Author: Brandon McWherter

There is a dangerous new issue in the insurance world regarding arbitration clauses. Though most insurance policies usually do not have forced arbitration clauses, recent news from Texas makes it apparent that at least some carriers are trying to go that route. As Tennessee is one of the many states with no statutes in place “prohibiting or restricting the use of arbitration in insurance contracts,” it is possible that your insurer may try to put one in place eventually.

When you purchase your policy, you agree to pay a certain premium for insurance coverage. This guarantees (at least hypothetically) that your insurer will provide coverage in the event of a claim. So if you submit a claim under your homeowners’ policy after a storm damages your home, and your insurance carrier refuses to pay, or tries to pay you less than what the damage is worth, then you could come see one of our attorneys, and we would either negotiate a better settlement, or take the insurer to court. It depends on the exact circumstances of your case. Either way, you are well within your legal rights to choose either of these options.

But those premiums can be difficult to pay – especially when you have a mortgage payment on top of it – for some homeowners. The insurance company then offers you another option: lower premiums in exchange for agreeing to arbitration in lieu of a right to a jury trial should a dispute arise. With a mandatory arbitration clause, however, you are denied your right to pursue justice in court. While arbitration can sometimes be used to reach a successful resolution, it also subjects the parties to a final decision that cannot be appealed under most circumstances.

The effect on homeowners

Remember how we said that homeowners’ policies usually don’t contain these clauses? Texas Farm Bureau is trying to change that. In this letter to the Texas Commissioner of Insurance, David Mattax, The Office of Public Insurance Counsel asks the Commissioner to not approve the company’s Endorsement No. HO-802, “’Mandatory Mediation-Arbitration Endorsement’… for use in the Texas insurance marketplace.” Farm Bureau is trying to push through policies with mandatory arbitration clauses – even homeowners’ policies. Given Tennessee’s lack of regulation in the realm of arbitration clauses, homeowners here could see a similar push for arbitration by insurance companies as well. And as the insurance company is likely to be in charge of picking an arbiter, the chances are good that homeowners won’t get a fair shake if a dispute arises.

So far, this hasn’t been an issue in Tennessee, but the winds of change are blowing. Now is probably the right time to double check your insurance policies, to make sure that you understand everything they say. If you notice any discrepancies or changes to your policy that you never agreed to, speaking with a skilled Tennessee insurance attorney is a smart move.

The Gilbert Firm proudly represents policyholders throughout Tennessee. If you believe your insurance company is acting in bad faith, or that you have been sold a different policy than the one you agreed to buy, we may be able to help. Please contact Brandon McWherter, Clint Scott, or one of our offices in Nashville, Chattanooga, Memphis, Jackson or Knoxville to learn more about our services.

The worst has happened; there’s been a fire in your home, or a windstorm damaged the roof and walls, or some other horrific thing has occurred and rendered your house unlivable. So you put your claim in to the insurance company, who turns around and asks for a tremendous amount of paperwork – paperwork that you are sure they already have on file in their offices somewhere. Your copies, however, are hard to find and covered in debris. Do you really need to keep filling out these forms and submitting that documentation? Do you really need to let your claims adjuster keep coming back to the house, over and over again, to take pictures or inspect the property?

The short answer is yes, you do. In your homeowners’ policy, you have something called a “cooperation clause,” written in rather general language, which states that policyholders must cooperate with insurers in the event that the policyholder makes a claim. The American Bar Association uses this example of a basic cooperation clause:

“The [Insurer] and the Insured persons agree to provide the Underwriter with all information, assistance and cooperation which the [Insurer] reasonably requests and agree that in the event of a Claim the Company and the Insured Persons will do nothing that shall prejudice the [Insurer’s] position or its potential or actual rights of recovery” (emphasis ours).”

The words “reasonably requests” are important, as the ABA recognizes “Over the years, courts that have interpreted the cooperation clause have developed differing standards.” What is reasonable to one judge may not be so to another.

What this means for policyholders

The clause is purposely broad, because the insurance company wants to make sure they protect themselves in the event of a dispute. Still, there are limits to what your claims adjuster (or other agents or employees) can request. For example, it is probably not reasonable to meet them at your property at 2:00am for an inspection. It is reasonable, however, to ask you to submit to an Examination Under Oath.

In sum, your claims adjuster may ask you to submit any relevant documentation or information that is material to your loss. Attempts to block a claim based on your refusal to “cooperate,” even if said cooperation is clearly beyond reason, could be an act of bad faith on behalf of your insurer. Every claim is different, as are the circumstances surrounding that claim, so there’s no definitive answer that says, “Yes, this is reasonable” or “No, you’re acting in bad faith.” That is why working with an experienced Tennessee bad faith attorney can help you through the process.

