What's the Scenario? with PLRB PLRB

Old brick mansion in New Jersey with a fireplace that the insured uses in the winter. During a routine cleaning, the chimney sweep noticed some cracking in the chimney bricks. He says (1) it’s probably due to age and normal use because over time the heat from the fires takes a toll; he says (2) in his estimation the cracking has existed for 3+ years. 
 
Notable Timestamps
[ 00:15 ] - He encourages the insured to submit an insurance claim anyway. Policy = ISO HO 00 03 05 11. The adjuster knows there is an exclusion for “cracking” but also knows that fire is a covered peril. Is there coverage for the chimney?
[ 01:18 ] - Trivia Time! How many fireplace-related deaths happened in the United States?
[ 04:18 ] - The "cracking" exclusion appears alongside other long-term normal-usage exclusions and would normally be considered in that context.
[ 06:18 ] - But, could we say that FIRE was the proximate cause in order to find coverage? Not necessarily. Courts created a distinction between "friendly" fires like stoves or fireplaces vs. "hostile" fires that "escape" their enclosures.
[ 08:55 ] - See Karadontes v. Continental Ins. Co., 354 A.2d 696 (N.J. App. 1976).
[ 09:40 ] - The fact that the "date of loss" when the cracking began was three years ago likely does not mean the insureds provided late notice. Courts created the discovery rule for cases such as this, starting the clock at the time the loss was discovered.
[ 12:50 ] - Who would notice a crack in their fireplace?
[ 13:50 ] - In civil law, the preponderance of the evidence standard applies, so in this case the chimney sweep's claims would likely be accepted.
[ 15:00 ] - Only sudden or accidental soot or smoke is typically covered.
[ 15:33 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Chimney Damage-Faulty Maintenance or Covered Fire Loss? – Claims Magazine - https://www.plrb.org/documents/chimney-damage-faulty-maintenance-or-covered-fire-loss-claims-magazine/
Thermal Cracking Inside Chimney – Fire or Wear and Tear? – PCQ.2023.08.19.twh.a - https://www.plrb.org/documents/thermal-cracking-inside-chimney-fire-or-wear-and-tear-pcq-2023-08-19-twh-a/
Windstorm: Downdraft Into Chimney Disperses Soot – PCQ.2018.04.30.rcw.b - https://www.plrb.org/documents/windstorm-downdraft-into-chimney-disperses-soot-pcq-2018-04-30-rcw-b/
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys (https://www.plrb.org/container.cfm?conlink=sec/cq/default.cfm) at no additional charge to you or your company.
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Please reach out to us with your scenario! This could be your “adjuster story” sharing a situation from your claims experience, or a burning question you would like the team to answer. In any case, please omit any personal information as we will anonymize your story before we share. Just reach out to scenario@plrb.org.
Legal Information
The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.
Music: “Piece of Future” by Keyframe_Audio. Pixabay. Pixabay License.
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The insured is a charitable organization. Times were tough; fundraising was stagnant. The insured was looking to save money, so they asked if they could lower their premiums by canceling their hurricane coverage. The underwriters agreed, and drafted a 1-page endorsement with an exclusion for named storms. Sure enough, the insured got hit with a hurricane the very next month. They submitted a claim anyways, now stating they don’t see any named storm exclusion in the policy. The adjuster looks but can’t find it either. 

Notable Timestamps
[ 00:15 ] - It turns out the insurer forgot to include the endorsement in the policy bundle. But still, there are documented conversations that the insured wanted to cancel their hurricane coverage, and they got lower premiums, and the insured doesn’t even deny that. Who wins?
[ 01:56 ] - Ambiguities are construed against the insurer, because they drafted the policy. But in this case, there's no ambiguities within the four corners of the policy.
[ 03:30 ] - The contract says what the contract says, period. The Parole Evidence rule says evidence can't be presented that something else was meant to be different compared to what was in the written contract.
