Protecting Your Interests

Protecting Your Interests
Green trial law & Barton law firm

DISCLAIMER: Mr. Green is licensed in Texas and Colorado. All of the information contained in the slides is intended to outline general knowledge about the law and is not intended to serve as legal advice to anyone. Every situation is unique and the law may be applicable uniquely thereto. If you want to know how the law applies to your particular situation you could consult a lawyer licensed in your jurisdiction.

Statute of Limitations
S.O.L. Statute of Limitations Be safe. Know the policy. File the case within the limit in the contract!

S.O.L. That May Apply To Insurance Claims (Texas)
Breach of Contract – 4 years Unfair settlement practices – 2 years Prompt Payment of Claims – 2 years, but could arguably be 4 years – see RX.com Inc. v. Hartford Fire Insurance Co., 426 F. Supp. 2d 546, (S.D. Texas, 2006) Breach of common law duty of good faith and fair dealing – 2 years Violations of Texas Deceptive Trade Practices Act – 2 years

Statutes That May Apply To Insurance Claims (Oklahoma)
Breach of Contract – 5 years Bad faith – 2 years Unfair settlement Practices – 2 years Deceptive Trade Practices Act – 2 years

Minnesota Deceptive Trade Practices – 4 years
Breach of Contract – 6 years Bad Faith – 6 years

LEGAL ACTION AGAINST US
You may not bring legal action against us concerning this policy unless you have fully complied with all of its terms. Suit must be brought within one (1) year after the loss.

Suit Against Us. No suit or action can be brought unless the policy provisions have been complied with. Action brought against us must be started within two years and one day after the cause of action accrues.

When Does The Time Start?
Breach of the common law duty of good faith and fair dealing – the date the insurer denies or delays payment Violations of the Texas Deceptive Trade Practices Act – typically will be when the claim is denied or payment is made for a sum less than its value

When does the cause of action accrue
When does the cause of action accrue? THE EXCEPTION – The Discovery Rule The cause of action would accrue from the date that the Plaintiff discovered, or in the exercise of reasonable diligence, should have discovered the injury

“The insurance contract between America First and Spicewood contains the following provision:
No one may bring a legal action against [America First] under this policy unless: There has been full compliance with all terms of this insurance, and The action is brought within 2 years and one day after the date on which the direct physical loss occurred.” The Spicewood Summit Office Condominiums Assoc., Inc. v. America First Lloyds Ins. Co., 287 S.W.3d 461, 465 (Tex. App. – Austin 2009)

Spicewood Summit Office Condominiums Assoc. , Inc. v
Spicewood Summit Office Condominiums Assoc., Inc. v. America First Lloyd’s Ins. Co. “Therefore, Spicewood was not entitled to file suit against America First under the policy on the date on which the direct physical loss or damage occurred because, without more, no breach of the insurance agreement by America First had yet occurred, and Spicewood did not yet have a cause of action for breach of contract.”

Spicewood Summit Office Condominiums Assoc. , Inc. v
Spicewood Summit Office Condominiums Assoc., Inc. v. America First Lloyd’s Ins. Co. “…the provision at issue in this case has the practical effect of providing a period in which to file suit that is less than two years. Therefore, the contractual limitations provision is void. As a result, the four-year statute of limitations governs Spicewood’s breach of contract claim.”

Texas CPRC § 16.070 Contractual Limitations Period
“(a) except as provided by Subsection (b), a person may not enter into a stipulation, contract, or agreement that purports to limit the time in which to bring suit on the stipulation, contract, or agreement to a period shorter than two years. A stipulation, contract, or agreement that establishes a limitations period that is shorter than two years is void in this state.”

Uptegraft v. Home Ins. Co., 1983 OK 41 (Okla. 1983)
“a provision in the insurance policy which limits the time for bringing a suit thereunder to less than the statutory period is void”

R.S. Mo. § Missouri: “All parts of any contract hereinafter entered into which either directly or indirectly limit or tend to limit the time in which any suit may be instituted, shall be null and void.”

Brisbane Lodging L.P. v. Webcor Builders 2013 WL 2404154 (June 1, 2013) (CA – Ct. App.)
California: “parties should be given the ability to enjoy the freedom of contract and to structure risk-shifting as they see fit without judicial intervention,” even where defects and damage are not discovered until after the limitations period expired.” The contractual limitations period was not void.