Insurance companies should not shouldn’t be allowed to deny claims while citing the cooperation clause, when their requests have been unreasonable. The Gilbert Firm helps protect policyholders facing disputes on their claims. To make an appointment with a skilled Tennessee bad faith attorney, please contact Brandon McWherter, Clint Scott, or one of our offices in Nashville, Chattanooga, Memphis, Jackson or Knoxville by calling 888.996.9731 or filling out our contact form.

This is one of those examples that make insurance dispute lawyers angry. Let us say that a rogue thunderstorm sweeps through town, causing the trees to shake loose of branches, limbs and acorns. After the storm, you realize that your roof is stippled like a golf ball. It is still functional, and there is no damage to any other part of your property and the roof doesn’t leak – it’s just, well, ugly. You file a claim with your insurance company for the damage to your roof, only to hear them reply that cosmetic damage is not “functional” damage, and therefore your claim will not be covered.

Turns out, this is not necessarily true. Whether the damage was cosmetic, functional or some combination of the two, it still constitutes direct physical loss – and more than likely, direct physical loss is what is covered under your policy.

Bad Faith vs. Bad Policy

This does not mean you can immediately start making claims for cosmetic damage. If your policy is an “all-risk” policy covering all risks of direct physical loss, and it does not specifically exclude damage that is cosmetic only, then you most likely have a strong claim for reimbursement for the damage. In fact, some courts have held that refusing to pay for hail dents just because the roof is still functional can constitute bad faith. Unfortunately, in response to this, some insurance companies have begun adding exclusions to their policies that specifically exclude direct physical loss that is cosmetic only in nature. I haven’t seen many (if any) of these policies in Tennessee yet, but I have seen a few from other states. This is yet another reason to carefully review your insurance policy before you have a loss. It goes without saying that most people assume that if hail falls and beats up their metal roof, causing dents visible from the ground, that those dents would be covered by their insurance policy. But if your policy has that exclusion, then you might be in for a surprise.

As a final word about the “cosmetic v. functional” distinction, it is important to note that dents in a metal roof can still constitute “functional” damage (for those policies that have such a requirement). For example, if the hail caused the paint or finish on the metal roof to crack or peel, then that exposes the bare metal, thereby causing rust and oxidation and ultimately shortening the life span of the roof. This is “functional” damage and therefore would be a compensable claim even under insurance policies that exclude damage that is cosmetic only.

Tennessee Trial Court Opinion on Cosmetic Damage

There are handful of opinions around the country holding that there is no distinction between cosmetic and functional damage in policies covering all risks of direct physical loss. I’m not aware of any that hold in favor of the insurance company that “cosmetic only” damage is not covered. Last summer, I was involved in a Nashville claim involving a metal roof on a hotel that was dented during a hailstorm, and we were finally able to get a decision on this important issue by a Tennessee judge. In that case, Chancellor Russell Perkins held:

Based on the undisputed facts, the Court is asked by [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][the insured] to rule, as a matter of law, that the hail dents to the metal mansard roof of the Insured Premises constitute direct physical loss or damage under the subject insurance policy. . . . The Court concludes as a matter of law that if there are hail dents to the metal mansard roofs, no matter where they are visible from the ground or visible with or without the aid of chalk, then such dents constitute direct physical loss or damage under the insurance policy and therefore constitute a covered claim under the policy.

Chancellor Perkins got it right, but his opinion is not binding precedent. As a result, this fight will continue until the issue is decided by the Court of Appeals.

Bringing a bad faith claim is anything but plain and simple. That is why you want the help of an experienced Tennessee insurance dispute attorney to assist with your claim. The Gilbert Firm has successfully represented clients in Nashville, Chattanooga, Memphis and Jackson, and in other states around the Southeast, in breach of contract and bad faith actions against insurers. To make an appointment, please contact Brandon McWherter or Clint Scott, or contact our office to learn more.

#insurancedisputeattorney #insuranceclaim #badfaith #cosmeticdamage[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

When we buy homeowners insurance, we mostly think about what we want it to cover: a fire, wind or hail damage, earthquake – those types of things. What most people don’t think about (and what they really should) is what their policies don’t cover. These are called exclusions, and they can vary from policy to policy. Knowing what your policy excludes is absolutely critical.

