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inside man
45 Posts |
 Posted - 02/03/2003 : 12:48:11
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Insured lives in his house and has had the heat shut off for some time (most likely the last two years). Insured uses electric space heater to heat only his bedroom.
Due to severe cold all of the plumbing in the house freezes and water damage ensues.
Is there coverage for the damage to the plumbing system? How about the ensuing water damage? How about ALE?
Insured has an HO3 (04 91) |
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ckleisch
USA
46 Posts |
Posted - 02/03/2003 : 13:52:45
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I would like to take a run at this one. Of course i dont know which state is involved and whether there are any state amendatory endorsements pertinent.
H0-3 reads "We insure for all risks of physical loss to property described in coverages A and b (EXCEPT):
1.) Losses excluded under Section I- Exclusions:"
under items any ensuing loss not excluded is covered.
Dwelling you stated was occupied and not vacant. Insured dressed for cold using rest of house for things. sleeping in well heated bedroom to save heat expense in rest of house. If this is the case i see no exclusions as applicable. Now if insured vacated part of house put plywood and plastic over doorways and openings and sealed self off in bedroom i think you have a coverage issue. recommend review of PILR for that one. Based, on present knowledge of facts coverage with ALE would be in order. However, if he is staying in one room only all the time and electrical active what would his ALE be? Was/is toilet active and in use? Question heat was off what about hot water heater if on and in use and water dripping he was doing best to forestall such an occurrence. As indicated unless Ho-3 exclusion can be found applicable its covered. House was occupied. |
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Jeanette
25 Posts |
Posted - 02/03/2003 : 14:12:15
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Nice site--ISO policies available for educational purposes. Has both the 91 and 2000 policies and great educational opportunity
http://vu.iiaa.net/Lib/Ins/PL/Homeowners/ThompsonHO2000Worst.htm
Scroll to bottom of linked page to see author's take on frozen pipes... |
Edited by - Jeanette on 02/03/2003 14:17:34 |
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inside man
45 Posts |
Posted - 02/03/2003 : 14:14:11
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Date of loss falls wihin the policy period.
Insd used house as what one would define as normally ie: used bathroom, toilets, kitchen etc up until pipes froze. No areas sealed off to my knowledge.
The insured IS required to take reaonable means to protect his property following a loss to prevent further damage.
Where does the policy state the insured has a duty to protect the property prior to the loss?
This would imply that insured's are required to do board up prior to a hurricane. I am not aware of this being a condition of the policy.
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ckleisch
USA
46 Posts |
Posted - 02/03/2003 : 14:44:56
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PILR has case law on subject that states basically the following:"Occpancy," as used in a policy is largely a matter of intent and does not require, continuous bodily presence on the insured premises. In Independent Fire Ins Co versus Butler a FLA case the occupant had the electricity off and did not stay in the house as she was moving but still had property in the house and a fire insued. it was found "Vacancy" as used applied to inanimate objects while "occupancy" applied to animate objects. the court had no trouble finding since furnishings remained in the house after the occupant ceased sleeping there coverage was applicable. In Krajenke v Preferred Mutual a Michigan case. the damage occurred as a result of pipes freezing while she was on vacation. court rendered opinion that insured's temporary absence from the home was insufficient to render the house vacant or unoccupied for purposes of an exclusion for vacant or unoccupied building.
now comes the question of reasonable care:
it appears the policy is intended to cover under this section unforseable events. There is an attempt to avoid coverage for losses caused by the insured's negligence in not draining the water system or maintaining heat. because, reasonable care or due diligence is seen as a subjective, relative standard based on the facts of the individual case, it seems that almost gross negligence would be required before a finding that the insured failed to act in accordance with the appropriate standard of care would be reached. Blacks law dictionary defines reasonable care as that degree of care which a person of ordinary prudence would exercise in the same or similar circumstances. failure to exercise such care is ordinary negligence. because, the definition for due diligence in the same dictionary does not depart significantly from that given for reasonable care there seems to be no analytical distinction between them.
i still believe you have a loss covered unless you can prove insured with deliberation caused the event. |
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CCarr
Canada
1200 Posts |
Posted - 02/05/2003 : 15:13:17
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'Inside', this is a very interesting situation, that you have come up with. My comments are framed within the HO3 (04 91) and referenced legal doctrine and cases.
