I Reported My Claim Eight Months Ago! Am I Entitled to Interest Upon Resolution?

Beaujeaux de Lapouyade | Property Insurance Coverage Law Blog | July 20, 2018

This blog follows a telephone conversation I had with an insurance carrier representative who disputed the policyholder’s entitlement to interest under Florida Statute § 627.70131(5)(a).

Insurance carriers have a statutory duty to pay interest on claims after refusing or delaying payment of policy benefits. The statute states:

627.70131. Insurer’s duty to acknowledge communications regarding claims; investigation. –

(5)(a) Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment. Any payment of an initial or supplemental claim or portion of such claim made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, whichever is later, bears interest at the rate set forth in [Fla. Stat. Ann. § 55.03]. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. If there is a right to prejudgment interest, the insured shall select whether to receive prejudgment interest or interest under this subsection. Interest is payable when the claim or portion of the claim is paid. Failure to comply with this subsection constitutes a violation of this code. However, failure to comply with this subsection does not form the sole basis for a private cause of action.1

An insurance company is in a far better position than its insureds to effectuate prompt and fair settlement of insurance claims. Many policyholders suffer through a prolonged claims process experiencing constant delays in communication. Delays in the process often enable the insurer to wrongfully withhold benefits due and owing under the policy. Time is of the essence when the insured depends on payment of policy benefits to properly and promptly repair his or her home following a loss. Fortunately, § 627.70131(5)(a) provides a remedy for policyholders experiencing claim delays or denials.

The statute promotes prompt claim resolution by penalizing the insurance company for non-compliance.2 The date the insurer receives notice of the loss triggers a ninety-day period within which the carrier must investigate and resolve the claim. The insurer is required to pay statutory interest on any payment of benefits beyond the ninety-day investigation period.

Statutory interest is calculated from the date the insurer received notice of the claim using the interest rate found in Florida Statute § 55.03.3 Interest is payable at the same time payment of benefits is made. This incentivizes the insurance company to timely resolve its policyholders’ claims. An insurer’s refusal to pay interest on any payment made after ninety days from the date of notice constitutes a code violation.4

A qualified property insurance professional can assist policyholders in determining entitlement to statutory interest. Statutory interest can provide some relief to those fighting the uphill battle of obtaining wrongfully withheld policy benefits.
1 Fla. Stat. § 627.70131(5)(a) (emphasis added).
2 The term “insurer” refers to any residential property insurer. Fla. Stat. § 627.l70131(4); see alsoGreat Lakes Reinsurance (U.K.) PLC v. Branam, 126 So.3d 297, 303 (Fla. 3d DCA 2013) (Florida statute imposing ninety-day time limitation for insurer to pay or deny property insurance claim applies to residential property owners and not marine insurers).
3 Judgment Interest Rates can be found at https://www.myfloridacfo.com/division/aa/vendors/.
4 This requirement is inapplicable if there are factors outside the control of the insurer reasonably preventing such payment. See Fla. Stat. § 627.70131(5)(a).

Successful Assertion of a Professional Liability Claim

Michael L. Meyer | Taft Stettinius & Hollister LLP | July 25, 2018

Perhaps you are a general contractor whose project has suffered a catastrophic failure due to a problem with an engineer’s calculations. Maybe you are an owner and you have just learned your new building sits partially on adjacent property due to an error by the surveyor. Or possibly you are a construction manager accused of mishandling safety governance, leading to an injury on the job site. These are just some of the many ways in which the players in construction projects may interface with professional liability. Understanding professional liability and how it can impact your business operations is a critical risk management tool.

A professional liability claim is a claim that involves a mistake in a technical or highly skilled area of a project. In construction “professional” service providers can include architects, engineers, land surveyors, construction managers, and others performing services that require advanced skill or professional training. Often, but not always, professional services are those performed by individuals that must be licensed by a state or governing board. Whether or not an act is that of a “professional” service provider is based on the nature of the work performed, not the performer’s title.

There are two important distinctions that make a claim of professional liability different from other claims. The first involves what a plaintiff must prove in order to win his or her case. The second is how professional liability claims are covered by insurance. Whatever your role on a project, a basic understanding of these variables is important.

Most commercial property owners have experienced a claim for premises liability. A typical case may involve a patron who files a lawsuit after being injured while on the property. To win, the patron must prove that the owner owed a legal duty to keep the premises safe, and failed to do so, causing an injury. The same basic elements apply to a professional liability claim, with one critical difference. An expert’s opinion is required to establish whether the “professional” failed in carrying out his or her legal duty.

