Revisiting California Insurance Code 2071–Your Rights to Your Claims File

Denise Sze | Property Insurance Coverage Law | November 22, 2015

In California, insurance consumers have a right to their claims file when dealing with a loss and encounter issues during the claims process after a loss. As an attorney, most insureds do not contact me until after something has gone wrong or there have been substantial delays in their claims process causing a lack of or minimal payment of policy premiums. However, when I speak to an insured, they are surprised to find out that under the California Insurance Code, they have a right to review everything within their claims file. Although an insurer will “notify every claimant that they may obtain, upon request, copies of claim-related documents…” insureds do not realize that the claims file is the insurance company’s record and documentation regarding how the file is progressing.

Under the insurance code, this means that insureds have a right to construction estimates, photographs and the documentation backing up their estimates and “all other valuation” that the insurance company is using to evaluate and pay the claim. During the claims process, insureds are often asked for recorded statements and before an examination under oath is taken, insurers and their attorneys are reluctant to provide a copy of the recorded statement. However, unless that recorded statement is actually attorney-client privileged (which means that the insurer is working under the advisement or direction of their attorneys) that the recorded statement should be provided to the insured pre-examination under oath.

If you are an insured, whether a homeowner or a corporation who suffers a loss and there are questions regarding how the insurance company is handling your claim, it’s a very good idea to assert your rights under California Insurance Code 2071 and obtain a copy of your entire claims file. It’s not only allowed, it’s the right of the insured to have these materials and a review of these materials, reveals if the insureds’ claim is properly handled and evaluated. It’s rare that an insured requests these documents and even realizes that the whole claims file is available for review and that if it is obtained, can help insureds guide themselves and their attorneys through the claims process because it demonstrates how a claim is proceeding. If documents are withheld…

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Oregon Supreme Court Eases the Path to hold Insurers Accountable for Bad Faith Practices

Kyle Sturm | Ball Janik | November 20, 2015

Yesterday, the Supreme Court of Oregon overruled Stubblefield v. St. Paul Fire & Marine (1973) and paved the way for a more commonsense approach to negotiating stipulated judgments. Stipulated judgments have been a well-worn, though somewhat perilous, mechanism for insureds to resolve liability claims against them when their insurers defend in bad faith. In doing so, however, the parties to the stipulated judgment were tasked with navigating needlessly technical steps along the way. In Brownstone Homes Condo. Ass’n. v. Capital Specialty Ins. Co., the court removed one of the insurers “gotcha” defenses to an otherwise valid stipulated judgment.

Stipulated judgments are an effective weapon against abusive insurers in Oregon. They are employed effectively in cases where an insured is sued and the insurer defends that lawsuit in bad faith, including refusing to settle those claims against the insured, and thus exposing the insured to personal liability. Because a defending insurer is obligated to treat its interest at least equal to that of  its insured, it is obligated to reasonably settle claims against its insureds. The problem often arises where the insurer refuses to negotiate in good faith, leaving the insured responsible for a large percentage of any proposed settlement or final judgment. Stipulated judgments allow the underlying plaintiff and the insured (the defendant in the lawsuit) to agree to an amount of liability, enter that judgment with the court, and agree that the plaintiff will not execute the judgment against the insured in return for an assignment of the insured’s bad faith claims against its insurer.

In Stubblefield, the court declared that when a liability policy covers damages that an insured is “legally obligated to pay” (as most do), and the insured agrees to enter into a stipulated judgment against it in exchange for the plaintiff’s covenant not to execute the judgment against the insured, that settlement eliminates the liability of both the insured and the insurer. Therefore, parties to a stipulated judgment had to be very careful about not completely eliminating the insured’s liability—the result of which is the use of unnecessarily complicated language preserving the plaintiff’s right to come back later and execute the judgment against the insured under certain circumstances. Until yesterday, Oregon stood virtually alone on this issue.

Following Stubblefield, the Oregon legislature passed ORS 31.825, a statute designed to allow an insured to assign claims against its insurer to a plaintiff and receive assurances that the plaintiff would execute the judgment only against the insurer. The statute, however, contains…

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Another Reason to Love Construction Mediation (Read: Why Mediation Works)

Christopher G. Hill | Construction Law Musings | November 18, 2015

I’ll bet you’re thinking by now that I have beaten the mediation drum to death and that I wouldn’t have any more praise for the process than I have heaped upon it here at this corner of the construction law “blawgosphere.”  Well, just about every time I am involved with the process, whether acting in my capacity as a Virginia Supreme Court certified mediator, or as counsel to a client seeking to resolve a matter and move on with the business of making money, I become more convinced that mediation can work in even the most contentious of situations.

What do I mean by “work?”  The obvious answer is that mediation “works” when the parties come up with a solution to their problem.  In most instances, the solution involves money changing hands.  After all, it is money that is usually the tangible and outwardly driving force behind a dispute.  Money is also what a court or arbitrator (in most cases) will be awarding to one side or the other at the end of what is likely to be an expensive process.