All-risk policies vs. named perils policies

Property insurance policies are generally one of two types: an all-risk policy or a named peril policy. All-risk policies cover everything except losses that are specifically excluded or limited by the policy. On the other hand, named peril policies cover nothing except for specifically listed perils, such as fire, theft, etc. Of course, all-risk policies are preferable, but many property owners don’t discover the difference until it’s too late.

The average all-risk policy will begin with language that indicates that coverage is provided for all risks of direct physical loss except for certain perils that are not covered. So, for example, if your dog destroys your couch and there is no exclusion for damage caused by pets, then the damage to the couch should be covered. In contrast, if you have a named perils, the damage to the couch will not be covered unless it specifically says that damage caused by pets will be covered by the policy (which is unlikely).

Exclusions to think about

Because the types of exclusions your policy has will vary from insurer to insurer (and policy to policy), it is impossible to list out here all of the various exclusions that may apply. However, there are some common exclusions that are present in most insurance policies, and we’ll cover some of these in a series of posts to better help you make better choices as a policyholder. We plan on covering in some degree:

• Wear and tear/ deterioration
• Improper workmanship/materials/design (that often has an exception for resulting or ensuing damage)
• Intentional acts
• Earth movement (earthquake/sinkhole, etc.)
• Flood (surface water)
• Mold
• Pollution
• Slow leaks (many policies exclude water losses occurring over a period of “weeks, months or years” – must be sudden event such as a pipe busting as opposed to a slow drop)

These are all commonly excluded perils, but that doesn’t mean they are the only ones. The insurance world is full of tricks, traps, and loopholes, and it is often important to work with a skilled Tennessee insurance dispute attorney to best present your insurance claim. If you think your insurer is acting in bad faith, or trying to avoid making payment on your claim, you definitely want to see a lawyer before you take another step.

At the Gilbert Firm, we know insurance. We’ve helped policyholders throughout Tennessee and other parts of the Southeast obtain the compensation they need to rebuild after their home has been damaged. To make an appointment with an experienced Tennessee insurance dispute attorney like Brandon McWherter or Clint Scott, we invite you to contact us. With offices in Nashville, Chattanooga, Memphis and Jackson, our team is where you need us, when you need us. Discover what we can do for you.

When you make a claim to your insurance company, you may be asked to submit to an Examination Under Oath (EUO). Insurers often use the EUO process as a way to vet claims before they make a payment. EUOs are becoming more and more common, and often indicate there is a red flag of some sort associated with the claim. The “red flag” possibilities are endless. Perhaps the insurance carrier suspects there was a misrepresentation on the application, there may be questions about the amount of the claim, or the cause of the loss could be suspect. In our experience, the motive behind an EUO request is sometimes pure and other times not. But one thing is for sure and that is the policyholder’s obligation to appear and participate in the EUO. As attorneys who represent Tennessee policyholders, we have represented our fair share of clients during these proceedings, and so we offer you some basic information about what might happen, and what steps you will need to take.

The process generally works like this: you submit a claim for a loss to your insurance company. Your insurer has a question about your claim – or has begun an investigation into your claim – and asks you to submit to the EUO. You are then asked to meet with the insurer’s attorney(s) and to bring in additional supporting documentation. Because you are under oath, you will be sworn in just as you would during a court session; there is usually a court stenographer on hand, too. During the Examination, your insurer’s attorney(s) will ask you highly detailed, specific questions about your loss and the claim you submitted. The process can last for hours, and depending on the nature of the claim, sometimes for a full day or more. After the EUO, the questions and answers will be typed and bound in the form of a transcript, which you will have the opportunity to review and correct any errors before signing and returning to the insurance company.

Additional information you need to know

If your insurer requests that you submit to an EUO, you cannot say no or disregard that request. Most insurance policies have language included in them regarding your cooperation with their investigations (or with the process of the claim in general), and failing to show up or refusing the request can be grounds for them to deny your claim outright.

This is why working with an experienced attorney is so important. We help our clients by reviewing their claims and preparing them for the types of questions they may be asked during the EUO. We also help you by documenting the evidence you have of your loss, and organizing that documentation so it is accessible and complete. Should your insurance company attempt to deny your claim despite evidence that the claim is valid, we can help you determine the appropriate steps to take next.

The Examination Under Oath can be a nerve-wracking part of the claims process; you don’t have to go it alone. The Gilbert Firm represents Tennessee policyholders in insurance disputes to ensure that valid claims are fully and promptly paid. To make an appointment with an experienced Tennessee insurance disputes attorneys, such as Brandon McWherter or Clint Scott, please contact the firm. We maintain offices in Nashville, Chattanooga, Memphis and Jackson for your convenience.