In the basic premises liability case a defendant is held to the standard of care of a reasonable person under the circumstances. In a professional liability case, however, the standard of care is that of a reasonable member of the profession. In other words, a plaintiff claiming an engineer’s negligence must prove that the engineer’s conduct fell below the standard of care for a typical engineer. To establish that standard, a plaintiff must rely on expert testimony. Establishing the appropriate standard of care and demonstrating a violation could require many hours of work by the expert. This translates into significant expense for a plaintiff… an expense that is often not recoverable in the lawsuit.

In addition to considerations about the cost, a potential plaintiff must also be concerned about the availability of the professional’s insurance to cover that claim. Likewise, a professional service provider must understand the scope of their insurance, including those claims that are not covered. Policies contain numerous exclusions and exceptions that can take a claim out of the scope of coverage. If the claim is large, this could result in the professional being unable to satisfy a judgment.

Many insurance policies define professional services to limit the type of services to which the insurance applies. An architect or engineer may perform a variety of tasks as part of his or her engagement on a project. But tasks that do not require any specialized knowledge or advanced training may not qualify for coverage under a professional liability policy. For example, an engineer’s miscalculation of wind tolerances, leading to a partial collapse of a building during a storm, may qualify as negligence in performing professional services. By contrast, an engineer’s failure to supervise on-site movement of materials, leading to a personal injury when two trucks collide does not require a professional degree or designation. It is not likely to qualify as professional negligence.

Another consideration for both plaintiffs and professional service providers is the coverage period of the policy. Many general liability policies are “occurrence” policies, meaning they cover losses that occur during the policy period. By contract, professional liability policies are often “claims made” polices covering only claims actually made during the policy period. If a potential plaintiff waits too long to make a claim, they may find that professional no longer has coverage. An example would be where a professional service provider ceased operations years earlier.

Yet another consideration is the eroding or “wasting” limits of a professional liability policy. Unlike general commercial liability policies, a professional services policy often includes the cost of defense of the lawsuit in the overall policy limits. This means that the cost of the professional’s attorney fees to defend the case reduces the overall amount of insurance available to pay a judgment against the professional.

Understanding how a professional liability claim differs from a general negligence claim, and how it is covered differently by insurance, is critical to successfully defending or prosecuting such a claim. In short, professional liability claims are often more difficult to prove. Insurance coverage is available, but subject to certain limitations that narrow coverage.

Before the Slip and Fall: Lease Drafting Guidance for Tenants

Scott R. Kipnis | ICSC

Some of the most prevalent, mundane, and time- and money-consuming claims that tenants find themselves litigating stem from slip-and-fall accidents in shopping center common areas. The lease between landlord and tenant, specifically the allocation of maintenance obligations as well as indemnification and insurance provisions, is often the determining factor of the outcome in such cases. It is determinative of which party’s insurer is obligated to defend the claim. As demonstrated by the analysis of the Second Judicial Department of the Appellate Division of the Supreme Court of the State of New York in Atlantic Ave. Sixteen AD, Inc., v. Valley Forge Insurance Company (“Atlantic”)[1], specificity in drafting can be key to shielding tenants from liability and effectuating the intent of the parties.

Atlantic Ave. Sixteen AD, Inc., v. Valley Forge Insurance Company — Procedural background

The tenant, Linea 3 Corporation d/b/a Marilena Imports (“Tenant”), leased space in a commercial building in Rockland County, New York, from Atlantic Ave. Sixteen AD, Inc., (“Landlord”) in which it operated a wedding and party supplies store. In the underlying personal injury suit[2], Tenant’s employee was allegedly injured after falling on black ice in the building’s parking lot while walking from his car to work. The injured employee brought an action to recover damages for his injuries in the Kings County Supreme Court against the Landlord and Universal Strapping Corp. (“Universal”), which operated a business in the same building and was owned by the same principals as the Landlord.[3]

Tenant maintained a commercial liability insurance policy with Valley Forge Insurance Company, and Landlord and Universal had a commercial liability insurance policy from Citizen Insurance Company of America. Landlord tendered the defense of the claim to Valley Forge, which denied the tender. Thereafter, Landlord impleaded Tenant and Tenant moved for, and was granted, summary judgment. Landlord then commenced an action seeking a declaratory judgment action in the Rockland County Supreme Court that Valley Forge and Tenant were obligated to defend and indemnify it in the personal injury action as required by Tenant’s insurance policy and by the indemnification language in the lease.

