Bonbeck Parker, LLC and BonBeck HL, LC (together, BonBeck) claimed from Travelers benefits that they claimed were due to hail damage. The Travelers Indemnity Company of America (Travelers) acknowledged that some of the alleged damage to BonBeck's property was caused by a covered hailstorm but claimed that the remaining damage was caused by undetected events such as wear and tear. BonBeck requested an assessment to determine the extent of the damage, but travelers rejected this request unless BonBeck agreed that the appraisers would not determine whether the hailstorm actually caused the disputed damage. When BonBeck rejected this condition, travelers in sued Bonbeck Parker, LLC; Bonbeck HL, LLC v. The Travelers Indemnity Company Of America, No. 20-1192, United States Court of Appeals, Tenth Circuit (October 1, 2021) requesting a declaratory judgment that the assessment procedure in BonBeck's policy does not allow valuers to decide the causal question. The district court did not agree and ruled that the relevant policy language made it possible for valuers to determine causation. After the assessment took place, the district court granted a summary judgment to BonBeck on its breach of contract, and concluded that travelers had violated the policy's assessment provision. Travelers appealed ..
In June 2012, a hailstorm damaged three buildings owned by BonBeck. BonBeck filed a claim for the damage according to its commercial insurance with travelers (Policen), which covers hail damage. For each building, BonBeck claimed that the hailstorm damaged the exterior, overhang, HVAC and roof. Travelers acknowledged that some hail damage occurred on all building components except the roofs, and that covered this damage with two payments totaling approximately $ 34,200. However, travelers denied coverage for the roof damage, claiming that it was not due to the hailstorm but from revealed events such as wear and tear, deterioration and incorrect installation.
Facing this dead end over the roof damage, BonBeck invoked the assessment provision. This provision allows either party to request an assessment of certain issues that they may disagree with during the claim process, including the "amount of the loss". Invoking the assessment provision sends the parties' dispute to a panel consisting of three valuers (the panel, abbreviated). But it did not immediately have that effect when it was invoked by BonBeck.
Travelers only agreed to BonBeck's assessment request under certain conditions that had been applied in similar situations for more than a century. Travelers in particular insisted that the parties demand that the panel distinguish between disputed and undisputed damages. The passengers' proposal would not allow the panel to determine what caused the roof damage, no matter how large the loss turned out to be. That is, the panel could decide how much it would cost to repair the roofs but not what made the roofs need to be repaired in the first place.
Travelers sued to request explanations that (1) the policy prevents the panel from determining causal issues. and (2) Travelers were not liable to BonBeck any more because the remaining damage (meaning the disputed roof damage) was caused by excluded causes of loss.
The district court sided with BonBeck and concluded that the assessment provision authorizes the panel to determine the cause of the loss. The panel issued its assessment, estimating the total cost of repairing BonBeck's loss from hail damage (excluding depreciation) to approximately $ 216,000. Travelers paid BonBeck the appraisal amount, minus the approximately $ 34,200 it had already paid.
Following another brief ruling, the district court awarded BonBeck nominal damages ($ 1) and statutory interest ($ 36,142.63).
The disputed insurance provision allows either party to request an assessment of the "amount of the loss", a phrase with a common meaning in an insurance context that unequivocally covers disputes about causation. Contrary to travelers' beliefs, giving this meaning of the term "loss amount" is consistent both with other related policy language and with the purpose of the appraisal provision to avoid costly litigation.
However, it is important that the Tenth Circuit concluded argument on the effect of its payment of the valuation amount in practice is consistent with its argument for annulment of the summary judgment on its declaratory judgment. That is, since travelers acknowledge that they do not claim compensation for the payment of the assessment price, any relief that the tenth circle could grant on that claim would be illusory. Travelers' appeal of its claim for declaratory judgment was dismissed as disputed.
Since the Supreme Court of Colorado has not addressed the issue raised by travelers, the federal court had to predict how that court would resolve the issue. Travelers argued that, contrary to the district court's view, the policy unequivocally prevents the panel from determining the cause of the loss. The district court based its interpretation on the first sentence, which lists three points on which either party can request a valuation: the value of the property, the size of the income and costs or the size of the loss. It stated that the third item, "the amount of the loss", covers causal disputes. In the appeal, Travelers barely mention that phrase or the district court's conclusion on its meaning. Significantly, the various dictionary definitions all include a causal component, each of which makes it clear that "loss" refers to damage resulting from a covered event.
The travelers' cards had little to say about the phrase "the size of the loss." Travelers relied more on common, common language, "loss amount" means the monetary value of property damage, regardless of insurance coverage or the source of the damage. [ Caribbean I Owners ’Ass’n v. Great Am. Ins. Co. of N.Y. 619 F.Supp.2d 1178, 1187 (S.D. Ala. 2008)].
Travelers focus on the word "appraiser", which occurs several times throughout the appraisal provision. Travelers argue that the "simple meaning of [this term] and the policy's requirement for valuers reflects an intention to limit the scope of assessments to monetary determinations, thereby excluding causation." To the tenth circle: "Neither the word 'valuer' nor the qualifications of valuers make the unambiguous phrase 'loss amount' ambiguous."
Travelers also rely on the purpose of the valuation provision. However, the tenth circle refused to consider this argument, as the language at issue is unambiguous. And if not, Colorado's laws would require it to interpret any ambiguity against travelers as drafting the policy. Nevertheless, the purpose of the assessment provision, if considered, only confirms what the text forces. As the district court reasonably reasoned, and as Resenärer seems to agree, the purpose of the assessment provision is "to avoid legal disputes and to encourage the resolution of the parties' dispute." Removing causation from the assessment process nullifies this purpose by "reserving a plethora of detailed damage assessments for judicial review." The disputed insurance provision allows either party to request an assessment of the "size of the loss", a phrase with a common meaning in an insurance context that unambiguously covers causal disputes such as this. Contrary to travelers' beliefs, the implementation of this meaning is consistent both with other related policy language and with the purpose of the assessment provision to avoid costly litigation.
In my book, Zalma on Insurance Claims Part 104 Third Edition I note that the assessment, since the start of the standard fire insurance, has been limited to a determination of the size of the loss. In order to establish a causal link, either an agreement between the insured and the insurer or a court judgment was required. By removing the amount of loss by assessment, any litigation contesting coverage would be limited to one trial or agreement on the cause of the loss. The tenth circuit has eliminated this process and enables appraisers to determine both the causal link and the amount of the loss, and if the cause is not excluded, the entire dispute is resolved. Valuation is a special form of limited arbitration, there are significant differences between the powers of an arbitrator and a valuer. The role of an arbitrator is more like the role of a judge in a legal proceeding. In Florida, it is clear that "whether the claim is covered by the policy is a legal matter, not a matter for the appraisers." [ Gonzalez v. State Farm 805 So.2d 814, 2000.FL.0049845 (2000)] The Tenth Circuit should reconsider its conclusion and consider the meaning of the language rather than applying a dictionary definition to solve it. a question of law.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to the position of insurance consultant specializing in insurance coverage, handling insurance claims, bad faith and insurance fraud almost equally for policyholders and policyholders
He also acts as an arbitrator or mediator for insurance-related disputes. He has practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.
He is available at http://www.zalma.com and email@example.com. 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 claimants to become professionals in insurance claims.
Go to the training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos at https://www.rumble.com/zalma; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4