TN Farm Bureau Changes its Coverage on Roof Claims

I recently learned that Tennessee Farmers Mutual Insurance Company (Farm Bureau) has changed the way it will pay roof claims.  Specifically, a recent endorsement changes roof coverage to actual cash value for roofing materials instead of replacement cost.  This means that roof materials will be depreciated in the event of a roof claim.  For example, if hail damages a roof that is 10 years old, the replacement cost would be depreciated to account for the age of the roof.  The depreciation rate will vary depending on the age and condition of the roof, but could be as high as 75%, which will impact consumers' ability to replace their roofs after a catastrophe.  This is obviously a huge deal for Tennessee consumers, particularly in light of the wind and hail storm events that has become common in our state.  

Legislative Reaction To Recent Court Decisions

In response to a couple of cases rendered earlier this year, the Tennessee legislature has adopted Senate Bill 2271, which has two important impacts. The statute was signed into law by Governor Haslam on May 10, 2012. For a PDF copy, click here

The new law provides that the signature of an applicant for or party to an insurance contract which states the type, amount, or terms of condition of coverage actually creates a rebuttable presumption that the statements provided by the person so signing bind all insureds and that the person signing such document has read, understands, and accepts the contents of the document. 


Secondly, the new law provides that the payment of premium by an insured also creates a rebuttable presumption that the coverage provided has been accepted by all insureds. 


This should have some immediate impact in coverage cases dealing with the knowledge of an insured as to certain coverages. 

A Personal Plug for My Firm's New Website

Ok, so this really has nothing to do with insurance.  But my firm, Gilbert Russell McWherter PLC, just launched our new website.  Check it out here.  The update has been long overdue.



Tennessee Hospital Lien Does Not Attach to Medical Payment Benefits

In Shelby County Health Care Corporation d/b/a Regional Medical Center v. Nationwide Mutual Insurance Company, the Tennessee Supreme Court held that the statutory hospital lien act does not attach to medical payment benefits paid pursuant to an insurance policy. In this case, the “Med” attempted to recover the full amount of its medical treatment rendered to Kevin Holt, the Nationwide insured, which exceeded $33,000.00. The Nationwide policy included medical benefits coverage of $5000. The Trial Court had awarded $5000 in damages, and the Court of Appeals had actually increased the judgment to 33,823.02. The Supreme Court reversed the judgment of the Court of Appeals and dismissed the suit against Nationwide. For a PDF copy of the opinion, click here.

Tennessee Insurance Litigation Blog Honored as One of the Top 50 Insurance Blogs

 A month or so ago I was excited to announce that this blog was nominated by the LexisNexis Insurance Law Community as one of the top 50 insurance blogs on the web.  I recently learned that we were in fact selected as one of the top 50. Thanks to all of our readers for making this blog a success. 

For a full list of the Top 50 Insurance Blogs, click here.

Tennessee Insurance Litigation Blog Nominated as One of the Top 50 Insurance Blogs

 I just learned today that our blog, just under a year old, has been nominated as one of the top 50 insurance blogs.  The LexisNexis Insurance Law Community publishes the list each year.  Although its a bit late to ask all of you to send in positive comments to the folks at Lexis who decide which blogs make the final cut (the deadline for comments is tomorrow), thanks to all our readers for making our little blog a success.  

For a list of all the nominees or to comment on our blog or others, click here.

Delay, Deny, Defend

Delay, Deny, Defend - Why Insurance Companies Don't Pay Claims and What You Can Do About It. No, that's not the theme of a bad faith trial.  Its the title of Professor Jay M. Feinman's new book that chronicles the bad faith practices of insurance companies.  Several months back, the book's publisher, Penguin, provided me with an advance copy, and I found it to be dead-on.  An easy and enlightening read, Feinman details the systematic and widespread practices utilized by insurance companies across the country, and then shows insurance consumers exactly how to best deal with these mammoth companies that seldom have the insured's best interest at heart.  

Here's a description of the book directly from its author and publisher, taken from the book's website:

Do you think your insurance policy has your property protected from life's many mishaps? That those premiums you pay every month guarantee you the help you need when you need it? That your insurance company is a benevolent entity that strives to pay claims fairly and promptly? Think again.

Your insurer's main objective is not to protect you; in fact, insurers often try to avoid paying justified claims. Today the name of the game is delay, deny, defend: to improve their profits, insurance companies delay payment of justified claims, deny payment altogether, and defend their actions by forcing claimants to enter litigation.

It's unconscionable, and it's widespread. From stonewalling and lowballing claims to instigating arbitrary fraud investigations, insurance companies are increasingly failing to live up to their contractual commitments. Some major insurers even hired the big-name consulting firm McKinsey to help them squeeze even more cash out of their claims centers. Why? Because insurance companies have realized they can add to their bottom line by using your monthly payments as a profit center, rather than a fund for giving you what you deserve if tragedy strikes.