I think when anyone is considering this type of claim, when reference to the wording is necessary, it is always beneficial to start that wording review from the beginning of the policy.
The opening "Agreement", lays out the intent of the policy, "we will provide the insurance described .... in return for .... compliance with all .... provisions ....".
Next, in the "Definitions", #5 'Occurrence', I think this will be the critical important consideration in the eventual outcome of this claim.
"Occurrence means accident, including continuous or repeated exposures to substantially the same general harmful conditions ....".
I suggest the critical word in what an 'occurrence' means is ACCIDENT.
The definition of 'accident', and its application to loss, has been the issue of discussion in insurance for generations.
Rupp's Insurance Glossary defines 'accident' as, "a sudden, unplanned and unexpected event, not under the control of the insured, resulting in damage."
RIG also has a definition for 'occurrence', but that is of little consequence to this claim, as the HO3 provides its guiding definition of 'occurrence; and as it says - "means an accident".
One of the foundations of a property policy is that they are based on 'accident'. Property insurance policies are intended to indemnify insureds for losses to which the object of insurance may be expressed. The purpose of insurance is to respond to losses which are both accidental and future; it is not meant to respond to losses which are expected. By the way, much of this can and should be applied to another thread in CADO - the "Assessment" thread; which I may venture into later.
The scenario 'inside' provided, although unusual, is not necessarily a rare claims event. It has led me to some legal docuementation I have that is relevant, and that will support the strength of the opening comment I made with regard to 'accident'; and my conclusions later.
A fundamental principal of insurance law is that only fortuitous losses are covered under property insurance policies. The 'fortuity doctrine' is an extra-contractual principal arising out of the function of insurance as a mechanism to spread risk. The 'fortuity doctrine' provides that an insured can only recover from losses that are both accidental and unforeseen, as opposed to losses that are certain.
This doctrine by the way, was heavily reviewed and elevated in prominence in 1998 and 1999, in view of the concern for 'Y2K' crisis predictions. The argument was strong and being advanced, that a 'Y2K' loss would not have been fortuitous if computer hardware was non-compliant and certain to fail (with the beliefs in place at the time) on 01/01/00; if a 'Y2K' crisis was real and occured.
Although recent case law suggests that fortuity must be determined from the insured's point of view, it is argued that the standard should at least be partly objective, based on what the insured must have known about the potential consequences of any inaction. It seems a simple argument to suggest that any reasonable insured would have anticipated or expected freezing pipes, in freezing weather; in unheated areas of a dwelling containing water.
Looking at the points 'inside' has provided that are relevant;
(a) HO 3 (04 91) policy
(b) owner / occupied dwelling
(c) has had the 'heat' shut off for some time
(d) insured uses electric space heater to heat only his sleeping space; the inference being he is aware of the effect of freezing temperatures on a human body, and therefore knew of the consequences of inaction in that regard
(e) due to severe cold, all plumbing in the house freezes
(f) water damage ensues
(g) loss date is within policy period
(h) insured used dwelling, no known sealed off areas
Had I had the opportunity to be the adjuster on this loss, as soon as the 'picture' started to form regarding items (c,d,h), I would immediately obtain a Non-Waiver Agreement, or alternatively depending if I was staff or IA, issue or recommend a Reservation of Rights Letter.
Additional information I would want for the file, would be;
(1) normal temperature averages / expectations for the subject area of the dwelling. I would consider this as critical information, in view of my comments regarding the 'fortuity doctrine'.
(2) a clear or more indepth understanding of 'why' the insured shut off 'the heat' for the length of time suggested.
(3) some indication from all the insured has to say, regarding his expectations of the results of his inaction in all areas of the dwelling other than his sleeping area.