[ 06:08 ] - ...But this situation is so unfair! Courts "sit in both law and equity", meaning that if there was a mutual mistake, many courts will reform the contract.
[ 07:46 ] - See Shiloh Christian v. Aspen, a Florida case with similar facts which held in favor of the insured.
[ 11:30 ] - The adjuster's mistake can't create coverage, but if the insured relied on the insurer's mistake, the doctrine of detrimental reliance would protect the insured.
[ 13:55 ] - When does a hurricane get its name? What happens when your name gets co-opted as the name of a bad hurricane?
[ 15:33 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Shiloh Christian Ctr. v. Aspen Specialty Ins. Co. (2023), No. 22-11776, 2023 WL 2920573, — F4th — (11th Cir. (Fla.) 4/13/2023) - https://www.plrb.org/documents/shiloh-christian-ctr-v-aspen-specialty-ins-co-2023/
Estoppel: Detrimental Reliance By Insured – PCQ.1993.04.16b - https://www.plrb.org/documents/estoppel-detrimental-reliance-by-insured-pcq-1993-04-16b/
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys (https://www.plrb.org/container.cfm?conlink=sec/cq/default.cfm) at no additional charge to you or your company.
Subscribe to this Podcast
Your Podcast App - Please subscribe and rate us on your favorite podcast app
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LinkedIN - Please follow at “Property and Liability Resource Bureau”
Send us your Scenario!
Please reach out to us with your scenario! This could be your “adjuster story” sharing a situation from your claims experience, or a burning question you would like the team to answer. In any case, please omit any personal information as we will anonymize your story before we share. Just reach out to scenario@plrb.org.
Legal Information
The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.
Music: “Piece of Future” by Keyframe_Audio. Pixabay. Pixabay License.
Font: Metropolis by Chris Simpson. SIL OFL 1.1.
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Homeowner was an elderly widow in Texas who was not keen on moving into a retirement home, so she continued to live in her house by herself. As she got older, a lot of normal maintenance started to get ignored, including the roof – The shingles were old and looked like they were about to fall off any day. One day a windstorm came through the area, and sure enough, 20-30 shingles blew off. She called her insurance company. The adjuster reviewing the file thinks, wind is a covered cause of loss, but wear and tear and deterioration are not. He is wondering what to do when there are multiple contributing factors.
Notable Timestamps
[ 00:15 ] - The homeowner failed to maintain the roof, and then it was damaged in a windstorm. Both factors contributed to the loss, but only one (wind) is covered, and the other (wear and tear) is not.
[ 01:04 ] - The PLRB podcasters discuss how long their roofs have left before they'll need to be replaced...
[ 02:50 ] - There can be coverage for a roof even though it's past its useful life. It still performs a valuable function. ACV would be low, but replacement cost would replace old with new.
[ 03:44 ] - The question is whether it's functioning as a roof. If there are gaping holes, or damage to the point where it's value-less, it may not be covered.
[ 04:06 ] - Some carriers have endorsements clarifying when a roof's useful life (and coverage) ends.
[ 04:35 ] - The Anti-Concurrent Causation Preface: "Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss." When this is present and applicable, one exclusion's application means no coverage for the entire claim.
[ 05:45 ] - Ususally, the Anti-Concurrent Causation Preface does not precede the wear & tear exclusion. Without that clause, the exclusion would only apply if wear & tear were the proximate cause.
[ 08:00 ] - Tim makes the bold claim that Texas is the #2 state, after Ohio of course. Outside of Texas, under the majority rule, proximate cause means the dominant and sufficient cost. If the shingles were hanging on by a thread, wear & tear would be the proximate cause even if wind knocked them off. On the other hand, if the shingles weren't that bad and a 70-mph gust tore them off, the proximate cause would likely be wind.
[ 09:25 ] - The crew selects Houston as their favorite Texas destination. In Texas, when covered and non-covered perils combine to create a loss, the insured is entitled to recover that portion of the damage caused SOLELY by the COVERED peril. Failure to do so results in NO coverage. This sounds a lot like the Anti-Concurrent Causation Preface, even though it's not coming from the policy but from Texas case law.
