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The American Association of Public Insurance Adjusters was founded in 2004 for the purpose of ensuring that the rights of a public adjuster are represented. In doing so, public adjusters nationwide are able to work in a fair and open marketplace.

Recent News

AAPIA Litigation Director Anthony “Tony” DiUlio settled a major class Action Suit against Travelers regarding Traveler’s denial of Rot claims, bringing not just monetary damages to the class members, but also a change in future claims handling. The terms of the settlement, and instructions from the Court, complete with deadlines, can be found here.

The suit involved a situation where the claimant noticed a stain on the ceiling and, upon examination by a plumber, found Rot above the ceiling. Rot Remediation Coverage was included in the policy, up to a limit of five thousand dollars. Travelers denied the claim anyway, arguing that the damage was as a result out of long-term seepage, even though such Rot was hidden and unknown to the insureds until the stain formed on the ceiling.

Tony DiUlio investigated further and found that Travelers was routinely denying these claims, even though such coverage was included and paid for with premium dollars. Such claims were mostly limited to $5,000.00, and Travelers had not been challenged legally. Tony saw an injustice and formed a class action lawsuit in order to compensate those whose claims had been wrongfully denied. Even better, Tony has effected real change, and helped future victims of damage by forcing Travelers to change its claims handling practices going forward—a tremendous result!

The settlement will award damages to class members, according to a chart, and those details, as well as the details of the future claims handling can be found here. Tony DiUlio was not available for comment on the settlement, but if you have questions about how this affects closed claims, or future claims, please contact him at Notice will be sent by Travelers’, via email to affected parties.

By Holly K. Soffer, Esq. AAPIA General Counsel

Much has changed in the world since my blog on March 24th. Not only are there new phrases in our lexicon such as “zoom happy hour”, but also the legislative response to the COVID-19 Business Interruption claims has taken a new tone.  At first, a few states offered similar bills to the Jersey one [ MA, OH, NY, PA, LA] but then, as Chip has commented, the insurance industry has made its views known, as we knew they would.

Whether in response to or in anticipation of the industry’s obviously strong opposition to adding COVID-19 coverage to policies retroactively, a few states have begun to offer forms of government grants for this newly created coverage. Both Pennsylvania- PA H 2386- and South Carolina-SC S 1188-have introduced bills that create limited coverage, with claims to be paid in some form by the state, although South Carolina’s bill includes an assessment to insurers built into its bill.

The PA bill provides a mechanism for “adversely impacted” businesses to make claims for Business Interruption coverage, then when those claims are denied, for the Commonwealth to pay those claims as a grant. The grant is contingent upon:   i) the business remaining open (it seems counter intuitive to keep the business open but make a claim based upon the suspension of business, but perhaps that is just semantics)  and, ii) not laying off employees, otherwise there is a repayment penalty of 10%.  There are many questions surrounding how this will work, who will be disbursing the funds, and whether third parties advising the businesses will be compensated.  The bill states in part:

PA H 2386:

(a) Establishment.--The COVID-19 Disaster Emergency Business Interruption Grant Program is established within the department to provide funding for the continuing operation of businesses during and after the COVID-19 disaster emergency. The department shall award, to the extent that money is appropriated to the department for the purpose, grants to eligible businesses as provided under this section.

(b) Eligibility.--A business shall be eligible for a grant under this section if:

(1) The business has submitted an insurance claim under a business interruption insurance policy and the insurance claim was denied prior to applying for a grant.

(2) The business demonstrates in its application that the business has been adversely impacted by the COVID-19 disaster emergency.

(c) Grant amount.--A grant may not exceed the amount of the insurance claim submitted by the business under subsection (b)(1).

(d) Application.--A business may apply for a grant for the duration of the COVID-19 disaster emergency and for 60 days after the COVID-19 disaster emergency is terminated by executive order, proclamation or operation of law. The application shall be in a form and manner determined by the department.

(e) Conditions.--If a business receives a grant, the business must remain open and not lay off any employees for the duration of the COVID-19 disaster emergency. If a business that receives a grant does not comply with this subsection, the business shall repay the amount of the grant plus 10%.

