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Insured's attempts to benefit from claims fail



The insurance is designed to obtain compensation for the insured. It simply means that the insured gets – in cash – what it lost from an insurance against. If the policy stipulates the full replacement value of the damage, the insured must, according to most policies, actually spend the money that is determined to be the full RCV.

Mount Zion Lutheran Church v. Church Mutual Insurance Company, a foreign company, No. 78107-3-I, Washington Appeal Court on March 1, (March 18, 2019) Church Mutual refused to pay the RCV hold back because Zion's mountain did not spend the money to replace the damaged portion of the church that was agreed and lost its argument in the trial. Mount Sion sought conversion.

FACTS

On May 7, 201

4, a fire caused significant internal damage to Mount Zion Lutheran Church in Mountlake Terrace, Washington. Mount Zion was insured by Church Mutual Insurance Company (Policy). Under the policy, Mount Zion can collect "Actual Cash Value" (ACV) in "Covered Property", whether it chose to repair or replace the Church. If Mount Zion chose to rebuild, it could file a claim for repair or replacement costs that exceed ACV.

Church Mutually Employed J.S. Held Construction Consulting to prepare a scope of repair and cost calculation. J. S. Held estimated the cost of replicating the church building as it was before the fire was $ 729,106.42 (RCV). J. S. Held appreciated the ACV in the Church at $ 593,361.66, which the Church's reciprocal paid to Mount Zion. The policy allowed Church Mutual to keep the difference between RCV and ACV, about $ 135,744, until Mount Zion made the repairs.

J.S. Hero's estimate included the cost of replacing curved glulam beams in the church's sanctuary and replacing the sanctuary, a cost of over $ 196,000. Slaed Player, an independent adjuster employed by Church Mutual, inspected the church, including the glulam bars, and discussed their replacement with Pastor Frank Paine. Pastor Paine indicated that Players whom he preferred to repair, instead of replacing, the gleam bars, as replacement would require removal of the roof of the church. Church Mutual hired Rimkus Consulting Group to assess the glulam bars and the conclusion that they did not need to be replaced.

At the end of July 2014, Mount Zion retained a public adjuster, Drew Lucurell, to assist with insurance claims. Although Rimkus and the four bidders did not consider it necessary to replace the rays, Church Mutual acknowledged and allowed Mount Zion to replace them.

Mount Zion retained the Seattle Remodeling Company to perform the repairs. The player performed a routine post-mortem inspection of the Church on October 28, 2015, and he discovered that the glulam beams had been repaired, not replaced.

Zion's mountain provided evidence that it was chosen instead of replacing the vaulted globe beams in the sanctuary, since the removal of the roof would have added significant time to the reconstruction timeline. Mount Zion chose to make "replacement costs" with funds otherwise allocated for the shift.

Mount Zion chose to replace the old kitchen with a full kitchen, redesign It makes it more functional for the church's present needs. The full-size kitchen had upgraded kitchen cabinets, an upgraded sink and faucets, new self-closing drawers and upgraded appliances. Mount Zion also upgraded the hardware on the front entrance doors, upgraded floor and basement trim and the foyer, upgraded wall and ceiling insulation, reframed the mezzanine for use as storage, installed tunnel wires for telephone and internet cables, added custom built shelves to a meeting room and classroom, refurbished a street sign that was not damaged in the fire and upgraded lighting in the foyer, community building and sanctuary.

Church Mutual refused to pay the cost of changing rays that the Church did not replace. It also refused to replace the Church's "reimbursement" as "unnecessary" according to the policy.

Zion's mountains matched the church's mutual. The Court of Justice denied Zion's movement.

The only problem in appeal is if Mount Zion is entitled to receive full RCV calculated by Church Mutual according to the policy.

Rules for the design or interpretation of insurance contracts

court interprets insurance as a contract. When interpreting the language of an insurance policy, its provisions must be interpreted as giving rise to power and effect on each clause. If the language is clear and unambiguous, the court must apply it as written and must not change the contract or create ambiguity where no one exists. Conversely, if a policy clause is on its face, susceptible to multiple but reasonable interpretations, the policy is ambiguous and the court must seek to separate the parties' intentions and enforce the contract. Insurance expectations cannot override the plain language of the agreement.

Relevant insurance regulations

Mount Zion claims that the trial is wrong in deciding that it was not entitled to receive the entire RCV amount. The Court of First Instance concluded that Mount Zion is not entitled to the full amount of the RCV as the policy restricts Church Mutual's obligation to pay for losses until the lost or damaged property is actually repaired or replaced.

The policy gives the insured the opportunity to claim loss or damage to an ACV foundation instead of to a replacement cost base. While ACV explicitly covers the entire building and all its components as a unit, RCV explicitly covers only lost or damaged property within the covered property.

Although there is nothing in the policy that requires Zion to build the church, its office, and the kitchen in exactly the same configuration as before the fire, the insurer is not obliged to allow an insured to benefit from a loss. Since the ACV payment included the cost of replacing the GLULAM rays, the insurance does not allow to use the RCV needed to replace the rays unless the money is spent on the difference between ACV and RCV. Mount Zion was paid for the loss and was unable to make a profit by installing things that were not lost.


© 2019 – Barry Zalma

This article and all the blog posts on this page melt and summarize cases published by the courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, condensed to facilitate reading and convey the author's views in each individual case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance management, bad faith assurance, and insurance fraud nearly equal for insurers and policyholders. He also serves as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance cover and law firm and more than 50 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual liability magazine / ACE Legend Award.

Over the past 51 years, Barry Zalma has put his life on insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims to become insurance managers.

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