However, often money is far from the only driver of a dispute.  Whether it be a feeling of being slighted or a lack of communication that caused friction, the parties most likely have other “grievances” that need to be worked out.  In contrast to litigation where many of these non-monetary and non-contractual issues would be considered irrelevant, in mediation the parties get to “vent” and air their thoughts on these less tangible issues.  A good mediator encourages this sort of back and forth and knows that if these issues can be worked out, settlement can also be achieved.

Another driver for a monetary dispute can quite frankly be that money got tight and one party may be unable to pay the other as required by the contract.  In court (aside from in bankruptcy court), the inability to pay is not an excuse and not relevant.  In the “real world” this fact is highly relevant because a judgment is only as good as the ability to collect it.  The mediation process also can and should take this fact into account and allow the parties to be creative to get past this hurdle.

Finally…

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Waiver of Time of Performance Provisions in Construction Contracts

Jeffrey S. Wertman | Berger Singerman LLP | November 11, 2015

It is important for owners and contractors to understand the contractual provisions and requirements for the time of completion and minimize the risk of delay. Most construction contracts contain a provision stating that “time is of the essence.”  An example of a “time is of the essence” provision is as follows:

Time is of the essence of this Agreement. The Contractor acknowledges and recognizes that the Owner is entitled to full and beneficial occupancy and use of the completed Work following expiration of the Contract Time, that the Owner may enter into binding agreements demising all or part of the premises where Work is to be completed, and that Owner may have entered into financing agreements based upon the Contractor’s achieving Substantial Completion of the Work within the Contract Time. The Contractor further acknowledges and agrees that if the Contractor fails to complete substantially or cause the Substantial Completion of any portion of the Work within the Contract Time, the Owner will sustain extensive damages and serious loss as a result of such failure.

The effect of a “time of the essence” clause in the construction context is generally to render a contractor’s unexcused delay in completing the project a material breach of the agreement permitting the owner to terminate the contract and seek damages for the delay.

However, under certain circumstances, an owner may waive its right to require adherence to the contract schedule. For example, in RDP Royal Palm Motel, L.P. ex rel. PADC Hospitality Corp. I v. Clark Const. Group, Inc., 168 Fed. Appx. 348 (11th Cir. 2006), the Court of Appeals for the Eleventh Circuit affirmed a judgment of the District Court for the Southern District of Florida finding that a developer and hotel owner waived the “time is of the essence” provision in a construction contract by continuing to perform after the expiration of the substantial completion date for the hotel.  In the absence of a contractual completion date, the court held that the owner was not entitled to recover any damages, liquidated or otherwise.  The Eleventh Circuit reasoned:

[the owner] allowed the substantial completion date…to pass without setting a new deadline and continued issuing change orders and construction change directives requiring [the contractor] to perform additional work. [The owner’s] conduct in issuing hundreds of change orders and construction directives after expiration of the substantial completion date … constituted waiver of the “time is of the essence” provision of the contract. In addition, [the owner] failed to set a new substantial completion date, thus it failed to preserve its right to enforce the liquidated damages provision for any date after [the contract’s substantial completion date].

In another case, an owner implicitly waived a “time is of the essence” clause in a contract for…

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Insurance Companies Search Social Media During Property Claim Investigations, Part II

Nicole Vinson | Property Insurance Coverage Law Blog | November 14, 2015

In the first post of this series on social media, we listed various reasons the insurance company is searching your social media profile during a claim investigation to specifically address the non-claim related issues carriers are searching for in your tweets, posts, and check-ins. Click here to read Part I of this series.

Adjusters, investigators, and attorneys use Google and social media to learn about the character and habits of those they are connecting with on a claim.

While we know that social media posts are used to undermine credibility and get unsolicited intel on an insured, there are ways your social media footprint can be used to help during an investigation of your claim.

Focusing on just personal property losses, here are some ways looking back at your old posts—and specifically your photographs—can help you if policyholder document your damages. These tips can help any policyholder in any state, and be applied to any peril when items of personal property are being claimed.

  1. Photographs can help you inventory. Many people have pictures of the rooms of their house showing up in the background of Facebook photos. Did you take a funny video of your cat? That same video may show evidence of the contents of a living room and dining room?
  2. Your favorite photos show you all dressed up for a special night on the town or on vacation. These photos show the vintage earrings and great purse you wore for New Year’s Eve. Those vacation pictures will help make sure you remember that multi-lens camera and the great treasures you brought home from the Alaskan cruise.
  3. Photographs can jog your memory about events and your belongings. You can not only see items you owned in the background but you will remember more about the location of your cherished items in your home if the actual property is now stolen, burned, or blown away.
  4. Kids have a lot of stuff and for some reason stop using many of those expensive accessories and toys. Looking back at old photos on Facebook can help you remember what was in the closets.
  5. Have a wedding album on Instagram? These hashtagged photos will help you remember not only the best night of dancing to Billy Joel but also jog your memory about old neighbors who came and the gift they purchased for you.
  6. Photographs can depict model numbers or help identify the model you owned. Zooming in on the photo of the electronics shown in the cute picture of your son’s missing front teeth will reveal the model of surround sound you had in the den.
  7. Photographs can…

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