North Carolina Supreme Court Holds the Term ‘ACV’ Unambiguously Includes Depreciation of Labor Costs

Key Takeaways:

  • The term ACV is not susceptible to more than one reasonable interpretation and unambiguously includes depreciation of both material and labor costs
  • Split decisions in other jurisdictions on whether ACV includes depreciation of both labor and materials does not result in the term being ambiguous under North Carolina law

The Supreme Court of North Carolina held that the term Actual Cash Value (ACV) in a homeowners policy is unambiguous and is calculated by depreciating both labor and material costs. The decision in Thomas

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Fourth Circuit Holds that Insured Must Strictly Comply with Notice Conditions

The U.S. Court of Appeals for the Fourth Circuit, applying South Carolina law, recently held that an insurer had no duty to indemnify its insured for a default judgment on late notice grounds because the court found that the insured’s forwarding to the insurer’s agent of a notice of representation letter by the claimant did not constitute notice to the insurer of a lawsuit later filed by the claimant. Founders Ins. Co. v. Richard Ruth’s Bar & Grill LLC, No. 17-1282, 2019 WL 852137 …

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Insured Can’t Claim Damages in Proof of Loss Were “Puffed” Up to Avoid Federal Jurisdiction: Federal Court Deems Damages Demand in Sworn Proof of Loss Submitted to Insurer More Credible than Complaint’s Unsworn Estimate

On October 10, 2018, a Florida federal court ruled that an insured’s precise damages estimate, set out in an exhibit to his complaint against his insurer, of $73,963.19, was less credible than his pre-suit demand in his proof of loss form of $100,709.34.

The insured, Roger Ulloa, sued his insurer, Integon National Insurance Company, alleging it failed to fully pay his property damage claim in the wake of Hurricane Irma. Integon removed the case to federal court on the basis that Ulloa’s pre-suit estimate …

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The ALI’s Recently Adopted “Restatement of the Law of Liability Insurance” Receives Mixed Reviews from Courts and Legislatures

The much-anticipated Restatement of the Law of Liability Insurance (RLLI) was recently approved by the American Law Institute (ALI) during its Annual Meeting in May 2018. Since its adoption, the RLLI has been met with mixed reviews from courts as well as at least one state legislatures.

As discussed in previous blogposts, the RLLI is the ALI’s first publication in the field of insurance law and touches upon nearly every legal issue frequently faced by insurance professionals. Prior to its adoption, the RLLI had been …

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Compliance Deadline Approaching for NY Cybersecurity Regulation

A key compliance date for the NY Cybersecurity Regulation is quickly approaching. September 4, 2018 will serve as the third key implementation date for individuals and companies (Covered Entities) governed by New York’s Cybersecurity Requirements for Financial Services Companies (23 NYCRR Part 500). Unless the Covered Entity qualifies for one of the exemptions under 23 NYCRR 500.19, by September 4, all Covered Entities must have completed the following*:

  • create and maintain systems that can reconstruct material financial transactions to support and maintain the obligations of
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Sixth Circuit Uses Every Tool in the Box To Build Case for Coverage for Defrauded Policyholder

July 12, 2018, we reported on the Medidata decision handed down by the Second Circuit in which the court found coverage for a claim resulting from social engineering fraud. We suggested the ruling in Medidata lacks persuasive power due to its unusual factual circumstances and atypical policy language. The Sixth Circuit’s decision in American Tooling Center, Inc. v. Travelers Casualty & Surety Co. of America, No. 17-2014, 2018 WL 3404708 (6th Cir. July 13, 2018), will have more persuasive power, but due to …

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Second Circuit’s Decision Upholding Social Engineering Fraud Coverage Likely a Paper Tiger

In a case closely monitored by the insurance industry, the Second Circuit upheld in a non-precedential summary order a New York federal district court’s summary judgment finding coverage under the computer fraud coverage of a commercial crime policy. Medidata Solutions, Inc. v. Fed. Ins. Co., No. 17-2492, 2018 WL 3339245 (2d Cir. 2018). Although the policyholders are apt to tout the decision as a seismic victory, the atypical policy language and factual circumstances should greatly limit its persuasive value.

As background, the insured, Medidata …

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The ALI Votes to Approve the “Restatement of the Law of Liability Insurance”

After nearly a decade of debate and controversy, the American Law Institute (ALI) voted to approve the much anticipated Restatement of the Law of Liability Insurance (RLLI) at its annual meeting on Tuesday, May 22, 2018.  The project that ultimately resulted in the RLLI was launched in 2010, under the direction of Reporter Tom Baker of the University of Pennsylvania School of Law and Associate Reporter Kyle D. Logue of Michigan Law School, and produced nearly 30 drafts through the lifecycle of the project, before …

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Exceptionally Navigating Abstention: Northern District of Illinois Applies the Colorado River Doctrine to Stay Arbitration

An insurer and a policyholder entered into an agreement, or didn’t they? Either way, the Northern District of Illinois doesn’t have to decide because “exceptional circumstances” triggered the Colorado River abstention doctrine, allowing the court to stay the case asking it to determine whether the agreement existed.

A policyholder and one of its insurers began having disputes about who had to provide coverage for certain claims. As a result of those disputes, the policyholder and the insurer allegedly entered into an agreement in 2007, where …

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Pennsylvania Federal Court Sets Standards for Burden of Proof in Rescission Matter

The ongoing coverage litigation between H.J. Heinz Company and Starr Surplus Lines Insurance Company in the U.S. District Court for the Western District of Pennsylvania has yielded another important decision that is instructive in rescission matters.  As a follow up to our previous report on October 22, 2015 on the court’s order that Starr must produce information from its underwriting files involving other policyholders, the court has now set guidelines for the burden of proof and jury instructions in the $25 million coverage dispute set …

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