J.S. Reimer Inc. v. Village of Orlando Hills 2013 IL App (1st) 120106
Illinois: “the plain language of [the] section provides that the period of limitations will expire in a fixed time frame … regardless of whether the complained-of injury was discovered or even discoverable within that time period. The practical effect ... is to transform the statute of limitations into a statute of repose.” A contractual limitation is valid

36 O.S § 3617 Oklahoma: Applies a 2 year statute of limitations to casualty insurance policies; any provision limiting a cause of action beyond that statutory period is void

Colorado Limitations less than 2 years are invalid
Breach of Contract: 3 year Statute of limitations (unless modified by contract – cannot be less than 2 years) Bad Faith: 2 years

Breach of Contract – the date the breach occurs which can vary depending on the breach alleged On denial of coverage (some courts have held that reconsideration after denial will not restart accrual period) On the date final payments under the policy were made

Prompt Payment of Claims (Texas) – the date the insurer violates the Prompt Payment of Claims provision of the Texas Ins. Code. If the insurer has not agreed to pay the proper amount within 30 days of your providing all the items they have requested, then they have violated the prompt payment statute. We take the position that a prompt payment still violates the statute if it is inadequate.

Unfair Settlement Practices – the date the unfair practice occurs which can vary depending on the practice alleged. When the insurer’s liability becomes reasonably clear but the insurer fails to pay When the misrepresentation is made to Plaintiff relating to coverage When insurer refuses to pay Plaintiff’s claim without conducting a reasonable investigation

Be Safe. Know the Policy. File the case as soon as possible and before the earliest conceivable limitation

Avenues for extra-contractual damages
Bad Faith Avenues for extra-contractual damages

Bad Faith How do we collect more than it takes to fix the property?
Avenues for Extra Damages Texas Prompt Pay Statute – Attorney’s fees + 18% per annum penalty – No Bad Faith Required Texas Unfair Claims Settlement Practices Statute Attorney’s fees + possible 3 times damages Common Law Bad Faith – Mental Anguish plus punitive damages Misrepresentations Colorado Bad Faith Statute: Automatic 3 times damages + Attorney’s fees

Attorney’s Fees (Texas)
Bad Faith Remedies Two ways Attorney’s Fees are covered: 1) Violation of Prompt Pay Statute 2) Unfair Settlement Practices

Texas Prompt Pay Statute
Deadlines No later than 15 days after notice of the claim The Carrier Must Acknowledge the claim in writing (this should also include a general reservation of rights where appropriate) Commence its investigation and request pertinent information Provide a proof of loss form to the insured along with instructions for completing the forms

No later than 15 days after receipt of all requested documents The Carrier Must Accept the Claim, reject the claim, or submit written request for additional time to complete its investigation. The request should explain the reason for the need for additional time.

No later than 45 days after its request for additional time to investigate The Carrier Must Accept or Reject the Claim

No later than 5 business days after the claim has been accepted, or within 60 days of receipt of all requested items: The Carrier Must Pay the Claim

Remedies Attorney’s Fees 18% per annum penalty in addition to other penalties All Penalties are Mandatory

Prompt Pay Statute – Colorado (§ 10-3-1115)
Improper denial of claims - prohibited – definitions – severability “(1)(a) A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.” This is a different standard than at common law. Colorado does not require a finding of “knowing,” you are required to show ONLY unreasonable conduct by insurer. Kisselman v. American Family Mut. Ins. Co., 292 P.3d 964, 972 (Co. Ct. App. 2011)

Prompt Pay Statute – Colorado (§ 10-3-1116)
Remedies for unreasonable delay or denial of benefits – required contract provision – frivolous actions – severability “(1) A first-party claimant … whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees and court costs and two times the covered benefit” If the jury finds unreasonable, the damages are automatically trebled.

