Articles Posted in Commercial Policies

Springtown insurance lawyers need to read this Corpus Christi Court of Appeals opinion dealing with late payment on an insurance policy.  The case is styled, Schrader v. Texas Farm Bureau Underwriters.

The trial court granted summary judgement in favor of Farm Bureau.

Schrader alleged in his lawsuit against Farm Bureau that two farming tractors and related equipment valued at $60,000, were stolen from him sometime between December 5 and 13, 2013.  Farm Bureau had denied the claim based on its assertion that the policy was not in force for the date of loss.  Schrader asserts the policy was “undeniably in force until midnight on December 6 and should have bee reinstated retroactively to November 30, 2013, as premiums were forwarded via the agent.

The United States District Court, N.D. Texas, Dallas Division, Judge Boyle, issued an Order remanding a case in March of 2018.  The case is styled, Allied Stone, Inc. v. Acadia Insurance Company, Union Standard Insurance Group, LLC, and James Amato.

Acadia insured property owned by Allied.  In 2016, Allied claims it suffered hail and wind damage and made a claim to Acadia.  Acadia hired Union to adjust the claim.  Acadia sent out it’s employee Amato.

Most insurance lawyers don’t see this type of coverage, but for those who do, here is a little information.

Ocean marine insurance insures overseas shipments by vessel or aircraft.  Ocean marine coverage can also be provided on a vessel to insure against any loss or destruction to the boat, barge, or other vessel.  This is explained some in the 1965, Southern District of Texas opinion styled, Gulf Coast Trawlers, Inc. v. Resolute Insurance Co.

Coverage on the vessel usually insures against “perils of the sea” or any “marine peril.”  The sinking of a vessel that occurred due to an open valve in calm waters while the vessel was docked was not a “peril of the sea” according to the 1972, Southern District of Texas opinion styled, Commercial Union Insurance of New York v. Daniels.  One court explained the phrase “perils of the sea” within marine policy includes “all kinds of marine casualties” involving the sea and are distinguished from the mere act of being on the sea.  This case was the 1963, Southern District of Texas opinion styled, U.S. National Bank of Galveston v. Maryland National Insurance Co.

Insurance lawyers who work in rural areas of Texas will see situations involving crop insurance.

Some insurance companies sell property coverage to mitigate against the risk of loss to farm crops caused by environmental perils including drought, flooding, hail or other weather conditions.  Crops can be insured under various types of insuring agreements including coverage limited to losses caused specifically by hail.  Crop insurance is also available through the Federal Crop Insurance Corp. (FCIC), an agency of the federal government designed to facilitate the placement of crop insurance through private insurance companies.  The placement of a policy through the FCIC does not automatically create a federal question jurisdiction over such claims.  (Keep in mind that for most people, the local State District Courts and County Courts are more favorable venues to fight with an insurance company than is a Federal Court).  The 1997, Eastern District of Texas opinion styled, Bullard v Southwest Crop Insurance Agency, is a case which decided that not all FCIC cases have to be heard in federal court.  Insureds under crop policies maintain all of the traditional contractual and extra-contractual remedies against their crop insurance company.  This also, was stated in the Bullard case.  An insured may elect to sue the FCIC if a dispute develops over a crop claim, but any such suit must be brought in a United States district court otherwise possessing jurisdiction to hear the dispute.

Crop policies are usually sold with one of the traditional cause of loss forms — broad, special, or basic.  Hail policies also frequently require the injured plants to be in a certain state of growth or development at the time of injury or damage from hail in order to be covered.

Insurance for commercial businesses can take many forms.  So what about the loss of business income?

Because commercial property losses can result in a decrease or loss of business income, many commercial property insurance companies offer business income insurance.  An insurer of business income coverage agrees to pay for any actual loss of “business income” the named insured sustains due to the necessary suspension of “operations” during the “period of restoration” following a loss.  For the loss to be covered, the operations must be suspended because of the physical loss of, or damage to, property at covered premises caused by a covered cause of loss.  This is explained in the 1996, Southern District of Texas opinion styled, Royal Indemnity Insurance Co. v. Mikob Properties, Inc.

Business income insurance covers loss of “business income,” usually defined as the reduction in net income that results from suspension of operations due to a physical loss at the insured’s premises.

There are many different types of insurance.  Under the category of commercial insurance is an insurance called Builders Risk Insurance.

Buildings under construction create unique coverage problems which builders risk insurance attempts to alleviate.  Because builders risk insurance forms are designed to cover buildings or structures under construction, they attempt to specify the point at which construction is deemed to be completed and when coverage ceases.  At that point, the building owner needs to obtain a BPP or other comparable property coverage to replace the builders risk policy.

The builders risk form covers the building or structure being built, building materials and supplies intended to become a permanent part of the building, and temporary structures.  Like the BPP, the builders risk form must be combined with the basic, broad or special cause of loss form and any necessary endorsements to form a complete policy.

Another type of coverage that insurance lawyers see is called, Special Form Coverage.  Special Form Coverage is the broadest form commercial coverage.  The special form provides “all risk” insurance which covers any accidental cause of loss unless specifically excluded by the policy.

The special form contains the following exclusions, which are also contained in the basic form and broad form:

1) ordinance or law