The Rockland County Supreme Court granted summary judgment in favor of Valley Forge and dismissed the complaint, finding that under the terms of the governing lease neither Tenant nor its insurer had any duty to defend or indemnify Landlord in the personal injury action. Landlord then appealed the decision and sought a judgment declaring that Tenant’s insurance company was obligated to defend and indemnify Landlord in the personal injury action. The Second Judicial Department of the Appellate Division of the Supreme Court of the State of New York affirmed the order of the Rockland County Supreme Court.

Case analysis

In evaluating the merits of the Landlord’s appeal, as well as Valley Forge’s motion to dismiss the action brought in the Rockland County Supreme Court, the courts addressed the following:

  1. which party was responsible for the maintenance of the parking lot under the lease,
  2. the indemnification language under the lease and
  3. the insurance coverage in effect at the time of the alleged slip and fall.

Maintenance and indemnification issues

The lease between Landlord and Tenant provided that the parking lot was a common area outside of the leased Premises and that Tenant had no obligation to maintain the common areas; Tenant’s only obligation was to contribute toward the expense of common area maintenance. Under the lease, Landlord was responsible for common area maintenance, including the removal of snow. The lease further provided that Tenant would “defend, indemnify and hold Landlord harmless from and against any and all suits, claims, actions, damages, loss, expense or liability, including reasonable attorneys’ fees arising out of or in connection with any act or omission of Tenant…arising out of, or in connection with, Tenant’s use and possession of the [leased] Premises.”[4]

Therefore, the Rockland County Supreme Court held that Tenant neither leased the parking lot nor had any responsibility for snow and ice removal. Additionally, Tenant only indemnified the Landlord for Tenant’s acts and omissions in connection with the leased premises, and this indemnification did not extend to the common areas.

Insurance coverage and additional insured status issues

The lease required both Landlord and Tenant to obtain commercial liability insurance. Tenant’s insurance policy included an endorsement covering the Landlord as an additional insured for “liability arising out of the ownership, maintenance or use of that part of the premises leased to [Tenant] and shown in the Schedule”.[5] The schedule stated the specific unit of the building leased by Tenant and did not reference the common areas.

While the Supreme Court Appellate Division held that a party named as an additional insured is entitled to the same coverage as the policyholder,[6] because the additional insured endorsement was limited to liability “arising out of” the “ownership, maintenance or use” of the “premises leased” to Tenant, and since Tenant neither leased nor maintained the parking lot, the insurance policy did not provide coverage for the alleged injury. Therefore, Tenant’s insurance company had no duty to indemnify or defend the Landlord for the slip and fall.

Key points of analysis

Here, the lease was clear that Tenant was not responsible for parking lot maintenance. Further, because Tenant only indemnified Landlord for claims related to Tenant’s use and possession of the premises, which did not include the parking lot, Tenant had no liability for the incident. In addition, Tenant’s liability policy naming Landlord as an additional insured only covered the premises and did not extend to the common areas. Based on the foregoing, and the absence of any allegation that any wrongful act or omission by the Tenant in the common areas contributed to the injury, Tenant and its insurer had no obligation to defend the injured party’s claim.

This case offers practical drafting guidance for tenants to ensure that they are likewise protected, either when sued directly by an injured party or are otherwise forced to defend such claims. By using practical common sense and narrowly defining the premises, setting forth each party’s maintenance obligations with specificity and tailoring the insurance and indemnification clauses as described below, tenants can take steps to protect themselves from the pitfalls of having to litigate personal injury claims.

Lease considerations when drafting

Define what you are leasing. The lease should expressly identify what constitutes the premises as distinct from the common areas. “Common areas” should be defined comprehensively to account for all existing improvements, and should also be broad enough to encompass all areas provided by the landlord for the common use of the tenants of the shopping center and their customers. Especially significant in the context of slip and falls, the lease should specifically define sidewalks as part of the common area, and not part of the premises. The differentiation between common areas and premises and narrowly defining what constitutes the “leased premises” is critical when it comes to each party’s insurance coverage, even where the tenant may be responsible for maintenance and repairs, as further discussed below.

