Superior Court holds that insurance on antique car is subject to provisions of another policy with respect to underinsured motorist benefits

In Boulette v. Safety Ins. Co., plaintiff Scott Boulette was involved in an accident while driving a car owned by his employer and insured by Safety Insurance Company. The other driver was insured by Premier Insurance Company. When the damages exceeded the Premier policy limits, Boulette applied for underinsurance benefits from Safety.

Boulette owned an antique Chevrolet Corvair on which he had insurance from Metropolitan. Boulette purchased the Metropolitan coverage solely so that the Corvair could be registered as an antique and towed to his new residence. He included in his coverage optional bodily injury and medpay benefits, but not optional underinsurance coverage.

Safety denied Boulette's claim for underinsurance benefits because of a policy provision stating, "We will not pay damages to or for anyone else who has a Massaschusetts auto policy of his or her own . . . "

Boulette contended that he could not reasonably be expected to look for underinsurance benefits from a policy covering an inoperable antique car, although he apparently did have the option of purchasing underinsurance benefits from that policy and chose not to do so.

Judge Lemire of the Superior Court agreed with Safety, holding that the plain language of its policy precluded Boulette from recovering underinsurance benefits from it.

A case only insurance coverage attorneys could love

In Mass. Care Self-Ins. Group, Inc. v. Mass. Insurers Insolvency Fund the Superior Court ruled on the interplay between Mass. Gen. Laws ch. 152 § 25A, which allows employers to form worker's compensation self-insurance groups, and Mass. Gen. Laws ch. 175D, which creates a fund which provides insurance benefits when an insurer that would otherwise provide coverage has become insolvent.

A worker's compensation self-insurance group provided coverage up to a self-insured retention limit to an injured employee of one of its members. The group had an excess carrier over the SIR that had become insolvent. When the damages paid to the injured employee exceeded the SIR, the group sought coverage from the fund.

At issue was whether the worker's compensation self-insurance group was an insurer, in which case pursuant to ch. 175D there would be no coverage from the fund because the fund does cover any claim due to an insurer.

After a thorough review of both statutes and relevant case law, the court concluded that the self-insurance group is an insurer, so that the fund did not provide coverage.

Massachusetts federal district court holds that physical damage is required for coverage for "direct physical loss"

In Tocci Bldg. Corp. v. Zurch Am. Ins. Co., 2009 WL 3182858 (D. Mass.), Tocci was the general contractor on a hotel construction job that included a large retaining wall. A small part of the retaining wall was damaged during a heavy rainstorm.

On June 9, 2000 the town in which the project was located issued a stop work order and declared the wall unsafe as a result of the damage from the storm. In early August the town gave Tocci permission to repair the damaged section of the wall. The repairs took less than a week.

In the meantime the town concluded that the wall had not been built in accordance with the approved plans and notified Tocci that the wall need to be demolished and reconstructed. Tocci disagreed. In November, 2000, the town agreed to permit the hotel to open if Tocci would grout the entire wall. Tocci agreed only in order to prevent further delays. Tocci then sought coverage from a builders risk policy for the cost of grouting.

The policy provided coverage for "RISKS OF DIRECT PHYSICAL 'LOSS'". "Loss" was defined as "accidental loss or damage."

The United States District Court for the District of Massachusetts held that the grouting was not a covered loss because the need for it did not stem from "direct physical loss or damage" to the wall.

The insureds argued that the storm was "covered cause of loss" because it created a "risk of direct physical loss," and that physical damage was not otherwise required by the policy. The court disagreed:

It is true that the only express reference to "physical" damage is found in the definition of "Covered Causes of Loss" which, as quoted above, "means RISK OF DIRECT PHYSICAL 'LOSS'. . ." However, it would make no sense to cover an event which creates a risk of physical damage if physical damage was not a triggering event for coverage. Moreover, "loss" is expressly defined as "accidental loss or damage." It is impossible to read the insurance policy as providing coverage for "risk" in the absence of a "damage." Since it is undisputed that the grouting was not required due to damage to the retaining wall, there was no loss and hence no coverage.