Proving the Case Best Proof for Breach of Contract and Bad Faith:
The Insurance Company Claim File The Insurance Company Underwriting File

What we get to see that the Insurance Company hides from you

Claim File Example Reports – Bad Faith

Claim File Example Email Communication

Claim File Example Reports – Original

Claim File Example Reports - Edited

Underwriting File Images

Underwriting File Example

Unfair Claims Settlement Practices Statutory Liability
Actions that are unfair settlement practices: Misrepresenting to a claimant a material fact or policy provision relating to coverage at issue Failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: A claim with respect to which the insurer’s liability has become reasonably clear; or A claim under one portion of a policy with respect to which the insurer’s liability has become reasonably clear to influence the claimant to settle another claim under another portion of the coverage unless payment under one portion of the coverage constitutes evidence of liability under another portion

Unfair Claims Settlement Practices Bad Faith
(3) Failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement of a claim; “You are not covered” is not good enough

(4) Failing within a reasonable time to: (A) affirm or deny coverage of a claim to a policyholder; or (B) submit a reservation of rights to a policyholder

(5) Refusing, failing, or unreasonably delaying a settlement offer under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages suffered, except as may be specifically provided in the policy

(6) Undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim (7) Refusing to pay a claim without conducting a reasonable investigation with respect to the claim

(9) Requiring a claimant as a condition of settling a claim to produce the claimant’s federal income tax returns for examination or investigation by the person unless: (A) a court orders the claimant to produce those tax returns (B) the claim involves a fire loss; or (C) the claim involves lost profits or income

Unfair Claims Settlement Practices
Remedies for Bad Faith Section of the Tex. Insurance Code:: A plaintiff who prevails in an action under this subchapter may obtain: The amount of Actual Damages, plus court costs and reasonable and necessary attorney’s fees; An order enjoining the act or failure to act complained of; or

Texas Unfair Claims Settlement Practices
Remedies (continued) 3. Any other relief the court determines is proper (b) On a finding by the trier of fact that the defendant knowingly committed the act complained of, the trier of fact may award an amount not to exceed three times the amount of actual damages.

Breach of Contract Test: Insurer does not pay, or do what they were supposed to pay or do under the policy. Remedy: 1. The amount they should have paid; 2. Attorney’s fees

Texas Common Law Bad Faith
Test: “failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: A) A claim with respect to which the insurer’s liability has become reasonably clear…”

Texas Common Law Bad Faith
Remedies: Damages independent of the original breach of contract. Mental Anguish Loss of Franchise Punitive Damages

Remedies for Ins. Code Violation DTPA Damages
§ 542 “ties in” to the DTPA, and “Each consumer who prevails shall be awarded court costs, and reasonable attorney’s fees… In applying this section, the trier of fact is authorized to award a total of not more than three times actual damages.”

Bad Faith - Colorado How do we collect more than it takes to fix the property? Avenues for Extra Damages Colorado Prompt Pay § CRS § Cramer v. Insurance Exchange Agency, 675 N.E. 897 (Ill. 1996): explains the history of 155, states that the courts will not recognize a separate tort of bad faith in a breach of contract action unless it is proven through something like common law fraud 155 is the legislated “limited remedy” for breach of insurance contract

Bad Faith - Oklahoma How do we collect more than it takes to fix the property? Avenues for Extra Damages Common Law Bad Faith – Attorney’s fees Prompt pay – Attorney’s fees and 15% interest Misrepresentations

Bad Faith - Oklahoma Bad faith found “where there is a clear showing that the insurer unreasonably, and in bad faith, withholds payment of the claim of its insured. Christian v. American Home Assurance Co., 577 P.2d 899 (Okla. 1977)

Bad Faith - Oklahoma Essential elements (1) Insured was covered under the policy (2) Actions of insurers were unreasonable under the circumstances (3) Insurers failed to deal fairly and in good faith (4) Breach or violation of good faith was the direct cause of damages sustained by insured Badillo v. Mid. Century Ins. Co., 121 P.3d 1080, 1093 (Okla. 2005)

Bad Faith – Oklahoma Attorney’s Fees
There is no statutory provision for attorney’s fees, and “ordinarily, attorney’s fees may not be recovered in the absence of an agreement or statutory authority…” One exception to this rule is where the litigant has acted in BAD FAITH … the trial court, in its exercise of equitable power, may award attorney’s fees. Christian v. American Home Assur. Co., 577 P.2d 899, 906 (Okla. 1977)

36 Okl.St.Ann. § 3629 Within 90 days of receiving the proof of loss, the carrier must: Submit a written offer of settlement or a rejection of the claim to the insured. Upon a judgment rendered to either party, costs and attorney’s fees shall be allowable to the prevailing party. The prevailing party is the insurer in cases where the judgment does not exceed written offer of settlement. In ALL other judgments, the insured shall be the prevailing party.