[ 10:30 ] - It's the insured's burden to establish what damage is caused SOLELY by the covered peril. If there's a non-covered peril contributing to the loss in any way, it won't be covered, at least in this unique jurisdition.
[ 11:50 ] - A creative public adjuster brings up the Ensuing Loss clause. Losses that ensue from wear & tear can be covered... but Tim's not buying this argument. If the wear & tear causes a leak which leads to damage, that's one thing, but to consider the shingle damage as an ensuing loss of the wear & tear of the shingles themselves... it's a little close.
[ 13:08 ] - If spot repair can be effective, it's an option. But issues like matching, difficulty accomplishing the repair, and local ordinances or laws can mean a full replacement.
[ 14:07 ] - What if the only issue with spot repair is the rotted decking under the shingles? Mike had relevant personal experience to share.
[ 15:33 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Coverage Question - Roof Damage Caused By Combination of Wear and Tear Plus Freezing/Thawing  - https://search.plrb.org/?dn=74356&src=gsa
Coverage Question - Windstorm Damage v Wear/Tear Shingles - https://search.plrb.org/?dn=20790&src=gsa
Annotation

At a store, a female patron wanting to try on clothing secured the dressing area with a curtain. Another patron, the insured, engaged in allegedly assaultive conduct by rummaging, feeling, and grabbing the curtain in an attempt to make physical contact with the female patron. The insured also knelt down and used his phone to take videos or photos of the patron under the curtain.
Notable Timestamps
[ 00:19 ] - At a store, a female patron wanting to try on clothing secured the dressing area with a curtain. However, another patron, (who happens to be our insured) entered the store with various family members, selected a shirt and approached the occupied dressing area. Although the insured was made aware by the patron not to come in, he then engaged in allegedly assaultive conduct by rummaging, feeling, and grabbing the curtain in an attempt to make physical contact with the patron.
[ 01:00 ] - At this point, a store associate provided the insured an alternate location to try on the shirt, which the insured did. But afterwards, the insured knelt down and used his phone to take videos or photos of the patron under the curtain.
[ 01:24 ] - The patron sued the insured for allegedly assaultive conduct in a store. Prior to trial, in her discovery deposition, the patron explained that she tried to laugh it off and make a joke out of an uncomfortable situation by saying "you don't want to spoil your breakfast." According to the patron, the insured's family told the insured not to act that way, and "we kind of giggled and I just tried to shut it down very quickly and said, guys, enjoy your day."
[ 02:00 ] - The insured sought coverage under his HO policy, and the insurer sought a declaratory judgment that it owed no duty to defend or indemnify the insured. 
[ 02:40 ] - Special guest Michele Hunter, coverage counsel at PLRB, joins us today to discuss this podcast’s first Casualty topic.
[ 03:37 ] - See AIG Property Casualty Co. v. Anenberg, 2020 WL 4607839 (D. Haw. 8/11/20). This behavior does not seem accidental, but this particular policy defines an occurrence not just as an accident, but as an offense as well.
[ 05:50 ] - Among other charges, the patron claimed Negligent Infliction of Emotional Distress. If one claim triggers coverage, there is a duty to defend for the entire claim.
[ 06:46 ] - The insurer relied on the Intentional Acts exclusion to deny coverage. Courts are split on whether to apply a subjective or objective test in applying this exclusion. For the objective test, the court asks if a reasonable person would consider it an intentional act. The subjective test asks what the insured believed, and Hawaii applies this test.
[ 08:24 ] - However, the insured chose to argue that objectively speaking, his behavior was not intentional. The insured claimed that the patron’s joking response proved he had no intent to harm.
[ 09:20 ] - The court agreed that the insured objectively did not intend harm.
[ 11:30 ] - The majority of relevant case law does not allow the “creative pleading” addition of Negligent Infliction of Emotional Distress to establish coverage, in intentional sexual assault cases.
