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No coverage for compensation costs until property damage has been compensated



When a plaintiff claimed that it was entitled to compensation cost benefits under an insurance issued by the defendant, based on damage to the plaintiff's stock from a storm. The defendant paid the plaintiff a total of $ 165,952.85 under the insurance, based on the actual cash value (ACV) for damage to HVAC systems on the storage roof and for damage to part of the surface of the western part of the roof. The plaintiff claims that the roof suffered additional damage from the storm, and it seeks benefits for all damage based on a total compensation cost (RC) of $ 1,472,727.74. The defendant claims that the plaintiff is not entitled to compensation cost benefits under the insurance, and that benefits for covered losses are limited to ACV.

In KAW Drive, LLC v Secura Insurance, A Mutual Company, Case No. 19-2238-JWL, U.S. District Court of Kansas District (October 15, 2020), the USDC, applying Kansas- law, that unambiguous agreements are executed in accordance with their simple, general and common meaning to ensure the intentions of the parties are executed.

FACTS ABOUT ACTUAL REPAIR OR REPLACEMENT

The defendant first argued that the plaintiff may not recover RC benefits under the Damage Property Insurance which the plaintiff has not already repaired or replaced, and therefore requests a summary assessment of such a claim. . The plaintiff's policy included optional compensation cost coverage. It provided in part that: “We do not pay compensation for loss or damage: (1) Until the lost or damaged property has actually been repaired or replaced; and (2) unless repairs or replacements are made as soon as possible after the loss or damage.

This provision unequivocally states that the defendant is not obliged to pay benefits based on compensation costs until the property has actually been repaired or replaced. . Based on that provision, the defendant argued that if the plaintiff had not already made a repair or compensation for specific damage, the plaintiff could only recover ACV benefits for such damage. As the defendant states, courts have enforced almost identical provisions under the Channels Act that unequivocally require actual repair or replacement before RC benefits can be recovered. previous breach of the policy of the defendant, namely the defendant's failure to initially pay a fair amount of ACV benefits. The plaintiff argued that a proper ACV payment is the trigger for the RC condition requiring actual repair or replacement of the plaintiff.

The policy clearly presupposes RC benefits for the plaintiff's actual repair or replacement of the damaged property. Without further qualification that the condition only applies if the defendant first pays ACV benefits. According to the plaintiff's interpretation, if the insurer were to deny that there was a covered loss and therefore did not pay any benefits (on an ACV or RC basis), the actual repair condition for RC benefits would be effectively deducted from the insurance for such a situation. A court does not have the power to and should never rewrite an agreement voluntarily entered into by the parties.

The plaintiff has not shown that its allegation that the actual repair condition may fail from the defendant's "previous material infringement" for not paying ACV benefits initially. As regards the alleged damage for which the defendant did not pay ACV benefits to the plaintiff, the defendant in fact completely rejected the claim.

The plaintiff has not given any authority to support the argument that such an offense abolishes the condition for payment of RC benefits. The plaintiff effectively attempts to rewrite or add a qualification to a condition of a voluntary coverage benefit. The language of politics rules. The policy in this case does not qualify the actual repair condition based on whether the defendant has first paid ACV benefits to the plaintiff for damages.

A party who does not meet a precedent condition can avoid the consequences of his failure if it is caused by the other party to the agreement. However, the burden is on the party seeking to take advantage of the doctrine to prove its application.

The plaintiff has not been prevented from carrying out repairs (it may use other means); rather, the defendant is only trying to enforce the policy, which requires the repairs to be completed first.

Accordingly, the court enforced the clear language of the policy, which does not allow the plaintiff to reclaim RC benefits for damaged property that it has not already been repaired or replaced. The defendant is therefore granted a summary judgment in this regard.

The defendant has not shown that the plaintiff chose to claim ACV benefits in this case; the defendant has thus not shown that the 180-day notice period was triggered in this case. Consequently, the defendant is not entitled to a summary judgment for failure to provide such notice.

The proposal was granted in respect of the plaintiff's claim for compensation cost compensation for damaged property which the plaintiff has not actually repaired or replaced, and the defendant. was convicted of any such claim. The proposal was otherwise rejected.

Clear and unambiguous conditions must be met to get back the promised benefits. Failure to do so, in this case complete repair or replacement, defeats the claim to RC. Other issues, such as late payment, remain to enable the plaintiff to continue his action for breach of contract and bad faith. Terms are placed in contracts to protect the parties from abusing the rights of others. By trying to get a court to rewrite the policy, the insured in this case acted to deprive the insurer of the benefits of the contract promised at the time of the conclusion of an insurance contract. In doing so, it violates the union of good faith and fair trade. Catalog

Catalog


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance coverage, handling insurance claims, insurance operations and insurance fraudsters and insurers for insurers. 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 industry. He is available at http://www.zalma.com and zalma@zalma.com.

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