Defective but Functional Tiles Like many of us, All Saints Catholic Church purchased an insurance policy to protect its property. Unfortunately, the church’s roof turned out to be made with Hardi-Slate tiles that were later alleged to be defective because they were prone to absorb excessive moisture and deteriorate, leading to breakage and premature failure.… Continue reading What All Saints Catholic Church v. United National Insurance Co. Gets Wrong About Defective Components and the Concurrent Causation Doctrine
Author: Thomas W. Hamrick, Attorney at Law, Senior Counsel
I currently serve as Senior Counsel to a highly recognized multistate law firm with offices in four states. I have more than 35 years of experience representing clients on both sides of the docket, with a practice focused on first-party property insurance coverage and appraisal issues.
Section 1: “What to Do After Property Damage: Filing a Home Insurance Claim”
If you’re filing a home insurance claim, you’ve probably heard that you need to give your carrier 'prompt notice.' But what exactly does that mean, what is the first step, who do you contact, how do you find them, and what questions are they going to ask? What is a policyholder’s first step after discovering… Continue reading Section 1: “What to Do After Property Damage: Filing a Home Insurance Claim”
Section 2: Actual Cash Value vs Replacement Cost Policies
It's Not Apples to Apples Ask just about any adjuster or defense lawyer and they’ll tell you that the price list applicable to the loss must be within a month or so of the date of loss. It’s not that simple and in Texas there is no case that discusses the difference between the two… Continue reading Section 2: Actual Cash Value vs Replacement Cost Policies
Section 3: Empty Chair Appraisal
What Happens When One Party Refuses to Appoint an Appraiser? State Farm Lloyds v. Johnson established an important point in Texas appraisal law: as a general rule, a dispute over coverage does not excuse an insurer from participating in appraisal. But a practical problem remains: What happens when one party simply refuses to appoint an… Continue reading Section 3: Empty Chair Appraisal
Section 2: The Cost of Labor
Who Decides the Skill Level and Cost of Labor Involved in a Claim? Short Answer: The need for labor (in general) must be established by meeting the ‘necessary’ component of reasonable and necessary. The ‘market,’ however, sets the reasonable price (cost) for the labor regardless of who completes the task. Discussion: Whether the adjuster believes… Continue reading Section 2: The Cost of Labor
Section 2: Overhead and Profit
Insurers Mistakingly Believe GCOP is a Charge Directly Attributed to Work Performed Contrary to what most adjusters claim, overhead and profit is an indirect cost. As such, it is an additional cost not attributed directly to work being performed and there is no ‘is it necessary’ requirement relative to the tasks to be performed. “For individual trades, Overhead… Continue reading Section 2: Overhead and Profit
Section 2: When is Damage Not Damage?
U.S. Metals, Inc. v. Liberty Mut. Grp., Inc., 490 S.W.3d 20 (Tex. 2015) OVERVIEW: Not all damage is the same. Generally, an insurance policy limits coverage to physical damage or loss to covered property. Often stakeholders involved in the insurance claim confuse intangible and tangible physical damage. Issue: What is ‘physical injury to property?’ “A… Continue reading Section 2: When is Damage Not Damage?
Section 2: The Three Bids Problem
Why Is the Adjuster Asking You to Get More Bids? Your insurance policy generally provides that the insurer will pay the reasonable and necessary cost to repair or replace covered property damage. Can the Adjuster Require You to Obtain a Repair Bid? Generally, no. It is ordinarily the insurer’s responsibility to investigate the loss and… Continue reading Section 2: The Three Bids Problem
Section 2: Understanding Reasonable and Necessary Damages
Reasonable and Necessary is not unlike peanut butter and jelly--while they appear together as a concept, one does not confuse peanut butter for jelly and vice versa. The Rule: Generally, a party seeking to recover remedial damages must prove that the damages sought are reasonable and necessary. McGinty v Hennen, 372 S.W.3d 625 (Tex. 2012)… Continue reading Section 2: Understanding Reasonable and Necessary Damages
Section 2: Why Does Market Rate Determine Reasonable Cost
The concept of fair market value permeates such a wide spectrum of Texas and federal legal practice that it is rare not to use the term with some degree of regularity when advising, presenting, or contesting a valuation. In Texas case law, reasonable compensation is discussed as early as 1885 when the Texas Supreme Court… Continue reading Section 2: Why Does Market Rate Determine Reasonable Cost
Section 3: Recoverable Depreciation
THE 180 DAYS* RULE, WHAT’S THE HURRY? *The time period can differ between policies from 180 days to 2 years or more (concept is the same) Many homeowners' policies contain language similar to this: “The Company will not pay for any loss or damage on a replacement cost basis until the property is repaired, rebuilt… Continue reading Section 3: Recoverable Depreciation
Section 3: Actual Expenses Incurred for Repair: The Greenspoint Investors Problem and Why it Doesn’t Apply
NFIP claims are unique and only authorize payment of general contractor overhead and profit when certain metrics are satisfied relating to the use of and need for a general contractor. These strict rules ONLY apply to NFIP claims and are not applicable to non-NFIP first-party property claims in Texas. When Repairs Are Complete It is… Continue reading Section 3: Actual Expenses Incurred for Repair: The Greenspoint Investors Problem and Why it Doesn’t Apply
Section 3: Must I Play Ball with the Insurance Company and Submit an Estimate Prior to Appraisal?
