

    Gene G. Veno

    President

    AAPIA

  • March 1, 2017

    No industry combines so much money with so little transparency more than the insurance industry. Most people simply rely on family, friend or broker recommendations to find their auto, home or renter's policy. But with over 2,500 licensed property and casualty insurance companies in the market, it's hard to know which companies are the best. Until now, there simply has not been an available resource to compare your options and make better insurance decisions.

    Welcome Clearsurance! Clearsurance is on a mission: to provide the most objective, trustworthy and comprehensive ratings, reviews and advocacy tools in the insurance industry. As more consumers purchase insurance directly from insurance companies, there is a clear need for a trusted, independent source for consumers to share their insurance experiences, learn from others, and compare their options.

    Clearsurance has created the most dynamic, new measure of an insurance company. The algorithm analyzes a range of inputs, including crowdsourced reviews, poll results, net promoter scores and claim satisfaction scores from real customers. In addition, Clearsurance uses independent rating agencies, including AM Best (financial solvency and strength) and the Better Business Bureau accreditation to create the most comprehensive metric in the market.

    Clearsurance is the first-to-market, crowdsourced rating and review platform by people for people. Clearsurance is not an insurance agent or broker. Clearsurance is not an insurance company.

    Rather, Clearsurance is a content platform with a community of insurance consumers sharing experiences, rating those experiences with insurance companies, and creating transparency for all insurance consumers to understand how insurance works. Clearsurance wants to make sure people know the reputation of their insurance company.

    Clearsurance is comprised of a team of software, technology, and insurance advocacy entrepreneurs brought together by a passion for making it simple for insurance consumers to be better informed so they can have confidence in their insurance decisions. Additionally, Clearsurance seeks to partner with industry leaders, such as AAPIA, to bring awareness to the insurance industry. Early on, AAPIA provided Clearsurance with valuable insight into the insurance industry. Their unique perspective has afforded Clearsurance with yet another view of the insurance industry. It is relationships like these that Clearsurance capitalizes on to bring about further transparency into the insurance industry.

    Visit Clearsurance.com today to rate and write about your experience with your insurance carrier.