Maintenance and repair obligations. The lease should unambiguously set forth the maintenance obligations of each party with respect to the common areas and the premises. Unless the parties have negotiated for the tenant to be responsible for performing certain common area maintenance or repairs, the lease should state that the landlord shall be solely responsible for maintaining the common areas. It should further discuss in detail what such common area maintenance entails, i.e., routine sweeping, seasonal plowing and snow and ice removal from both parking and sidewalks adjacent to or in front of the storefront. By including such details, it leaves little room for allowing the landlord or the injured party to advance the argument that such items are the responsibility of the tenant or impose obligations on the tenant that were not contemplated by the lease. To further protect a tenant from unbargained-for liability, the lease should expressly state that the tenant shall have no obligations with respect to maintaining the common areas, other than to reimburse Landlord, or, as applicable, that any reimbursement obligations are captured in the base rent.

Indemnification. As demonstrated in Atlantic, courts will look at the indemnification provisions of a lease to determine whether either party has agreed to indemnify or defend the other in such actions. When maintenance of the common areas is a landlord responsibility, a tenant will want to make sure that the landlord holds the tenant harmless and agrees to indemnify the tenant from and against all claims that arise in such common areas. The indemnification language should be clear that the landlord is responsible for anything that occurs outside of the premises or within the common areas of the shopping center, and that the tenant can in turn indemnify the landlord for claims arising inside the premises. While there can be a carve-out for claims resulting from one party’s negligence or, preferably, gross negligence, where a tenant is not responsible for common area maintenance, it would have to take some action that contributes to the condition causing the party’s injury in order for a negligence claim to prevail.

Insurance coverage and additional insured status. Under the lease, both parties should carry commercial general liability insurance parallel to their respective indemnification undertakings. In accordance with the above, the landlord should be responsible for insuring the shopping center, including the common areas, and the tenant should insure the narrowly defined premises. Most significantly for the foregoing, and equally as important as having insurance coverage in the first place, is making sure that each party names the other as an additional insured in its respective policy. As noted by the court in Atlantic, a party named as an additional insured is entitled to the same coverage under the policy as though it were the named insured. Simply put, the landlord should name tenant as an additional insured for the common areas, with such coverage being primary and noncontributory other than for gross negligence; and a lawsuit can be avoided.

Landlord insuring tenant’s risk. Where the tenant is responsible for common area maintenance, it should still attempt to have the landlord insure the common areas in order to limit its exposure to liability. Other than with regard to New York’s unique vicarious liability rule, the landlord will want to carry its own commercial general liability insurance covering perils unrelated to the tenant’s negligence, such as negligent design of the parking lot.[7] In situations where the tenant is in care, custody or control of the common areas but the landlord is insuring the risk, to avoid any doubt that the tenant is entitled to such coverage, the lease should expressly state that the landlord’s policy is intended to cover any common area maintenance that the tenant is required to perform. To further ensure that the tenant has an enforceable claim to coverage, the lease should be clear that the cost of such insurance is either included in the base rent or is otherwise being paid by the tenant to the landlord. The lease should also clarify that the tenant is required to be named as an additional insured and should specify that such coverage is primary and noncontributory. Having primary and noncontributory coverage in place eliminates the question of who is negligent, analogous to the waiver of subrogation (a concept born in New York to effectuate the public policy that landlord and tenant should not fight among themselves concerning an insurable loss). This also prevents the tenant from being deprived of coverage for which it has bargained due to a reconciliation process between the parties’ insurance carriers as to whose negligence caused the accident. Having the “primary and noncontributory” language in the lease related to the common areas protects the tenant as an additional insured, since the landlord’s carrier cannot seek contribution from any other policy unless the claim exceeds the amount of landlord’s coverage.


The facts of each specific case may ultimately determine the tenant’s liability. However, tenants can take steps toward limiting their exposure to claims resulting from slip-and-fall accidents in shopping center common areas by negotiating the provisions described above.

[1] Atlantic Ave. Sixteen AD, Inc., v. Valley Forge Insurance Company, 150 A.D.3d 1182 (2d 2017).

[2] Raven v. Universal Strapping Corp., Supreme Ct. Kings Co. Index No. 4126/2011.

[3] Workers’ compensation laws would have prohibited the plaintiff from directly suing his employer.

[4] Atlantic Ave. Sixteen AD, Inc., v. Valley Forge Insurance Co., Supreme Ct., Rockland Co. Index No. 033887/13. Decision and Judgment dated Oct. 3, 2014.

[5] Atlantic Ave. Sixteen AD, Inc., v. Valley Forge Insurance Company, 150 A.D.3d 1182 (2d 2017).

[6] Ibid.