Massachusetts Appeals Court interprets insurance requirement in construction subcontract

In RCS Group, Inc. v. Lamonica Constr., Inc., 75 Mass. App. Ct. 613 (2009), the Massachusetts Appeals Court interpreted an insurance requirement in a construction contract between general contractor RCS and subcontractor Lamonica. The contract required that

[Lamonica] shall maintain, at its own cost, such insurance as will protect it and [RCS] from . . . any claim for bodily injury, including death, and whether such [w]ork or performance are by [Lamonica] or any of [its] subcontractors or any one directly or indirectly employed by [it] . . .

Lamonica obtained insurance but did not include RCS Group as an additional insured on its policy. When an employee of Lamonica's was injured and sued RCS, RCS sued Lamonica for breach of contract.

The court held that the insurance provision did not require that Lamonica name RCS as an additional insured on its insurance policy, on the grounds that the provision was ambiguous and must be interpreted against RCS as the drafter of the contract.

The court noted that the insurance clause followed an indemnity provision in the subcontract that the court had previously ruled unenforceable. The court stated:

Had the indemnification provision been valid, as the parties intended, then liability insurance purchased in Lamonica's own name would have "protected" RCS Group fully so long as it covered Lamonica's indemnification obligations (as the insurance contract purchased by Lamonica in fact did). When examined in this context, the parties easily could have viewed the insurance policy that Lamonica purchased as one that would "protect" RCS Group, even though the policy did not include RCS Group as an additional insured.

U.S. District Court dodges question of whether insured can cure breach of duty to cooperate

In Miles v. Great Northern Ins. Co., 2009 WL 2998529 (D. Mass.), the insureds sought first-person coverage for fire damage. The insurer denied the claim on the ground the insureds had breached their duty to cooperate.

In a motion for summary judgment the insureds argued that although they initially did breach that duty, they cured the breach by later providing the requested documents.

The United States District Court for the District of Massachusetts noted that there is no controlling Massachusetts caselaw on whether a breach of the duty to cooperate can be cured prior to a court ruling that the insureds breached the duty (when it is clearly to late to cure).

The court chose not to rule on that question of law, holding instead that whether the insurer had suffered prejudice as a result of the insureds' initial breach was a question of fact.

For anyone affected by the changes in the flood plain maps

Yesterday I posted on the changes to the flood plain maps in Massachusetts. Jenifer McKim, a reporter with The Boston Globe, is interested in speaking with people whose flood insurance has been or will be affected by the new maps. If you are interested in speaking with her you can reach her at jmckim@globe.com.

Changes to flood plain maps in effect or coming soon in Suffolk and other counties

Jenifer McKim of The Boston Globe alerted me to changes in flood plain maps being implemented in Massachusetts.

I have posted here and here about the National Flood Insurance Program. In that program FEMA subsidizes and at time issues flood insurance to homeowners.

Mortgage lenders require homeowners who live within flood plains to have flood insurance. FEMA is in the process of changing its flood plain maps county by county in Massachusetts.

I spoke with Chris Busch, the Executive Secretary of the Conservation Commission for the City of Boston. He informed me that the new maps for Suffolk County (which is Boston) went into effect on September 25, 2009. The changes to designated flood zones are based on better computer imaging of topography since the last time the maps were updated, between 1982 and 1990.

The City of Boston made an effort to contact homeowners whose houses are newly designated in flood plains, because if they purchased flood insurance before September 25 their old rates could be grandfathered in. There are some homeowners whose property was in a flood plain under the old maps but not under the new maps. They may not be required to carry flood insurance any more, but neither the city nor FEMA has made an effort to contact them. Dorchester is the most affected neighborhood in Boston, particularly Savin Hill and Port Norfolk.

Mortgage lenders can require homeowners to have flood insurance even if they are not in a flood plain, if they are in a "buffer zone"--an area outside by near a flood plain.