36 Okl.St.Ann. § 3629 (continued)
“If the insured is the prevailing party, the court in rendering judgment shall add interest on the verdict at the rate of 15% per year from the date the loss was payable pursuant to the provisions of the contract to the date of the verdict.”

Unfair Claims Settlement - Oklahoma
The central question for bad faith failure to settle or investigate concerns what the insurer knew or should have known at the time the insured requested payment – i.e. whether there was a justifiable, reasonable basis to withhold payment

Bad Faith - Oklahoma OK Supreme Court has found bad faith where insurer: Made settlement offers for less than insurer’s established minimum value of a valid claim Conducted a biased investigation or determined the results of the investigation based on clearly unreliable expert evidence Determined that a claim is legally or factually insufficient without proper investigation, or failed to seek available information that might aid an insured in proving a claim Refused to pay based on unreasonable interpretations of law or policy provisions, or relied on unreasonable legal advice

Bad Faith - Oklahoma Bad faith for delay of payment found where:
Claimant was entitled to coverage under the insurance policy at issue; The insurer had no reasonable basis for delaying payment; Insurer did not deal fairly and in good faith with the claimant; and Insurer’s violation of its duty of good faith and fair dealing was the direct cause of claimant’s injury

Okla. § 36-1250.6-7 Bad faith may be shown where:
Within 30 days after receiving a claim the carrier must Acknowledge receipt of the claim Provide all necessary claim forms, instruction, and reasonable assistance to the insured

Okla. § Within 45 days after receipt of a properly executed proof of loss the carrier must Advise insured of the acceptance or denial of the claim, or if further investigation is necessary.

Unfair Claims Settlement – Oklahoma
The following acts may be evidence of bad faith: Failing to fully disclose to first-party claimants, benefits, coverages, or other provisions of any insurance policy or insurance contract when such benefits, coverages, or other provisions are pertinent to the claim; Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue Failing to adopt and implement reasonable standards for prompt investigations of claims arising under its insurance policies or insurance contracts;

Unfair Claims Settlement – Oklahoma (Continued)
Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear; Denying a claim for failure to exhibit the property without proof of demand an unfounded refusal by a claimant to do so; Except where there is a time limit specified in the policy, making statements, written or otherwise, which require a claimant to give written notice of loss or proof of loss within a specified time limit and which seek to relieve the company of its obligations if such a time limit is not complied with unless the failure to comply with such time limit prejudices an insurer’s rights

Unfair Claims Settlement – Oklahoma (Continued)
Requesting a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment Issuing checks or drafts in partial settlement of a loss or claim under specified coverage which contain language which releases an insurer or its insured from its total liability Compelling, without just cause, policyholders to institute suits to recover amounts due under its insurance policies or insurance contracts by offering substantially less than the amounts ultimately recovered in suits brought by them, when such policyholders have made claims for amounts reasonably similar to the amounts ultimately recovered.

Bad Faith - Illinois How do we collect more than it takes to fix the property? Avenues for Extra Damages Damages under § 155 Attorney’s Fees Common Law Bad Faith Misrepresentations

Bad Faith – Illinois (Attorney’s Fees)
§ 5/ : (1) in any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney’s fees, other costs, plus an amount not to exceed any one of the following:

Bad Faith – Illinois (continued)
60% of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of all costs $60,000 The excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.

Unfair Claims Settlement Practices Ill. § 5/154.6
Some of the statutory provisions that may constitute bad faith: Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue; Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies

Unfair Claims Settlement Practices Continued Ill. § 5/154.6
Failing to adopt and implement reasonable standards for the prompt investigations and settlement of claims arising under its policies Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear Compelling policyholders to initiate suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;

Engaging in activity which results in a disproportionate number of meritorious complaints against the insurer received by the Insurance Department Engaging in activity which results in a disproportionate number of lawsuits to be filed against the insurer or its insureds by claimants Refusing to pay claims without conducting a reasonable investigation based on all available information

Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured Making a claims payment to a policyholder or beneficiary omitting the coverage under which each payment is being made

Delaying investigation or payment of claims by requiring an insured or claimant to either submit a preliminary claim report and then requiring subsequent submission of a formal proof of loss, resulting in duplication of verification Failing in the case of the denial of a claim or the offer of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis in the insurance policy or applicable law Failing to provide forms necessary to present claims within 15 working days of a request with such explanations as are necessary to use them effectively

Bad Faith - Minnesota How do we collect more than it takes to fix the property? Avenues for Extra Damages Statutory Penalties Common law Bad Faith Attorney’s Fees

Bad Faith – Minnesota Elements of a bad faith claim
Insured must prove: There was no reasonable basis for the insurance company’s denying plaintiff’s claim for benefits under the policy; and The insurer in denying the claim, either knew or recklessly failed to ascertain that the claim should have been paid.