However, based on the details available, I could go no further in my exploration for coverage than the "Defintions" of the policy. I do not consider this as an "accident", and therefore I could not consider any coverage, any further. Therefore, I would not consider or enter into any conversation regarding the applicability of the "Freezing" perils found in the policy.
There is a distinction in the last few years, in how a court will fundamentally interpret insurance contracts which come before them. The current, referred to as the 'modern approach', is based on a review of the case according to the 'doctrine of reasonable expectations'. Irrespective of policy language, what would an ordinary, reasonable person expect in the way of coverage, for the loss being presented.
In that regard, a few cases I found, may help to illustrate the points I have raised.
'State Farm v Lytle', the insured had a fight with his spouse, who then called her brother. The spouse in turn warned her husband, that if the brother came to the house, he would come with a gun. The insured waited with his own gun, and shot the BIL when he kicked in the door. The insured then looked to his HO policy for coverage, which was denied. The US Court of Appeals held for the insurer, and found that the shooting "was not an unexpected or unintended event".
'Middlesex Mutual v Hitchcock', in Connecticut, an insured was sued for claims of emotional distress caused by a series of obscene phone calls allegedly made by the insured over a 2 year period. The insured sought coverage under his HO policy, which the insurer denied. The Connecticut Superior Court held that, "the repeated harassing and obscene phone calls were intentional acts which could not be characterized as 'accidents' under the policy, therefore there was no 'occurrence' which triggered coverage"
'Farm Bureaus Ins Co v Witte', in Nebraska, the insured while babysitting, shook a child and caused closed head injury and trauma. The insurer denied coverage under the HO policy, on the basis that the policy excluded coverage for 'expected' loss. The court held in favor of the insurer. |
Edited by - CCarr on 02/05/2003 20:59:55 |
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inside man
45 Posts |
Posted - 02/06/2003 : 08:23:48
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Truly impressive work Clayton.
You have really put this loss under a microscope and gone way beyond just a cursory examination of the facts that have been presented.
I am curious however if this deep an investigation into this claim with the resultant denial would be better served if it was performed by the carrier's legal department?
Do you think that in this case that you have gone to great lengths to "not" find coverage for this loss?
If the insured has lived like this for a number of winters with no previous problems with freeze up do you think that the extremely cold temperatures that led to this winter's pipe freeze up was foreseeable?
FYI: The carrier is providing coverage for this loss. |
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CCarr
Canada
1200 Posts |
Posted - 02/06/2003 : 11:15:32
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Hi 'inside', thank you for your kind words.
The scenario you presented tweaked my interest, because of the required examination - as I recognized it - of the 'fortuity doctrine'. With regards to the detail, in this case I thought it was required. The basic way I approach this type of question, when formulating a response is threefold; an answer / opinion, foundation for it, and finally "sell it". Often times, all that combined, can be accomplished in a few short paragraphs. However, knowing I was going to center my thoughts on "accident", which was outside of the two or three other thoughts already presented; I felt more foundation and 'selling' was required. I don't necessarily see the object of this type of pursuit being to convince people of my answer / opinion, and therefore I don't want 'sell it' to be construed in the wrong context. However, the ideal objective is to present a clear answer / opinion, with relevant foundation, and enough explanation of it so most people reading it will at least clearly understand the opinion presented; and can make their own conclusion.
But again, while on this 'train of thought', I want to re-emphasize the benefit I see in examining a policy from the beginning in situations like this. The policy is constructed in a unique and specific manner, conducive to being considered from front to back.
I will respond to your three additional questions, but in a different order than you presented them.
What I presented in my previous post, was not accomplished after 'going to great lengths'. Detailed yes, but not a great journey to present what I wanted. That journey was in no way, an effort 'not' to find coverage. To me, it was an effort to find what I considered was 'the answer', which is just an opinion. I am, and have been for many years a 'pro-pay' type of claims person. When I reflect on that issue, it is clear to me that of all the comments, opinions, arguments, discussions or answers I have given or been involved in over the years were - by a very high majority - on the pro-coverage side, not by choice or election; but that is just where the exploration of the issue took me. That is how I think, we all should fundamentally look at coverage 'exploration' issues. I see a clear distinction in this approach from a 'debate formula', I do not pick a 'side' and attempt to prove, sell or convince someone. I take the issue at hand, and explore with whatever tools required, and attempt to achieve an answer.
