January 26, 2022

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Condo Collapse and COVID Court Rulings Among the Top Stories for 2021

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The collapse of a Miami-area condominium tower and efforts to achieve a fair resolution for the victims was the Claims Journal’s top story in 2021.

Readers were also keenly interested in court rulings involving litigation by policyholders seeking coverage for income lost because of the COVID-19 pandemic, an insurer flub that led to a large award, claims involving expensive toys and a rash of smash-and-grab thefts from automatic teller machines.

The stories listed below were written by Claims Journal staff, selected according to reader interest, either for a single story or a series of articles about the same topic. The top stories for 2021 were:

  1. Condo collapse: A large portion of Champlain Towers South, a 12-story oceanfront condominium building in Surfside, Fla., suddenly collapsed on June 24. The disaster killed 98 residents, while four survivors were pulled out of the rubble. Within days, the city disclosed that an engineer who inspected the structure in 2018 had reported major water damage that was estimated to cost $9 million to repair. A Miami-Dade County judge began grappling with how to fairly compensate victims with the $48 million in insurance coverage available.
  2. COVID claim rulings: In 2021, more courts made rulings on the hundreds of lawsuits filed by business owners against their insurers to recoup losses for periods when they were forced to shut down to avoid the spread of the coronavirus. Most trial courts that issued early rulings found in favor of insurers that denied business interruption claims, but a few outlier decisions widespread attention. As of last week, eight of the 12 federal Circuit Courts of Appeal have issued decisions finding that SARS-CoV-2 does not cause physical loss or damage to insured properties.
  3. Unforced error costs GEICO: GEICO Indemnity Co.’s refusal to pay $30,000 to settle a bodily injury claim led to an April 19 ruling by the Georgia Supreme Court https://www.claimsjournal.com/news/southeast/2021/04/21/303270.htm that cost the carrier $2,763,742. The 11th Circuit Court of Appeal asked a series of certified questions that resulted in the high court finding that GEICO was liable under the state’s bad faith statute for the full amount of damages suffered by a bicyclist who was struck by an insured motorist. GEICO had rejected a demand by the plaintiff’s attorney for the full $30,000 policy limit.
  4. Expensive toys: A federal appellate court ruled that GEICO was solely liable for the cost of replacing a $100,000 Lamborghini sports car, but no coverage was owed for a luxury yacht damaged by fire damage. A panel of the 1st Circuit Court of Appeals ruled on Jan. 13 that GEICO could not force another carrier that insured the driver who crashed into the Lamborghini to chip in because it had correctly rescinded the policy after the owners failed to report that they had relocated the car to another state. Another 1st Circuit panel ruled on Jan. 19 that the owner of a 48-foot yacht that caught fire while anchored off the Florida coast had no coverage for the damage because he had failed to disclose a prior accident on his insurance application.
  5. Smashing ATMs: Early in the year, insurers rang alarm bells about an increasing number of “smash-and-grab” thefts from automatic teller machines, where criminals steal heavy equipment to rip the machines from their encasements. The Texas Bankers Association reported that Houston has become a hotbed for such crimes.
  6. Racism and biting dogs: Activists persuaded state legislatures in Nevada and New York to pass laws that force insurers to rescind policies that exclude or charge higher premiums to homeowners who own specific dog breeds, such as pit bulls, that are thought to pose a greater risk of biting. Animal Farm Foundation, a New York-based nonprofit organization, says that assumptions about dog bite risks are often based on racial stereotypes. Insurers opposed the new laws.
  7. Expensive to repair: The growing sophistication of modern automobiles and pressure by insurers to repair them as cheaply as possible is causing friction between carriers and auto repair shops. Experts reported that advanced driver assistance systems are increasing the complexity of repairs, but insurance claims departments are not keeping up with the time and cost demanded by the new technology.
  8. Not so independent contractors: The 9th Circuit Court of Appeals ruled April 29 that California may enforce a new labor law that imposes new employment practices and workers’ compensation liabilities on trucking companies and their insurance carriers. The appellate court panel reversed a ruling by a federal judge in San Diego that temporarily barred the state from enforcing the provisions of Assembly Bill 5.
  9. Funding other people’s lawsuits: The litigation funding industry is grow rapidly, prompting attorneys who defend insurance companies to push for more disclosure to guard against conflicts of interest or violations of attorney-client privilege. Insurers worry that third-party investments in lawsuits will increase the number of frivolous lawsuits and encourage plaintiffs to go to trial rather than settling their cases.
  10. Angry juries: The Tyson & Mendes law firm profiled a Washington state personal injury case that led to a $91 million jury award against a chain of gasoline station/convenience stores that was accused of failing to protect a customer from being assaulted in a high crime area. Attorneys for the firm said the number of “nuclear verdicts” is growing because plaintiff’s attorneys have learned how to play on jurors’ emotions, especially anger.About the photo: This aerial photo shows part of the 12-story oceanfront Champlain Towers South Condo that collapsed early Thursday, June 24, 2021 in Surfside, Fla. (Amy Beth Bennett /South Florida Sun-Sentinel via AP)

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