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Interpretation of insurance policy requires a review of the entire insurance



Every insurance adjuster, person in charge of insurance, general insurance adjuster, insurance protection lawyer and policyholder's lawyer knows that it is important to read the full policy (RTFP) when interpreting an insurance term, condition or exclusion. Not every judge has learned the rule of RTFP.

Year Engineered Structures, Inc., an Idaho Company, an Idaho Company v. Travelers Property Casualty Company Of America, a Connecticut Company, Engineered Structures, Inc., an Idaho Company, an Idaho Company v. Travelers Property Casualty Company Of America, a Connecticut Corporatio n, No. 18-35588, No. 18-35589, United States Appeals to the Ninth Circuit (August 17, 2020)) The District Court failed with RTFP and found coverage regardless of the exclusion of policy and Travelers appealed.

FACTS

This appeal concerns the scope of insurance coverage of a builder's risk policy (the "Policy") between Travelers Property Casualty Company of America ("Travelers Insurance") and Engineered Structures, Inc. ("ESI"). The policy covered the risk of loss while ESI built a gas station for Fred Meyer Stores, Inc., in Portland, Oregon. Damage occurred when an underground fuel tank "floated" in a "wet" excavation hole before the tank was completely installed. Travelers Insurance investigated and determined that the damage was caused by ESI or its subcontractor, 3 Kings Environmental, Inc. ("3 Kings"), which did not place enough ballast water in the tank to prevent it from flowing during a period of rainy weather. As a result, travelers denied coverage for ESI's damages, citing an exclusion in the policy that excludes coverage for “incorrect, inadequate or deficient. . . execution [or] construction ”(the“ exclusion ”). ESI then sued travel insurance for breach of contract, negligence, breach of the implied union of good faith and fair trade (bad faith) and explanatory judgment.

The district court found the exclusion to be ambiguous based on incorrect "execution". be susceptible to two reasonable interpretations: (1

) exclude only losses caused by a faulty product; or (2) excluding losses caused by an incorrect process. As the exception did not apply, the district court granted ESI a brief assessment of breach of contract claim. However, the district court granted a brief assessment of travel insurance with ESI's claim of bad faith.

Traveler Insurance appealed the district court's grant of a summary judgment for breach of contract, and ESI appealed the district court's grant of a summary judgment on its bad faith claim.

ANALYSIS

The construction of a provision on insurance policy is a matter of law. Both parties agreed that the Idaho Act regulates this diversity measure.

The exclusion states travel insurance “will not pay for loss or damage caused by or caused by incorrect, insufficient or defective. . . [d] esign, specifications, execution repair, construction renovation, remodeling, grading or compaction. ”(Emphasis added).

The district court focused on "execution" to find the exclusion ambiguous and not applicable. But that focus aside from the exclusion's unequivocal, process-oriented use of "construction." The policy section on "covered property" defines, for example, "completion of the project" as including "construction activities" as "preparation of the site … manufacturing, assembly, installation, construction, alteration, [and] renovation. Similarly, in a second section on coverage, the insurance instructs the insured to "see that the following is done in the event of loss… Resume, as soon as possible, all or any part of the construction or repair;…"

The ninth circuit found that there was no difference between "construction" in the exclusion other than the coverage provisions of the policy – as a term referring to the "process" in the completion of the covered project. Courts must interpret the policy in its entirety, not with an isolated phrase.

Since "construction" has an unambiguous, process-oriented meaning in the exclusion, the ninth district concluded that the existence was required because the district court only "assumes [d] insufficient ballast was in [storage tank] at the time of the loss," because that assumption did not affect the case the exclusion was ambiguous. Further proceedings before the district court are necessary to resolve whether the ESI's losses were in fact "caused by or results [ed] from incorrect, insufficient or defective… Construction," which means that the exclusion was applied.

The ninth district submitted to the district court to determine whether an "excluded cause of loss" was in fact "result [] of a covered cause of loss"; and in that case the extent of the "resulting loss or damage."

Travelers Insurance provided evidence to support a reasonable dispute over insurance coverage. The burden was thus shifted to the ESI to show a real dispute over the material fact that its claim for coverage was not "quite debatable."

While ESI presented evidence showing that Traveler's insurance knew that there might be some question as to whether 3 Kings correctly ballasted the idea, its evidence was not sufficient to show more than the existence of a legitimate question or disagreement over the amount of the claim. or value. The ESI needed to provide some evidence of a clear right to cover, which it did not.

In addition, even if the district court finds that there is coverage for ESI's losses, it does not mean that Reseförsäkring acted in bad faith by denying ESI's assertion and trial to the extent of the policy in these circumstances.

The ninth circle did not resolve all the issues between the parties. It found that the trial, by not reading the full policy, found an ambiguity in the exclusion that did not exist. It is an important decision because it reminds the courts and litigants that it is important for RTFP before making a decision on insurance coverage. Since the ninth circle read the full policy, it concluded that there was no ambiguity in the exclusion and evidence was necessary to establish that there is no coverage for the floating thought.


© 2020 – Barry Zalma [19659002] Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, handling insurance claims, bad faith insurance and insurance fraud almost equally for insurance 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 coverage and attorney management attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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