Problems viewing this email? Click Here

December 10, 2014  

 Q&A of the Week
Symbol 1 Coverage under the BAP

An Iowa subscriber recently asked the following question:

We have a major discussion going on about the coverage with a commercial client. The commercial client purchased a new vehicle three months into his policy period. He has symbol 1 on the BAP for coverage. We understand that during that policy period the client has automatic liability coverage for a newly acquired vehicle.

Symbol 1 says coverage exists until the end of the policy period. When that policy renews, and the insured does not place that vehicle onto the policy at renewal, is there then coverage for that vehicle if there is an accident for liability? It is no longer a newly acquired vehicle, but an owned vehicle that is in regular daily use.

ANSWER: Symbol 1 makes any auto a covered auto, so even if the insured does not place the vehicle onto the policy he has liability coverage. It is up to the insurer to attach the proper premium for that vehicle at the end of the policy period while conducting the audit. There are no exclusions to prevent coverage, and the insuring agreement and symbol 1 are the primary considerations. Read More

 Litigation Watch

Flood Insurance Coverage Dispute

This case pertains to a motion by the insurer for summary judgment. The dispute is over a flood insurance claim. This case is Lusco v. Allstate Ins. Co., No. 13-66342014, WL 3796423 (E.D. La July 30, 2014).

The Standard Fire Insurance Company, a participant in the Federal Emergency Management Agency's Write Your Own Flood Insurance Program, issued a standard flood policy to Lusco. When Hurricane Isaac hit on August 29, 2012, Lusco suffered property damage.

An independent adjuster inspected the property, and Lusco requested an advance payment of $15,000 for the covered building damage and a $5,000 advance payment for covered contents damage. Standard Fire approved these payments. In October 2012, Lusco submitted a signed and sworn proof of loss to Standard, contending that his building and contents losses totaled $75,076.12. Standard approved this payment.

When FEMA extended the proof of loss submission deadline for Hurricane Isaac-related claims to April 28, 2013, Lusco did not submit any additional proof of loss. However, on December 12, 2013, Lusco sued Standard Fire and his windstorm insurer (Allstate Insurance Company). On June 26, 2014, Lusco submitted an additional estimate of flood-related damage. Standard Fire filed a summary judgment motion seeking a dismissal of Lusco's claims, alleging that Lusco failed to submit a timely signed and sworn proof of loss to support his supplemental claim.

The United States District Court for the Eastern District of Louisiana noted that the Standard policy mandates that an insured who suffers flood loss to his property send the insurer a proof of loss within sixty days after the loss. The policy also declares that the insured may not sue the insurer to recover money under the policy unless the insured has complied with all the requirements of the policy.

The court also noted that courts interpret and enforce such provisions strictly; several rulings from the Fifth Circuit were quoted in support of this stance. Foremost among these rulings is the fact that the insured must provide a signed and sworn proof of loss within sixty days after the loss, or within any extension authorized by FEMA. The failure to submit a complete sworn proof of loss with supporting documentation is fatal to a claim for flood damage. In this instance, FEMA extended the proof of loss submission deadline to April 28, 2013. Lusco had until this date to submit a proof of loss for the additional sums he claims he is owed. He did not do so.

Standard Fire alleges that Lusco failed to submit a timely proof of loss for any additional amounts he seeks to recover beyond those provided in the October 20, 2012 proof of loss, which was paid in full by Standard. Lusco countered that by submitting the October 20, 2012, proof of loss which he later supplemented on June 26, 2014, with a detailed itemized estimate of the damage, he substantially complied with the proof of loss requirements. The court was not impressed with Lusco's position.

The court said that in strictly enforcing the applicable regulations, the Fifth Circuit has foreclosed Lusco's arguments that he need not submit a timely, signed, and sworn proof of loss when he seeks additional payments, as well as his argument that he substantially complied with the proof of loss requirements. The court found that the rule barring recovery absent submission of a timely sworn proof of loss applies regardless of whether it is an initial claim by an insured or a supplemental claim. In this case, Lusco failed to submit a timely, signed, and sworn proof of loss for the supplemental claim he makes, and this failure is fatal to his claim.

Standard Fire's motion for summary judgment was granted, and Lusco's claims were dismissed.

Editor's Note: This case is an example of the old saying "rules are rules." The insured had a definite deadline to submit his sworn proof of loss; he failed to do so; his claim was dismissed.

 Subscribe to FC&S
FC&S Online is the unquestioned authority on insurance coverage interpretation and anlaysis for the P&C industry. FC&S offers unbiased analysis and interpretation and keeps you current on the latest ISO and AAIS revisions. Providing instant access to the very latest information, FC&S is the resource that agents, attorneys, brokers, risk managers, underwriters, and adjusters rely on to research commercial and personal lines coverage issues.
Quickly and accurately determine coverage under a policy at the time of loss
Research coverage issues and interpretations, including court cases
Access experts live to discuss specific situations
Find answers to questions based on real-world claims disputes
View and print ISO forms
Access updates on breaking litigation and bureau developments
 Join Us Live!
FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@, for more information. They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer.
 Contact Us
As always, your comments and questions are welcome.

Contact us at:
FC&S Department
Phone: 800-543-0874
Fax: 859-692-2246
The Zalma Insurance Claims Library
Insurance Claims: A Comprehensive Guide
The only source you'll need to successfully handle insurance claims from start to finish. More Info
Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
Mold Claims Coverage Guide
This guide will allow you to handle mold insurance claims and litigation resulting from mold or fungi related disputes with confidence. More Info
For more information about these titles Click Here
FC&S Team
Kelly Maheu, J.D.
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
Consulting Editor
David D. Thamann, J.D., CPCU, ARM
Managing Editor, FC&S Bulletins
  Katherine S. Caudill, J.D.
Manager of Product Development
Susan L. Massmann, CPCU
Managing Editor, Electronic Publications
  Emily Brunner
Online Print/Production Editor
Donald S. Malecki, CPCU
Contributing Editor
  Tosha Brinkman
Marketing Manager
Barry Zalma, Esq., CFE
Contributing Editor
  Donna Cozatchy
Creative Director
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the services of a competent professional person should be sought.

To ensure future delivery of email, please add
to your address book, contacts or safe sender list.

You have received this email at %%merge members_.emailaddr_%%.
Click here to unsubscribe from %%merge list.descshort%%.
©2014 Summit Professional Networks, All rights reserved. Privacy Policy
4157 Olympic Blvd., Suite 225
Erlanger, KY 41018