[ 12:40 ] - The court found that the Sexual Molestation exclusion did not apply because the complaint did not allege the pertinent actions.
[ 13:50 ] - The laughter occurred after the behavior, but this court used it to interpret the insured’s intent anyway.
[ 15:30 ] - Under the typical ISO definition of an occurrence, this would likely not be considered an occurrence.
[ 15:33 ] - Michele provides a recap of the scenario and the points above. This case demonstrates the impact that specific policy language, creative pleading, and individual judges can have on a seemingly clear-cut argument.
Your PLRB Resources
Homeowners Policy Annotation Key 611 Expected or Intended Injury Exclusion - https://www.plrb.org/documents/ho611-expected-or-intended-injury-exclusion/
AIG Property Casualty Co. v. Anenberg (Hawaii

Your friend clicked on a link in a questionable email. Now her computer is locked with a message saying it will unlock if she makes a bitcoin ransom payment. This is causing two problems for her: (1) Her computer doesn’t work now, and (2) She had 10 years worth of family photo albums stored on the hard drive, with no cloud backup. 
Notable Timestamps
[ 00:15 ] - Today’s scenario involves ransomware. The computer wasn’t cheap, and those photos were priceless, so she wants her insurance company to make the ransom payment for her. The adjuster handling the claim is looking to see whether this is covered, and if so, what actually can be done.
[ 01:06 ] - The team discusses what happens when you click on a suspicious link, and what’s supposed to happen when someone says “O-H…”
[ 03:45 ] - The computer falls under Coverage C as personal property, and so do the digital photos.
[ 04:41 ] - Theft is a named peril under Covegage C that likely applies. Vandalism might also apply.
[ 05:35 ] - Being unable to access something qualifies as a loss in this scenario.
[ 07:08 ] - There is a split in courts, but in EMOI Services, LLC v. Owners Ins. Co., 2022-Ohio-4649, 2022 WL 17905839. —- N.E.3d — (Ohio 12/27/2022) (Supreme Court of Ohio, applying Ohio law) [reviewed at PLRB, Prop. Ins. L. Rev. 11510 (2023)], encryption of files, caused by a ransomware attack on the policyholder’s computer system, was not direct physical loss or damage to "media" covered under an Electronic Equipment endorsement to a businessowners policy.
[ 08:30 ] - If data isn’t physical in “O-H…I-O,” the Electronic Data coverage in commercial forms could apply, if it would otherwise have no application.
[ 09:30 ] - Assuming the matter is covered, the insurer could pay ACV… but could they pay the ransom? It’s an open question.
[ 11:04 ] - Calculating ACV for the photos is subjective, but market value would likely be low.
[ 13:00 ] - One of the Special Limits of Liability caps “personal records” at $1,500.00.
[ 13:48 ] - Ransomware is becoming an new insurable niche, with potential new endorsements coming down the road: “cyber-extortion” coverage, etc. 
[ 15:33 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Coverage Question - Loss of Use: Hacked Cell Phone, Ransom Demanded - https://search.plrb.org/?dn=73714
Coverage Question - Cyber Losses FAQs - https://search.plrb.org/?DN=67890
Webinar - Cyber Loss Case Scenarios - https://www.plrb.org/distlearn/webinars/vplayer.cfm?vid=w0091
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys (https://www.plrb.org/container.cfm?conlink=sec/cq/default.cfm) at no additional charge to you or your company.
Subscribe to this Podcast
Your Podcast App - Please subscribe and rate us on your favorite podcast app
YouTube - Please like and subscribe at @plrb
LinkedIN - Please follow at “Property and Liability Resource Bureau”
Send us your Scenario!
Please reach out to us with your scenario! This could be your “adjuster story” sharing a situation from your claims experience, or a burning question you would like the team to answer. In any case, please omit any personal information as we will anonymize your story before we share. Just reach out to scenario@plrb.org.