Bad Faith – Minnesota If court finds bad faith
Statutory Penalties permit: Amount equal to one-half of the proceeds awarded that are in excess of an amount offered by the insurer at least 10 days prior to trial, or $250,000, whichever is less Reasonable attorney’s fess actually incurred (capped at $100,000)

Unfair Claims Settlement Practices M.S. § 72A.20 – Minnesota
Some statutory provisions that may constitute bad faith: Misrepresenting pertinent facts or coverage provisions; Failing to acknowledge and act reasonably promptly upon communications with respect to claims Failing to implement reasonable standards for prompt claims investigation Failing to affirm or deny coverage within a reasonable time

Unfair Claims Settlement Practices M.S. § 72A.20 - Minnesota
Some statutory provisions that may constitute bad faith: Forcing insured to commence suit by offering substantially less than the amounts ultimately recovered in actions brought by insureds Failing to provide a reasonable explanation for a denial of a claim or for a compromise settlement offer

Rules for Contractors and Public adjusters
Certain prohibited acts

The General Rule In most states a contractor CANNOT negotiate terms, pricing, payment, etc. with the insurance company. “A license is required to negotiate claims with the insurance company, and an adjuster cannot have a financial interest in any construction projects, so a contractor who negotiates must be licensed, and if he is licensed, cannot have a financial interest in the work done.” – Oklahoma Dept. of Ins. Bulletin

Some State Specific Examples
Arizona: Contractors CANNOT negotiate with insurer. Florida: Contractors cannot negotiate HOWEVER, a contractor may discuss or explain a bid for construction or repair of the covered property with the owner of the property or the insurer, so long as the contractor is performing the work for customary fees, as stated in the contract between contractor and insured. Also, a PA cannot charge more than 20% of the claims, or more than 10% on emergency claims.

State Specific Laws Continued…
Minnesota: Contractor cannot negotiate claims. Cannot advertise itself as negotiating on insured’s behalf, or as representing insured in any way, these require licenses. Contractor CAN identify damage to insurer, and can point out damages that were not in initial scope or settlement offer. There is no cap on what a PA can charge. Texas: Contractor CANNOT negotiate with insurer. Public adjuster fee may not exceed 10% of the settlement on the claim. Roofing contractors especially: ANY negotiation, or attempt to work on behalf of insured explicitly forbidden. Lon Smith Roofing v. Reyelts.

State Specific Laws Continued
Colorado: Contractor MAY negotiate on behalf of insured, may advertise as such. No cap on what a PA may charge EXCEPT in the event of a catastrophe, which is capped at 10%. CONTRACTORS HAVE STANDING TO SUE INSURER UNDER § 1115 Illinois: Contractor CANNOT negotiate with insurer. No cap on PA fees. Missouri: Contractor CANNOT negotiate with insurance company.

Watch Out For Rules Regarding Payment and Funds
Tex. Disciplinary Rule 1.14 Safekeeping of Property: When a third party has an interest in monies recovered by a lawsuit, the lawyer MUST keep those funds in a completely separate trust account, and CANNOT disburse those funds until the joint interest is severed – i.e. completion of the representation.

Overview of General Contractor Overhead and Profit?
The Majority view: Payment of GCO&P by the insurer is required if the use of a general contractor is “reasonably likely” Arizona, Colorado, Louisiana, Mississippi, New York, Pennsylvania, and Texas support this view The Minority view Payment of GCO&P by the insurer is required only where the expenses are “actually incurred” Kentucky, Washington, Kansas support this view

GCO&P In Texas Commissioner Bulletin
The Department’s position has not changed. While individual company policy forms have been approved for use in Texas, the method set forth in Bulletin No. B continues to be a standard method of determining actual cash value under replacement cost policies. Thus, the insured continues to be entitled to reasonable and necessary expenses to repair or replace the damaged property, less proper deduction for depreciation. These expenses would include the services of a contractor. The deduction of prospective contractors’ overhead and profit and sales tax, in addition to depreciation in calculating actual cash value, is an improper claim settlement practice on policies that provide coverage on an actual cash value or replacement cost basis.

