Articles Posted in Insurance Bad Faith

Because of the number of fires in California over the past several years, there are huge shortages of labor and materials for building homes. It can take well over a year for someone who lost their home in a wildfire to secure a contractor and get permits to be able to build.

The California Department of Insurance knows this. On May 18, 2019, the Insurance Commissioner issued a Notice requiring insurers to extend additional living expense (“ALE”) benefits to as long as 36 months if needed for claims made due to a state emergency such as a wildfire, regardless of any time limit in the policy. “Good cause” is specifically noted to be unavoidable delays in the construction process. This can be delays with obtaining permits, or finding a contractor, or getting materials. It can also be delays due to the pandemic.

Note that this extension does not increase the dollar limit of ALE, if any, in the policy, so if your rebuild is delayed, you want to minimize the monthly cost of your lodging and related expenses to stretch it out as long as possible. This extension only applies to fires that occurred on or after September 21, 2018. However, 29 insurance companies agreed to voluntarily provide this extension to victims of the 2017 wildfires as well.

With the massive increase in wildfires throughout California, the Department of Insurance has adopted what is now an annual tradition of ordering insurance companies to refrain from policy cancellations and non-renewals in wildfire areas.  This year is no exception. On August 19, 2021, the Department of Insurance issued a one-year moratorium on cancellations or non-renewals of fire policies in the areas affected by the Lava and Beckwourth Complex fires.  More than 26,000 homes are affected, in Siskiyou, Lassen and Plumas counties.  This area was already included in last year’s moratorium, but this new order buys those policyholders another year.

Commissioner Lara’s office has stated that he intends to issue a similar moratorium for the Dixie and Caldor fires, once the perimeters of those fires are better established. The Dixie fire is currently only 35% contained. The Caldor fire is currently not at all contained.

These moratoriums are temporary respites from the insurance industry’s practice of non-renewing homes that are in wildfire areas. For homeowners who do lose their insurance because of their location, the “option of last resort” is the California FAIR Plan. This plan offers bare-bones coverage for fire coverage only.  The Department of Insurance ordered FAIR Plan to offer personal property coverage and liability coverage as well in 2019. The insurance industry has been fighting that, and in July 2021 a California superior court ordered FAIR Plan to comply.  Where FAIR Plan will likely appeal that decision, the ability to access this expanded coverage may not actually happen for some time to come.

Multiple sclerosis (MS) is a potentially disabling disease of the brain and spinal cord (central nervous system). In MS, the immune system attacks the protective sheath (myelin) that covers nerve fibers and causes communication problems between your brain and the rest of your body. Eventually, the disease can cause permanent damage or deterioration of the nerves.

Signs and symptoms of MS vary widely and depend on the amount of nerve damage and which nerves are affected. Some people with severe MS may lose the ability to walk independently or at all, while others may experience long periods of remission without any new symptoms. While there is no cure for MS, treatments can help speed recovery from attacks, modify the course of the disease, and manage symptoms.

The National MS Society estimates that more than 2.3 million people have a diagnosis of MS worldwide and approximately 1 million people over the age of 18 in the United States have a diagnosis of MS.

Most insurance companies unveiled national advertising campaigns in March 2020, promising to “pause” all policy cancellations or expirations for at least a month due to non-payment of premiums. Many continued this policy, stating that insureds simply had to ask to have their insurance payment plan extended during COVID-19.

Insurance companies did not do this out of the goodness of their hearts. In most states, the state insurance commissioner issued directives asking or requiring insurance companies to do exactly this. The federal government similarly issued regulations for policies governed by ERISA, extending the deadlines for appeals until after the pandemic ends.

Despite the state and federal mandates, and their own advertising, insurers have not all followed these requirements.  Many insurance companies did in fact still cancel or allow policies to lapse in the first month of the pandemic.  Many more put the onus on their insureds to reach out and request help, despite promises that all such extensions would be “automatic.”  Here is a summary of the positions taken by some of the major insurance companies:

In California, it has long been the law that it is up to the homeowner to decide how much insurance she needs, and that if a homeowner is uninsured, it is her fault.  This is the law despite the fact that insurance companies set the amount of insurance offered in a policy and do not inform insureds that they have not just the right, but the responsibility, to confirm that the amount is adequate if they need to rebuild. As a result, most homeowners who find themselves needing to rebuild lack the funds to do so.

The California Department of Insurance is aware of the problem and created regulations to address the issue. Since 2010, there has been an insurance regulation in California requiring that insurers take steps to provide accurate replacement cost estimates for homeowner insurance.  This regulation, 10 CCR Section 2695.183, was tied up in California courts for seven years as the insurance lobby fought against it. In January 2017, the California Supreme Court ruled that the regulation was valid.

