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May 21, 2015

Q&A of the Week

Frozen Pipe and Amount of Heat

A Pennsylvania subscriber recently asked the following question:

On a commercial property policy, there is no coverage for water damage caused by a frozen pipe bursting unless heat is maintained in a building. What is the proper level of heat that must be maintained?

ANSWER: We have not seen a specific temperature given for the proper level of heat. The CP 10 30, Causes of Loss—Special Form, states only that the insured must do his best to maintain heat in the building. The form does not provide a temperature, but it can be assumed that this would require having a power source and a properly working furnace or other heat-providing apparatus in the building. Read More

What's New This Week in FC&S

Definition of Inland Marine Insurance
The Nationwide Inland Marine Definition, a document published by the National Association of Insurance Commissioners (NAIC) and subscribed to in many states, dates back to June 1953. It replaced the older Nationwide Definition and Interpretation of the Insuring Powers of Marine and Transportation Underwriters, adopted in June 1933. Read More

Litigation Watch

Insured Property and Coverage under the SFIP

The insureds brought an action against the insurer seeking payment under the Standard Flood Insurance Policy (SFIP) for the cost of removing sand and other debris deposited during a hurricane on their land in front of and behind their house. This case is Torre v. Liberty Mutual Fire Ins. Co., 781 F.3d 651 (2015).

The Torres own land and a house in New Jersey and also hold a flood dwelling policy issued by Liberty Mutual. The property sustained substantial damage during Hurricane Sandy and the Torres submitted the claim to Liberty Mutual. The insurer paid $235,751.68 to the Torres. The Torres then sought an additional payment of $15,520 for the cost of removing sand and other debris deposited on their land in front of and behind their house. Liberty Mutual denied this claim on the ground that SFIP does not cover it.

The Torres filed a lawsuit against Liberty Mutual. The U.S. District Court ruled in favor of the insurer and this appeal followed.

The United States Court of Appeals, Third Circuit, noted that the sole issue on appeal is whether the SFIP covers expenses for removing debris not owned by the Torres from their land outside their house. The debris removal provision in the policy stated that the insurer will pay the expense to remove nonowned debris that is on or in insured property and debris of insured property anywhere. So, the court said, the appeal turns on the meaning of the term "insured property". The insureds argued that insured property means not only the specific structures and items of property that are insured by the SFIP, but also their entire parcel of land. The insurer countered that insured property means only the property insured under the SFIP, and the SFIP does not cover land. Read More

FC&S Ask the Experts

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The Zalma Insurance Claims Library

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Construction Defects Coverage Guide
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FC&S Team
Kelly Maheu, J.D. Publisher		Diane W. Richardson, CPCU Consulting Editor
Christine G. Barlow, CPCU Managing Editor, FC&S		Diana B. Reitz, CPCU, AAI Consulting Editor
David D. Thamann, J.D., CPCU, ARM Managing Editor, FC&S Bulletins		Emily Brunner Online Print/Production Editor
Susan L. Massmann, CPCU Managing Editor, Electronic Publications		Tosha Brinkman Marketing Manager
Donald S. Malecki, CPCU Contributing Editor		Donna Cozatchy Creative Director
Barry Zalma, Esq., CFE Contributing Editor

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