The South Carolina bill is even more complex and provides retroactive Business Interruption coverage, mandating that insurers pay the claims for businesses comprising less than 150 employees.  The bill then provides a mechanism for the carriers to apply to the state for relief, however the relief is all but certain. Down the road, the Department of Insurance will be able to assess all licensed insurers to recover these costs.

SC 1188 (in part):

(C) An insurer that is required to provide coverage to an insured that has filed a claim pursuant to this section may apply to the department for relief and reimbursement from funds collected and made available for such purpose as provided in this section.

(D) The department shall establish procedures for the submission and qualification of claims by insurers that are eligible for reimbursement pursuant to this section. In addition, the department shall establish procedures and standards to protect against fraudulent claims for reimbursement and appropriate safeguards for insurers to use in the review and payment of such claims by their insureds.

(E) The department is authorized to make one or more assessments in each fiscal year against licensed insurers in the State as may be necessary to recover the amounts paid or estimated to be paid pursuant to this section. Any assessment shall be made at a rate and shall be determined and certified by the department as sufficient to recover the amounts paid to insurers pursuant to this section. The amount to be assessed shall be made against all licensed domestic companies and foreign companies in proportion to their net premiums written and annuity considerations in the State as shown in the annual report of each of said insurers filed with the department. The assessment shall reimburse the State for funds appropriated for such reimbursement. Assessments under this section shall be charged to the normal operating cost of each company."

SECTION 2. This act takes effect upon approval by the Governor and shall only apply to policies that are issued to insureds with one hundred fifty or fewer full-time equivalent employees in the State, and that are in force on the effective date of this act or become effective prior to the date on which the Governor's state of emergency declaration expires.

The bottom line is that we have stepped through the rabbit hole, and we must continue to be informed, so that we can be prepared to be effective advocates on the path forward.

While many of us are working at home, we have more time to spend analyzing and contemplating the roles of the government and the insurance industry in responding to the corona virus crisis. The below blog is an extension of that opportunity.

NJ has been floating a bill, sponsored by Assembly members Roy Freiman, Louis D. Greenwald, and  Annette Chaparro, which would mandate that… “every policy of insurance insuring  against loss or damage to property, which includes the loss of use  and occupancy and business interruption in force in this State…, shall be construed to include among the  covered perils under that policy, coverage for business interruption due to global virus transmission or pandemic …… NJ Assembly 3844.  The bill then goes on to provide a recovery fund  for those companies which will be paid into by all insurers (and presumably the government).

At first (and second) glance, this bill seems fanciful, unlikely to get out of committee, not able to pass muster from a constitutional challenge, and not advisable on many levels.  But, with time to contemplate, and for the sake of argument, what if it weren’t?  As the owner of a small business, as well as being general counsel to a national association of public insurance adjusters  [AAPIA], and as someone who has the privilege of working with the absolute best of the policyholder advocates, I can see a rainbow here, as well as a possible legal argument for the bill.

The very valid arguments against such a bill as the NJ one begin with the idea that government would be interfering and reforming contracts long after they were agreed upon by the parties.  That contractual interference is fundamentally unfair and violates both common law and statutory law regarding such contract and may even have some due process or other constitutional implications.

But isn’t this type of contractual reformation and interference already happening? Arguably the NJ bill that seeks to reform the policy to provide coverage is re-writing the contract after the fact, but when requiring landlords not to collect rent, and banks not to foreclose, isn’t that government interference with contract also altering the terms of contracts after the fact?

The Department of Housing and Urban Development announced that it's suspending all evictions and foreclosures until the end of April. The Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to do the same for a minimum of 60 days. What about the Note signed by the parties?  Isn’t that a contract?

The National Multifamily Housing Council published a release on March 22 asking for a 90 day period for a halt on evictions by apartment owners and landlords for renters who were experiencing job loss or reduction in income due to COVID-19. The publication Motley Fool[1] published a list of local governments that have halted such evictions and foreclosures.  After seeing those lists, I ask the same question about the change in the terms of the contract after the fact. Arguably the NJ law that seeks to reform the policy to provide coverage is re-writing the contract after the fact, but when requiring landlords not to collect rent, and lenders not to foreclose, among other limitations—aren’t those the same types of interference with contract and alteration of terms after the fact?


In the end, altering insurance policies retroactively probably isn’t a good idea, but it’s not as fanciful as it seems on the surface.

Stay well,

Holly K Soffer, Esq.