Regarding your first question, I do not think 'this deep an investigation' is better served, if it was performed by the carrier legal department or outside defense counsel opinion; IF the 'claims department' has the 'resources' at hand to complete this task themselves.
This goes back to the 'pack-rat' attitude and mentality I mentioned, in my follow up post to you in the 'Picture this' golf course thread opinion.
I remember 25 and 30 or more years ago, my claims supervisor discussing many claims issues, most if not all of which were unusual to me then. He wouldn't hesitate to pick up the phone, mid sentence, and call the carrier defense firm and run the issue by them for their guidance. You could do that back then, it was part of the 'relationship', and it didn't cost any legal dollars.
Moving the clock ahead of that, by ten years, the issues seemed more complex and defense counsel relationships, while still good, didn't have that 'call me at any time for free advice' link anymore. Aside from actual defense work for litigation, seemingly complex issues were being sent to defense for written opinions, at quite a cost. We also had a very detailed court case reporting subscription service, as a resource tool.
During this period, defense litigation costs were spiralling within the industry, and were very visible on 'the spreadsheet', and the 'thumping mandates' were coming dictating the reduction of legal expenses.
So, as a great department project - a claims reference library, beyond ther basics, was born and nurtured. From the defense dollar spreadsheet, all those files were pulled, and a copy of their legal opinion and / or defense plan or settlement details were extracted - catalogued and cross-referenced. Add to that the deluxe version of the court reporting subscription service, add to that a full compliment of all the insurance course texts, add to that 4 or 5 specific legal / medical texts; and finally add to that an enthusiasm by the claims department people to use and enrich this resource and in turn themselves - and the result is less reliance on defense counsel.
Therefore, I have no qualms in suggesting that the issue you presented, could be clearly handled by the resources of an adequately equipped claims department.
Finally, your last question - if the 'inaction' existed for a number of winters with no previous problems - was the current result foreseeable? In response, I refer you back to point (#1) of the additional information I would want for the file, and as I said then; that is critical information, in view of my comments regarding the 'fortuity doctrine'.
I hope this gives you a better understanding on the 'how and why' of my appraoch to matters like this. |
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Horace
2 Posts |
Posted - 02/18/2003 : 16:15:58
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If the dwelling is occupied, not vacant and not under construction, the freezing exclusion does not exist. An individual may live in a closet,
say in a Minnesota dwelling, with no more than a candle or a can of sterno or perhaps less. There is coverage if he is living there.
Should the house be vacant, non occupied or under construction, one (the insured) must maintain heat or drain the suystem to defeat the exclusion and to have coverage.
THE MORAL: No matter how bad things get, pay your insurance premium |
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CCarr
Canada
1200 Posts |
Posted - 02/18/2003 : 16:37:59
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No Horace, don't think so; the 'peril' must arise as a consequence of an 'accident' as discussed above.
If an adjuster is just looking for evidence of a covered peril, then no regard has been given to the 'definitions' of the policy. |
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Catmandale
USA
67 Posts |
Posted - 02/19/2003 : 02:03:22
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With respect to Clayton, I must disagree. I believe that Horace is right, as this policy provides coverage for perils not otherwise excluded.
SECTION I – PERILS INSURED AGAINST COVERAGE A – DWELLING and COVERAGE B – OTHER STRUCTURES
We insure against risk of direct loss to property described in Coverages A and B only if that loss is a physical loss to property. We do not insure, however, for loss:
1. Involving collapse, other than as provided in Additional Coverage 8.;
2. Caused by:
a. Freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing. This exclusion applies only while the dwelling is vacant, unoccupied or being constructed, unless you have used reasonable care to:
(1) Maintain heat in the building; or
(2) Shut off the water supply and drain the
system and appliances of water;
Again with respect, I think Clayton overworked the issue. The insured had coverage, no exclusion applies, (except perhaps "neglect"?) It may be the guy had no money to heat the house, or was just dumb as a post...but it doesn't matter, unless it can be proven that he intentionally caused this loss. I would say that would be difficult to prove, even if true.
