Insurance nerds like me will spend days and months debating crazy insurance issues and offering all sorts of arguments and hypotheticals. Most of the time we just drop things. But the one issue that my insurance company friends have been really scared of is when the claim value is determined. Why?
Here is a new court ruling:1
The cost of repairing the plaintiff’s damaged property shall be calculated using the price of labor and materials at the time of the loss.
Chip Merlin thinks, “Happy days are here again”; and “God keep giving me stupid insurance defense attorneys who know less than their clients.”
Hypothetically speaking, here is the loss determination based on this rule:
“Joe, there’s a fire going on in my garage and it’s spreading to my bedroom. What’s the cost to repair everything during this ‘loss time?'”
The rule is not before the loss – the loss never happened. It is not at a reasonable time after the event that the insurer agrees to pay the “loss” and thereby provide the financing for the “loss.”
Instead, these insurance company attorneys convinced the judge that the valuation rule is “at the time of the loss!” Yahoo!
That time is the highest priced time of all — and the insurance industry argues that’s when the valuation should take place. Perhaps this is the rare case where the amount is less for the insurance company to pay — but this is the rule!
I have asked that this be the rule. I have doubly dared the insurance lawyer to argue for it. It’s stupid and an argument I never would have made as a rookie insurance attorney because my mentors understood the language and intent of insurance.
I would have been fired for making this argument because my senior lawyers understood the consequences. But that was 40 years ago. Now we have an insurance defense bar that wants to win every single case and make every argument to do so.
You can’t make this up! A federal judge agreed with alleged learned insurance company counsel that this is the valuation rule. A big win for policyholders!
Measure the value at the “time of loss.”
Thought of the day
Timing in life is everything.
1 West 32n.d/33rd Place Warehouse Condo. Assn., v. Western World Ins. Co.No. 22-cv-21408 (SD Fla. May 5, 2023).