“An appraisal clause binds the parties to have the extent or amount of loss determined in a particular way.” State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009). Always check your policy's appraisal clause to see if you must first provide an estimate or description of the differences prior to requesting an appraisal. State Farm… Continue reading Section 3: Must I Play Ball with the Insurance Company and Submit an Estimate Prior to Appraisal?
Section 3: May I Take My Toys and Go Home? Once you start, you may not stop.
“If a plaintiff were allowed to invoke appraisal, await the estimates, and then determine whether to risk an unfavorable award or commence litigation, the entire purpose of an appraisal—to resolve the parties’ dispute over the amount of loss for a covered claim without incurring the time and expense of litigation—would be vitiated.” Scalise v. Allstate… Continue reading Section 3: May I Take My Toys and Go Home? Once you start, you may not stop.
Section 3: Must Appraisers Always Be Disinterested? There’s always an exception to the rule.
“Just as we have concluded Texas case law does not require disinterested appraisers when the parties have not included that requirement in their contract, we conclude also that the policy here does not require appraisers be disinterested merely by requiring that they be competent. To do so would be to read into the policy a… Continue reading Section 3: Must Appraisers Always Be Disinterested? There’s always an exception to the rule.
Section 3: Can the Insurance Company Refuse Your Appraisal Request Claiming No Coverage?
“When an insurer denies coverage, appraisers can still set the amount of loss in case the insurer turns out to be wrong.” State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888, 894 (Tex. 2009). See also, Texas Farmers Ins. Co. v. Minjarez, №08–12–00272-CV, 2012 WL 5359284 (Tex.App.–El Paso Oct. 31, 2012, no pet.) (memo. op.). In several… Continue reading Section 3: Can the Insurance Company Refuse Your Appraisal Request Claiming No Coverage?
Section 3: Appointing Your Appraiser.
“A corporation, partnership, or any other group of individuals which has been appointed to act as an appraiser would necessarily have to delegate the duty to an individual, and the delegation of an appraiser’s duty is unauthorized.” Int’l Serv. Ins. Co. v. Brodie, 337 S.W.2d 414, 417(Tex.Civ.App. — Fort Worth 1960, writ ref’d n.r.e.). “An appraisal… Continue reading Section 3: Appointing Your Appraiser.
Section 3: Is Your Appraiser Biased?
‘The showing of a pre-existing relationship, without more, does not support a finding of bias.” Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777, 785 (Tex.App. — Houston [14th Dist.] 2004, no pet.). Prior to appraisal, the insurer hires Garibay to inspect the Franco home and determine the cause of the damage. Garibay issued a… Continue reading Section 3: Is Your Appraiser Biased?
Section 3: Running to the Judge During Appraisal.
‘Appraisals require no attorneys, no lawsuits, no pleadings, no subpoenas, and no hearings.’ Johnson, 290 S.W.3d at 895 ‘In theory, appraisal is to be used to provide a simple, speedy, inexpensive, and fair method of determining the amount of loss.’ Fire Ass’n v. Ballard, 112 S.W.2d 532, 534 (Tex.Civ.App. — Waco 1938, no writ). “Appraisals can provide… Continue reading Section 3: Running to the Judge During Appraisal.
Section 3: Appraiser Disagreements and the Limit of Umpire’s Authority–It’s Not What You Think.
“If one appraiser or arbitrator resigns, withdraws, or refuses to act further, it has been held that the other one and the umpire may complete the proceeding and make a valid award” Fisch v. Transcontinental Ins., 356 S.W.2d 186, 187 (Tex.Civ.App. — Houston 1962, writ ref’d n.r.e.). It is a correct statement of law that “the… Continue reading Section 3: Appraiser Disagreements and the Limit of Umpire’s Authority–It’s Not What You Think.
Coffee with Tom 