Opinion Involving ‘Roof’ Provides Reminder on Documenting Insurance Claims

March 25, 2020Alerts

Does a tarp installed on top of a hotel's existing roof constitute part of the "roof" under the insured’s policy? Perhaps, according to Judge Wendy Beetlestone of the U.S. District Court for the Eastern District of Pennsylvania.

In her March 18, 2020 opinion, Judge Beetlestone provides a cogent analysis and concludes that the tarp “appears to fall somewhere” between a “near-permanent structure” and a “hastily constructed attempt at a fix.” Specifically, because the insured did not remove the existing roof and placed a tarp over it, the tarp could have actually served as an outer layer of the roof. Consequently, the judge denied the insurer’s motion for summary judgment, the typical vehicle for deciding a coverage issue.

The insured experienced the initial leak in April, which it later argued constituted a claim. The insured then engaged in repairs utilizing a tarp, which gave way during a windstorm, resulting in additional water damage. Consequently, by the time the litigation reached the motion stage, the insured argued it had made two claims and that the insurer failed to address the first of those claims. 

Importantly, the court let stand one count for bad faith; meaning the rationale for the Court’s decision appears to be the lack of clarity in the insurer’s written letter of denial.

Two practice tips can be gleaned from the court’s analysis. First, the insured should make individual claims that are clear and well-documented. In this case, while the motion for summary judgment on bad faith was not granted in its entirety, the insurer still has a strong argument because it is not clear if the plaintiff actually made one of the claims. The court stated it would leave the matter for a jury to conclude as to whether or not the insurer had constructive notice of the insured’s initial claim for damages.

The second practice tip for insureds involves understanding whether or not authority exists to support a claim in the policy. In this case, there is a split of authority and, in a trial, the insured may still fail on its claim that the damage was covered. 

For the insurer, as always, focusing on relevant case authority as well as a proper investigation and clear denial of all claims can carry the day in a motion for summary judgment. In this case, it appears that both counsel provided thorough and effective arguments for their respective clients. 

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