CSAA Insurance Exchange ("CSAA") is a homeowner's insurance company. Premier Restoration and Remodel, Inc. (“Premier”) is a home repair contractor in CSAA's network whose misuse of an anti-soft chemical caused property damage to a home insured by CSAA. The premium was insured by Rockhill Insurance Companies ("Rockhill"), and the CSAA considered that coverage for the damage was available under Rockhill's policy.
I Rockhill Insurance Companies v. CSAA Insurance Exchange, dba AAA Insurance Exchange and Premier Restoration And Remodel, Inc., No. 19-16716, United States Court of Appeals for The Ninth Circuit (November 20, 2020) after paying what it believed was the amount available under its policy, Rockhill sued the CSAA and Premier in the District Court of Nevada, and filed a lawsuit. a declaratory judgment that it had fulfilled its obligations to the Premier.
Applying Nevada law, the district court granted Rockhill's draft summary judgment and found:
- that Rockhill had paid the full available amount of its applicable Pollution Coverage coverage,
- that Rockhill's commercial general liability Coverage (“General Coverage”) ”) Did not apply because it contained a mold, fungal and organic pathogen exclusion (“ mold exclusion ”) that blocked the type of property damage caused by Premier; and
- the District Court dismissed the CSAA's counterclaim in bad faith.
The general coverage provision in Rockhill's insurance excludes coverage of the CSAA's claims because the provision is subject to Mold Exclusion, which excludes any “property damage. . . which would not have occurred in whole or in part but for the actual, alleged or threatened release, spread, release, migration, growth, release or flight from [mold] at any time.
However, for the actual, alleged or threatened growth of mold in the CSAA's insured's home, the harmful application of the chemical against mold would not have occurred. Therefore, the general coverage provision does not provide a way to recover the damage, and Rockhill's obligation is limited to its pollution cover, according to which it has paid the full remaining amount of the insurance limits.
Under Nevada law, an insurance company does not waive its right to claim an exemption when it has given its insured sufficient notice of an unequivocal exception and here there is no reasonable basis in the minutes to find that Rockhill's notice was harmful insufficient. , as Premier admitted that it received Rockhill's reservation of rights.
Bad faith can only be established where the insurer acts unreasonably and with the knowledge that there is no reasonable basis for its conduct. Here, Rockhill followed advice from its legal counsel regarding several settlement offers, and the CSAA ever failed to make a settlement claim within the coverage limits. Looking at the record as a whole, the ninth circle concluded that no reasonable trial could find that Rockhill acted unreasonably or in bad faith.
Insurance companies, professional disputes, should be able to avoid disputes especially with another insurance company. In this case, the CSAA took a firm position that it was entitled to money from Rockhill even though there was no doubt that Rockhill's policy included a clear and unequivocal exclusion of mold and added to the infringing measure by accusing another insurer of committing the damage of bad faith. They failed because Rockhill followed the council's advice and the CSAA refused all reasonable conciliation offers.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant. specializing in insurance coverage, insurance claims management, incredible insurance and insurance fraud almost equally for insurers 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.
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