What does Section 2695.183 say? First, the insurance company or agent does not have to provide an insured with an estimate of replacement value, or provide a suggested amount of insurance. If the insurer chooses to do so, then the estimate must include certain elements. It must include the cost of labor, materials and supplies.  It must include overhead and profit.  It must include the cost of debris removal.  It must include the cost of permits and architect plans.  It must consider and include the specific features of the home to be rebuilt. That includes the type of foundation, the type of frame, the roof, the siding, any issues relating to slope, the square footage, the geographic area, the age of the structure, and the materials used in the interior and the finishes.

Fire season is beginning again in California, and soon throughout the West. Thousands of people are still trying to recover and rebuild from the years of past fires and related devastation. It is often taking three or more years to rebuild a home because of difficulties obtaining permits, contractors, and materials.

Ideally, your insurance company will work with you in this difficult time in your life. You will need to obtain a copy of your insurance policy and review it carefully. This can be harder than it seems if you have just lost all your possessions in a fire, as you may not even have access to a computer for some time. It is important to understand that the amount the insurance company set to insure your house may be much less than it would cost to rebuild your house. The insurance company will also only pay to rebuild your house as it was before, it will not pay for upgrades.

You will be asked to provide lists of the contents of your home. Then the insurance company will likely only reimburse you for the “actual cash value” of the possessions you lost in the destruction of your home, which removes depreciation from the value of your items. If your policy covers it, once you actually replace the item, you may receive a second payment covering that depreciation. But if you do not replace the item, you never will.

The effect of COVID-19 on the lives of every American cannot be overstated.  What we cannot know yet is how those effects will continue into the future.  We buy insurance to protect us in the event of future calamities. A variety of different types of insurance could potentially be triggered by the varying effects of the disease.  As it can be hard to know what the future could hold, the points below summarize the different ways your insurance could be involved in COVID-19 repercussions in the months and even years ahead.

It is difficult to know with certainty the range of long term health issues that could be caused by COVID-19, as the virus has only plagued us for approximately six months. Doctors predict the long-term effects will be similar to other coronaviruses like SARS.  While 80% of sick patients had “mild” cases, of the 20% who did not, they could experience a variety of long term effects.  COVID-19 survivors are expected  to follow the path of severe respiratory issues often seen after recovery from other respiratory illnesses.  That could mean lung fibrosis, reduced lung capacity and difficulty breathing and fatigue. Preliminary data out of China demonstrates that 20% of patients hospitalized with COVID-19 had heart damage. Patients also experience increased blood clotting.  Early studies from Asia show that COVID-19 attacks T-cells in a manner similar to HIV. Doctors are also finding that close to half of those hospitalized for COVID-19 have blood or protein in their urine, which is an early indicator of kidney damage, and up to 30% of patients in New York and Wuhan lost some level of kidney function. Liver damage, intestinal damage, and neurological malfunctions have also been reported.

Health Insurance

There comes a time in your life when you will need to consult with a lawyer – whether it be good news or bad news. A good lawyer works with you, helps you understand the situation, and guides you to the best possible result. At Kantor & Kantor we routinely speak with individuals who have had life, health, and disability claims denied by their insurance companies.

As lawyers we are well-versed in the practice of law, but we rely on the information from our clients to steer us in the right direction and guide each case. It takes TEAMWORK to get the best possible result for our clients.

Here are a few tips for talking to your lawyer and telling them what they need to know.

Due to their depth and breadth of knowledge, the attorneys at Kantor & Kantor are frequently asked to speak at seminars, conferences, or give presentations. In June of 2019, partner Brent Dorian Brehm was asked by a national continuing legal education (CLE) provider to speak about long term disability benefits.  The seminar was titled “Mastering Social Security, Long-term Disability & Government Benefits.” Mr. Brehm took the attendees on a journey from the start to the end of a long term disability claim – and everything in between. He also covered relevant differences between disability claims governed by state law and those governed by ERISA.

While we cannot provide you with the actual presentation or the question and answer segment that followed, we can provide Mr. Brehm’s outline. This information is valuable to anyone at any stage in the long term disability claim process. It starts from the beginning – explaining what LTD benefits are. It then goes through tips on making a successful LTD claim. It addresses what needs to be done during the claim stage to avoid litigation – but be ready for it if that must happen. And finally reviews the nuts and bolts of litigating both an ERISA and bad faith disability claim.

What are long term disability benefits?

Contact Information