HOMEOWNERS MUST PROVE DAMAGE WAS CAUSED BY THE COVERED PERIL

SEPTEMBER 25, 2010 – A recent “Case of the Month” article by Patrick B. Omilian of Goldberg Segalla, LLP, highlights the importance for homeowners of proving which specific damages have been caused by which covered peril, when substantiating a claim with their insurance company.

Property owners usually substantiate the amount of the damage but neglect to provide proof of specific cause of the damage. Attorney Omilian emphasizes that the insured must provide detailed proof that damage was caused by “a specific covered peril” in order to obtain coverage for such damage.

In the specific case, Bayle v. Allstate Insurance Company, No. 09-30161, decided by the Fifth Circuit Court of Appeals on August 11, 2010, the court settled the question of “when a house is damaged by both covered and non-covered perils, who bears the burden of proving which specific damages are covered and which are not?”

The insured homeowners had a home in Louisiana that suffered severe damage from Hurricane Katrina in 2005. Most of the damage was caused by flooding and some was caused by wind.  The homeowners provided Allstate with proof of the amount of the damage. Allstate’s experts, however, explained which damages were caused by flood and which were caused by wind, and their evidence proved persuasive.

In Patrick B. Omilian’ summary of the case, he emphasized that:

“This case reaffirms the principle that where an insured and an insurer dispute the amount of benefits that an insured is entitled to when damage is caused by both covered and non-covered perils, the insured must specifically prove that damage was caused by a covered peril in order to obtain coverage for such damage.”

And he recommended that clients reviewing the terms of their insurance policies should clearly understand “the difference between the wind coverage provided by the homeowner’s policy and the water damage coverage provided by the flood insurance policy…” and that they “should periodically be reminded of the fact that their homeowner’s policy does not cover storm surge or other flood losses.”

* The complete Bayle v. Allstate Insurance Company opinion by the Fifth Circuit Court of Appeals can be found here:

http://www.ca5.uscourts.gov/opinions/pub/09/09-30161-CV0.wpd.pdf

* Attorney Patrick B. Omilian, of Goldberg Segalla, LLP, (in Buffalo, New York) who writes the “Case of the Month” column for IRMI’s Personal Lines Pilot newsletter, can be reached here: http://www.irmi.com/expert/authors/omilian.aspx