Legal Information
The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their co

A young couple lives together in St. Pete, Florida. Their friend was vacationing in Italy for a month and asked them to dog sit for her 3 year old pit bull rescue, who had a checkered past but was doing well lately. The couple took in the dog, and one night they threw a dinner party. Out of nowhere, the dog attacked one of the guests, biting him in the leg. In the resulting chaos, blood got all over the expensive white wool carpet. The man got his leg treated at the hospital, he was fine– not suing! – the dog was returned to the shelter and now the couple is making an insurance claim to replace their blood-stained carpet under Section I of their HO3.
Notable Timestamps
[ 00:16 ] - Today’s scenario involves an insured with a dog that was not theirs, with some history of aggression but not recently, injuring a guest to their home, where the injury is not at issue but the carpet is. It’s a complex situation!
[ 01:12 ] - Mike shares a harrowing tale and Alissha argues on behalf of the dog.
[ 03:40 ] - There’s an exclusion for losses caused by “animals owned or kept by an insured.” The dog could be considered “kept” by the insureds because they hosted it for months.
[ 04:40 ] - There is a case to be made that this exclusion is only for “normal” pet damage like chewing, drooling, vomit, pooping, etc. It is grouped in wear & tear, and a dog bite could be described as fortuitous. However, some courts have disagreed. See resources below for citations.
[ 07:19 ] - Losses “caused by” pets are excluded, but losses that “ensue from” or “result from” pets are covered. If a dog knocks over a candle, that could be an ensuing loss, whereas a dog drooling on something could be a cause. It’s a hairline distinction.
[ 10:03 ] - You can look at state case law for your particular state for prior rulings on ensuing loss.
[ 11:00 ] - Blood is arguably a liquid & contaminant under the pollution exclusion. Such claims often involve emotional considerations.
[ 12:50 ] - According to a recent Florida case, blood is not a pollutant. See resources below for citations.
[ 13:30 ] - If there’s a Coverage C Peril, the exclusion would not apply. 
[ 15:33 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Related Case: Bjugan v. State Farm Fire and Casualty Co., No. 13-35927, 2016 WL 1072207 (9th Cir. (Or.) 3/18/16) (unpublished) (U.S. Court of Appeals for the Ninth Circuit, applying Oregon law) [reviewed at PLRB, Prop. Ins. L. Rev. 9398 (2016)]. https://www.plrb.org/documents/bjugan-v-state-farm-fire-and-casualty-ins-co-2016/
Related Case: Nolan v. Auto-Owners Ins. Co., No. 301106, 2011 WL 5865522 (Mich. App. 11/22/11) [reviewed at PLRB, Prop. Ins. L. Rev. 8351 (2011)] (unpublished). https://www.plrb.org/documents/nolan-v-auto-owners-ins-co-2011/
Related Case: Fla. Farm Bureau Gen. Ins. Co. v. Worrell, No. 5D21-3196, 2023 WL 3130872, — So.3d —- (Fla. App. 5th DCA 4/28/2023) (Florida District Court of Appeal, 5th Dist., applying FL law) [reviewed at PLRB, Prop. Ins. L. Rev. (2023)]. https://www.plrb.org/documents/fla-farm-bureau-gen-ins-co-v-worrell-2023/
Coverage Question - Pet Dog Attacked Owner; Blood on Carpet - https://www.plrb.org/documents/pet-dog-attacked-owner-blood-on-carpet-pcq-2023-10-27-twh-b/
Coverage Question - Pollutant Exclusion: Deer Crashes Through Window and Blood Destroys Carpet - https://www.plrb.org/documents/pollutant-exclusion-deer-crashes-through-window-and-blood-destroys-carpet-pcq-2017-03-21-slc-b/
Coverage Question - Are Blood and Bodily Fluids Pollutants under Coverage A Dwelling? - https://www.plrb.org/documents/are-blood-and-bodily-fluids-pollutants-under-coverage-a-dwelling-pcq-2024-02-09-mrh-a/
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys