Restaurant fryers and cooking surfaces are common causes of destructive and unfriendly fires. Insurers who insure against the risk of loss of restaurant properties know this and usually require the insured to maintain fire fighting systems over the cooking surfaces and fire alarm systems as a precondition for protecting a restaurant for a restaurant.
I United Specialty Insurance Company, a Delaware company against Shot Shakers, Inc., a Washington company; Scott Simpson, resident of Washington; Michelle Simpson, resident of Washington, No. 19-35192, United States Court of Appeals for The Ninth Circuit (December 16, 2020) Shot Shakers, Inc. and Michelle and Scott Simpson (together, appellant) appealed the district court's summary judgment in favor for their insurer, United Specialty Insurance, on fire coverage issues.
United Specialty issued a policy covering Simpson's family business, Roosevelt Ale House (Ale House). The insurance included a condition of "hidden, misrepresentation or fraud" which invalidated the "in all cases of fraud" policy with respect to coverage, the covered property, the interest in the covered property or a claim. It also contained a protective measure that required firefighting and alarm systems.
Following a fire in Ale House, United Specialty denied coverage based on the fraudulent situation and protective measures that required insured persons to maintain an automatic sprinkler system and fire alarm in accordance with a defined schedule. The scheme, in turn, required an "[f] ultra-functionally active fire-fighting system throughout the cooking area with an automatic shut-off for the heat source with a half-yearly service agreement.":
According to Washington law, a clause canceling insurance due to fraudulent statements enforceable. The insurer may invalidate the insurance if "false statements were deliberately made in the application for insurance and [if] by making them, the applicant intended to defraud the company."
In their insurance application, the complainants represented that:
- their fire extinguishing system covered all cooking surfaces and fryers, and
- their hoods, ducts and filters were cleaned at least every six months or more often.
The complainants were aware when they were made that these statements were false. The hoods, ducts and filters were cleaned not least every six months and their systems did not protect all cooking areas and fryers.
If a false statement has been deliberately made, there is an assumption that it was made intentionally. to trick. The district court therefore did not abuse its discretion by refusing to consider the complainants' argument, which was recently raised in its final response report, as to whether the application was admissible. The complainant was aware of any suspensions or deteriorations of any security provided in the schedule and failed to inform the insurer thereof. or failed to maintain any listed protection and over which the insured was in control, in full working order. was the source of the fire.
In addition, the complainant had ample notice through inspection reports to make necessary adjustments to the fire fighting system.
Conditions that preceded the insurance must be maintained, even by the ninth circle, when they are clear and unambiguous. The complainants lied about the application for insurance and thus annulled the insurance. They also accepted a protection guarantee and a condition that preceded the coverage that they knew at the time were not met and continued to violate the condition until a fire occurred at the place where they had to have firefighting equipment. They have no one to blame but themselves.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance coverage, insurance management, bad faith insurance and insurance fraud almost equally for policyholders and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
For the past 53 years, Barry Zalma has devoted his life to 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 staff to become professional in insurance claims.
https://zalma.com/zalmas-insurance-fraud-letter-2/ Last read two issues of ZIFL here.
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