The purpose of this bulletin is to state the Department’s position that actual cash value of a structure under a replacement cost policy, when the insurer does not repair or replace the structure, is the replacement cost with proper deduction for depreciation. The deduction of prospective contractors’ overhead and profit and sales tax in determining the actual cash value under a replacement cost policy is improper, is not a reasonable interpretation of the policy language, and is unfair to insureds.

--Premiums charged must not be excessive for the risks to which they apply. Under a replacement cost policy, the liability limits of the policy and the premium paid by the insured are determined on the basis of the replacement cost of the structure. The value of contractor’s overhead and profit, as well as sales tax on the building materials, has been included in the limit of liability for which the insured has paid premium. If the insurer in determining actual cash value excludes costs that are included in the determination of liability limits, on which the insured’s premium is based, the insurer reaps an illegal windfall because the insurer receives premium on insurable values for which loss may never be paid.

--The insurers’ argument that the cost of contractor’s overhead and profit and sales tax on building materials should be excluded from an actual cash value loss settlement because the insured has not incurred these expenses is not persuasive. Using this logic, an insured who opts not to repair or replace the damaged property, including the costs of building materials, and would collect nothing under an actual cash value loss settlement. This result would be contrary to the purposes of the subject insurance policy.

Some Argue ACV:TDI - Consent Order
GCOH&P “GCOH&P for the purposes of this order means General Contractor’s Overhead and Profit. TDI alleges that in handling some claims, TWIA and TFPA made a determination that GCOH&P would be reasonably likely to be incurred by the claimant but then the companies would limit payment of GCOH&P to only certain repairs or construction activities. TWIA and TFPA agree to implement adjuster and examiner training and issue clarifications in the claims manual and policyholder communications concerning GCOH&P consent with the following stipulation: “GCOH&P should be included in all estimates when the insured is reasonably likely to require the services of a general contractor to repair the damage. On claims that warrant GCOH&P, adjusters should apply GCOH&P to all building items and repairs for which supervision or coordination of the item or trade is reasonably required by a general contractor.” Nothing in this agreement shall prevent TWIA or TFPA from adjusting its claim processing policy to conform to any statutory changes or any opinions issued by any Texas court or agency of competent jurisdiction in regard to GCOH&P. Nothing in this agreement shall prevent TWIA or TFPA from challenging the application of GCOH&P in any civil lawsuit.

When is a code upgrade applicable?
The threshold issue: was it triggered by the work proposed on the damage caused by an insured peril?

Coverage Implications
Reconfiguration Change of Occupancy Hurricane Repair Renovation Upgrade NOT Covered Covered by Policy

Code upgrades that are not caused by the loss are not covered.
Bottom Line Code upgrades that are not caused by the loss are not covered.

What, Who, and most importantly: WHEN
Appraisal What, Who, and most importantly: WHEN

Appraisal WHAT: A determination of the value of the loss
Calculation of the damages to the property; does not deal with liability or cause WHO: Each party chooses ONE objective “appraiser” Typically a contractor or independent adjuster Someone with experience in calculating and determining damages to property, does NOT have to be knowledgeable on insurance policies, coverages, or claims practices

Appraisal Continued WHO: In the event the two appraisers cannot reach agreement, they select an impartial Umpire. Umpire makes own damage valuation An agreement by any two is binding on all parties Appraisal does not make a determination regarding cause of loss or coverage. Appraisal can be invoked at any time by either party Likely that an appraisal award defeats BOC claims and damages

Appraisal continued WHEN: Appraisal is beneficial when the ONLY dispute is the scope of the damages. That is: no violation of prompt pay or other unfair settlement practices

Waiver of Appraisal An unconditional denial of liability before a suit is filed constitutes a waiver of insured’s duties under the contract, i.e. Insurer Waives Appraisal Can be waived if demand is not made within a reasonable and seasonable time (reasonableness is measured from the point of impasse). Ongoing negotiations and disagreement do not constitute impasse Delay is not enough to show waiver, must show prejudice An insurer can invoke appraisal after litigation begins

the final keys to successfully navigating insurance disputes
Document Honest but aggressive Be careful commenting on causation Lots of photos of the damage Don’t repair without consent Add examples of infrared photos (see if LBD) is covering that Cooperate (give them what they ask for) Anything you do that can be used against the insured will be This presentation available at

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