When you work in a brick-and-mortar shop – a retail outlet, a trading company, a restaurant – and catastrophe hits, you can put a claim in for business interruption. (In case you’re new to the insurance claim game, “business interruption” claims are claims for the money you lost while your business could not proceed, more or less.) If there is a fire or a flood in your building, for example, and you lose some of your goods, your supplies or even your building because of the damage, you can make a claim for compensation for your lost revenue and products as a result of the stoppage of your normal business operation.

But what happens when your business exists solely online? Cyber companies face a different set of legal challenges for business interruptions claims because most general liability policies require some proof that you lost property. In cases where your loss was the result of a data breach or hack, there is no physical property loss: there is only lost data, despite how that data affects your business.

Your next steps

There are some courts which may interpret your policy outside of what constitutes “physical loss:” after all, Amazon.com posted a loss of around $66,000 per minute when its site went down in 2013, and no one questioned whether or not a downed site would harm their business. One smart option that any business – on-line or on the street – should take is to purchase additional cyber insurance, which protects you in cases of a breach or a hack (and which Amazon.com certainly had). This type of insurance could cover business interruption caused by:

• System failures, whether they are a result of human error or an outage
• Third-party failures, such as when the company which hosts your website goes offline
• Security failures
• Security breaches, specifically Distributed Denial of Service or “DDoS” attacks

The policy may also cover the same losses you could expect under a more general policy: the cost of wages paid out while no income was coming in, the cost of your operating expenses (such as any supplies or goods your purchase, or the cost of the rent of your building), and the cost of outside, applicable insurance policies (workers’ compensation, for example). All of these expenses must continue to be paid even if your company is not currently bringing in any revenue. You may also incur additional expenses determining how to best get your business back up and running, or through marketing efforts to ensure your client base that they are safe, and to explain what happened.

The insurance dispute lawyers of the Gilbert Firm represent policyholders throughout the state of Tennessee. To reserve a consultation time with Brandon McWherter, Clint Scott or Jonathan Bobbitt, please contact us. We maintain offices in Nashville, Chattanooga, Memphis and Jackson to better serve our clients throughout the state.

Few words strike fear into the heart of a policyholder like “Your claim is under investigation.” It’s understandable: you pay your premiums every month in case something happens, so it can be hard to reconcile your “good” behavior with a potential hold-up in the process.

Here’s what you need to remember: your insurance company covers thousands of policyholders, and receives numerous claims each year. Sometimes there is some confusion on their side; other times, you may have failed to provide all of the necessary information. Under some circumstances, however, your insurer could be acting in bad faith and trying to find a way to deny the claim completely. Working with an insurance dispute attorney means you’ll find out which one applies – and you’ll be protected if your insurer is trying to “pull a fast one,” as they say.

The investigation of the claim

We have used this example before, but let’s say you submit a claim to your homeowners’ insurance after a house fire. Your insurer is going to ask for a tremendous amount of information: tax returns, your deed to your home, any contracts you may have had pending, etc. If your insurer believes that you are not being truthful in some way, you will likely be asked to submit to an Examination Under Oath as well.

Once they have all of this information, the company may dig deep to find any discrepancy or hint of impropriety. If they suspect any wrongdoing – intentional or accidental – on your behalf, they may try denying your claim. How they define “wrongdoing” depends on your exact circumstances. For example, let us say that you were in an auto accident 20 years ago and put a claim into your homeowners’ insurance company for a fire loss. If you forgot about that claim when completing your application for homeowners’ insurance, or didn’t mention it when asked about prior claims during a recorded interview after the fire (and it’s understandable if that happens, because most people don’t think a decades’ old auto insurance claim is related to a house fire in any way), your insurance company may try to deny your new claim because you “lied.”

Your adjuster will also look at the damages to your home to determine whether to pay for your losses. This is why documentation is so important. Any missing information or any perceived “gaps” in the documentation may lead your adjuster to believe you are trying to collect more than you are entitled. If they believe you have not cooperated with their investigation (your policy has a cooperation clause, believe me), or if you have multiple claims put in to multiple insurers, you may find yourself under investigation as well.

If you put a claim into your insurance company and find yourself under investigation, you may want to call an experienced Tennessee insurance dispute attorney to help you. At the Gilbert Firm, we protect our clients whose claims have hit a snag, or are in danger of being denied or reasons of bad faith. To reserve a consultation with Brandon McWherter, Clint Scott, Jonathan Bobbitt or any of our insurance dispute lawyers, please contact us. We maintain offices in Nashville, Chattanooga, Memphis and Jackson to better serve our clients throughout Tennessee and the surrounding regions.