It is my opinion that the freeze damage to the pipes is covered, the ensuing water loss is covered, for Dwelling and Contents and Loss of Use.
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"When we thought that we had all the answers,
suddenly all the questions changed."
Mario Benedetti (1920); Uruguayan writer.
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CCarr
Canada
1200 Posts |
Posted - 02/19/2003 : 07:10:55
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Dale, Horace, I don't dispute the presence and applicability of the freezing peril; and both of you gentlemen have interpreted that correctly.
However, it is my thought that there is more to this loss scenario, and it was as expressed in my 2/5 @ 15.13 post.
I think our only opposing viewpoint, is whether the scenario put before us is an "accident".
Anyone who feels that what is presented, represents an "accident", then the freezing peril is the correct and next logical conclusion.
However, if in examining this situation, you have any concern of whether this is first an "accident"; then that issue must be explored and determined before you consider the applicability of any peril insured against.
When 'inside' presented this scenario, to me it was an excellent situation that required the examination of the 'fortuity doctrine'; and that was why I focused my post on that issue, and hoped that the cases I presented for review would illustrate the point. |
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Catmandale
USA
67 Posts |
Posted - 02/19/2003 : 09:10:20
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Clayton,
I agree with you in principle as regarding the furtuity aspect... does the claim meet the basic insuring agreement and definitions? A valid part of the investigation.
The reasonable man standard is, or has become broad. It is difficult to measure intent.
Here in sunny Southern California, we have a few mountain communities where people have bought weekend homes, only to discover too late that pipes can indeed freeze. It is made worse by the fact that they are not fulltime residents. Occupancy issues can be complicated, dependent on policy forms.
Of course, the lifetime Minnesota resident insured whose three other family members all got their houses replumbed and remodeled by insurance dollars tells a lot about intent.
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"When we thought that we had all the answers,
suddenly all the questions changed."
Mario Benedetti (1920); Uruguayan writer.
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Catmandale
USA
67 Posts |
Posted - 02/19/2003 : 15:46:03
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One last comment and I'm through -
It is my opinion that you must be able to defend your position with just the policy and possibly Websters Dictionary.
I think that this mans' loss was an accident, and that no exclusion bars him from the recovery he is due under the policy.
What about grease fires? Is it unforeseeable that a fire would occur if you leave a frying pan unattended to answer Aunt Betty on the phone?
Burst washer hoses - that ten year old hose is going to go any day now...not covered?
My plumbing is thirty years old - is my failure to open up the wall and replace it a grievous omission?
It just seems to me that while we should keep our eyes and ears open, this is a slippery slope we are looking at.
I'm done.
ps -
Clayton, my wife agrees with you. She says I've worked the Northridge EQ so long I forgot how to say no. |
"When we thought that we had all the answers,
suddenly all the questions changed."
Mario Benedetti (1920); Uruguayan writer.
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Edited by - Catmandale on 02/19/2003 20:59:34 |
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trader
USA
236 Posts |
Posted - 01/15/2004 : 21:08:05
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| Good topic Roy, I would have to see some weird stuff, to not proceed with a broken pipe inside a dwelling with a person living in the house. Vacant is no contents or people. |
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RJ
32 Posts |
Posted - 01/16/2004 : 11:01:59
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This is a simple problem.
First: Make sure this is not a vacant property. In some polices vacancy is not an issue.
Second: Obtain Utility bills. The utility bills will show if the heat was on. Remember the policy states that heat must be maintained. It does not say at what temperature, so, as long as the heat was maintained above freezing you will have a payable claim (don't forget about the vacancy issue).
As long as the utility bills show usage then that is acceptable proof that the heat was on. Make sure you include a copy of the utility bills in your claim file to the carrier as supporting evidence.
Everything satisfied and documented adjust the claim and forget about all of the other nonsense.
RJ |
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Frozen Pipes
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