[7] Likewise, the tenant should also insure the common areas against comparable perils.

It Took My Carrier Almost a Year to Make Their Coverage Determination, and Now I am Being Told That the One-Year Limitations Period Under the Policy Ends in a Few Days. Is That Right?

Kesha Hodge | Property Insurance Coverage Law Blog | July 15, 2018

Most insurance policies contain a contractual provision that sets forth the time frame in which the insured must commence suit should a dispute arise concerning the policy. In many instances, these limitation provisions provide that the insured must file suit no later than one year after the date of the loss.

A recent inquiry asked about the enforceability of a one-year limitation period in a Nevada property insurance policy. In that scenario, even though it took the carrier almost a year to investigate the claim and provide its calculation of the actual cash value of the covered loss, the carrier was seeking to strictly enforce the one-year provision. The carrier’s representative inferred that, if the insured did not accept the carrier’s numbers, the insured had only a few days to file suit or the claim would be forever barred. Understandably, the insured was concerned and, hence, the inquiry.

The enforceability of a limitation provision largely depends on state law. Here, Nevada has explicitly recognized that to allow the statute of limitations to run from the date of loss would not be just to the insured, given the natural delays associated with investigating a claim.

The Nevada Supreme Court has specifically addressed the effect of the following provision:1

No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.

The Nevada Supreme Court explained that:

If the limitation period is construed to commence to run from the date of the fire, then the entire period could, as here, be consumed by the built-in delays of the policy and by the time in which the parties attempt to negotiate the claim. It would not be reasonable for the insured to anticipate such construction. The limitation clause in the policy is ambiguous and is construed against the insurer. We construe the clause to allow the period of limitations to run from the date of the casualty, but the period will be tolled from the time appellant gave notice of the loss until respondent formally denies liability. This construction preserves the literal language of the limitation provision by providing that the insured will have only 12 months to institute suit, but does not penalize the insured for the time consumed by the insurer while it pursues contractual rights to receive a proof of loss or negotiates payment with the insured.2

So, for example, if the loss was discovered and reported in January 2018, but the carrier does not conclude its investigation until June 2018, the one-year period for filing a lawsuit would not expire until June 2019, at the earlier, and not January. 2019. In other words, the six months from January 2018 to June 2018 would not be counted in the one-year calculation. Issues like this underscore the importance of consulting a knowledgeable insurance law professional if an insured has any concerns regarding their rights under an insurance policy.

Even after an insurer has formally denied liability and/or damages, the limitations period might still be tolled if the adjuster continues to engage in negotiations with the insured.3
1 Clark v. Truck Ins. Exchange, 95 Nev. 544, 598 P.2d 628 (1979).
2 Id. at 95 Nev. 546–47, 598 P.2d at 629–30 (citations omitted, emphasis added).
3 Seee.g.Walker v. American Bankers Ins. Group, 108 Nev. 533, 836 P.2d 59 (1992)(homeowner’s policy provision, requiring insured to bring suit under policy within one year from date of loss, was tolled between time insured notified insurer of his loss and insurer formally denied its liability to insured; thus, although adjuster wrote to insured stating that payment for personal property loss would be declined, the continued negotiations between insured and insurer tolled limitations period until the date on which insurer filed its complaint for declaratory relief).

Thinking of Signing a Release? Do Your Homework

Billie Jo Fatheree and Daniel Miske | Husch Blackwell | July 11, 2018

In a recent case out of New York (Board of Mgrs. Of 325 Fifth Ave. Condominium v. Continental Residential Holdings LLC, 139 A.D.3rd 472 (2017)) a condominium board signed a broadly worded document, releasing the developer and multiple other developer-related entities and their “heirs, executors, administrators, successor and assigns” from claims associated with the construction and design of balconies and their related structures.  The Board then sued some of the developer-related entities and individual members of the entities under “alter ego” and “pierce the veil” theories.

The Association argued that the developer-related entities were liable as they were “alter egos” of the developer (entities that were set up to provide a legal “safeguard” for the developer), however, the appellate court sided with the developer-related entities, ruling that the release protected the entities even though they were not specifically named in the release. Further, the court found that the Association’s veil-piercing argument was insufficient, stating that the “law permits the incorporation of a business for the very purpose of escaping personal liability.”

Make sure your association, and their attorney, investigates all potential legal theories and determines all potential defendants before signing a release. Otherwise, your association may find that it released potentially liable parties, even though that was the association’s intent.