Expert Jay M. Feinman details the infuriating systemic abuses, including:
Katrina victims left homeless because of an obscure flood exemption clause in their homeowners insurance policies.
Computer programs that arbitrarily cut the settlements offered to auto accident victims on a take-it-or-leave-it basis.
Claims adjusters who receive cash incentives to reduce the amount paid out on each claim.
Feinman shows you how to fight back, explaining how to choose a carrier that won't take advantage of you, how to file a claim so that your provider can't avoid paying you, and what to do when your insurer disputes your claim. He also details the steps lawmakers need to take to protect consumers and thwart the aggressive and abusive tactics of insurance companies. No matter what the advertisements say, your insurance provider is not your friend or a "good neighbor." You need to be smart and savvy to deal with your insurer-Delay, Deny, Defend tells you what you need to know.

Feinman did a great job with this one, and its a must-read for both insureds and insurance consumer advocates.


The Aftermath of the Great Flood

 Fifteen or so inches later, the rain has officially stopped.  The entire state breathed a sigh of relief yesterday as the sun started trying to dry things out.  I was one of the lucky ones who didn't have any damage, but there are thousands of people who have lost personal treasures.  Photographs, antiques . . . all floating in puddles of dirty water.  Numerous others lost their homes, and some have even lost their lives.  The aftermath has now begun, and the litigation won't be far behind.  Stay tuned.

Anybody Got an Ark?

Not much legal analysis here but . . . it is coming an absolute flood in West TN.  We've got about 6 inches of rain in the past few hours, with that much or more coming over the next 24 hours.  I may have to call in the calvary and get Chip Merlin and company to help with all the water/wind claims.  Stay dry!

Please Just Give Me a Trial by Ambush

I came in this morning to an email from my partner, Justin Gilbert.  Justin lost a jury trial last week in Decatur County Circuit Court, and offered some insightful thoughts about the experience in a short article he entitled, "Please Just Give Me a Trial by Ambush."  Here's an excerpt:

The point is this: The cost of our normal legal rules is a price too steep for most
Tennesseeans. Often, we cannot enforce our laws because it is too expensive to follow our rules.

Today, motions for summary judgment -- intended to weed out frivolous cases and
conserve on the cost of litigation -- are filed in every discrimination case. Most
depositions are taken not because they are needed to better understand a case; they are taken to mount and respond to summary judgment. And electronic discovery requirements can overwhelm, regardless of the actual merits or size of the case.

Many employment discrimination cases do settle, particularly if it’s done early.
But something is fundamentally unsettling where the basis for the settlement is the
monetary price of the alternative: Our own judicial system. It makes companies feel
“extorted” by the judicial system. And employees feel cheapened because their
discrimination complaints are processed by system costs.

I’ve practiced fifteen years now. I had grown accustomed to, if not wary of, some
of the rules and their costs to individual claimants in Tennessee. If my recent experience was a “trial by ambush,” or one resembling “the days of old,” can you please just give me some more of that?

Justin practices employment discrimination law with Gilbert Russell McWherter PLC.  You may write to him at or at

Revisions to Local Rules in Western District

Several attorneys have been appointed to revise the Local Rules for the federal courts in West Tennessee. The committee is scheduled to meet in mid-October and the committee members are actively seeking input from the local bar for suggestions and comments regarding revisions to the present Local Rules.   A very significant portion of my firm's cases are in federal court so we fully intend to take advantage of this opportunity, as should other members of the federal bar.  If anyone has an interest in offering suggestions or input  but doesn't know who to call, send me an email and I'll be happy to send you contact information for the committee members.  The deadline for comment is October 16, 2009.

Cell Phones and Spoliation of Evidence

An Oklahoma insurance lawyer, Steven Buckman, recently started a new blog called Oklahoma Insurance Law. Its well written with a bit of comedy, including frequent accounts with "Bubba" (the redneck policyholder) and the "tall building lawyer" (the insurer's counsel).

In the latest post, the topic was whether deleting photographs from a cell phone constitutes spoliation of evidence. Here's a taste of Buckman's writings:


The "tall building lawyer" found out during the EUO that Bubba took photos of all the hand guns one week before the fire. Bubba was going to send the photos to a disabled vet who just returned home due to a medical discharge for combat injuries. Bubba has a big heart and wanted to do something for one of our soldiers wounded in the service of our country. He was going to let this soldier have his pick of any gun he wanted and give it to him as a gesture of appreciation. The fire destroyed the guns so he never sent the photos. The insurer learned about the photos and wanted a copy to document the claim.

The photos no longer exist. Bubba, while scouting his favorite deer stand, saw a "buck with a rack that makes ya as giddy as a schoolgirl gettin' ready for her first date." He took so many pictures of the buck that he overwrote the photos of the guns.


Is this spoliation? Maybe, depending on whether litigation was anticipated at the time the photos are deleted.  

Good luck with the new blog Steven.


General Contractors' Overhead and Profit Charges - Recoverable?

This is one of those topics that comes up regularly.  Does an insurer have to pay general contractors' overhead and profit charges?   The short answer is "Yes" but there are some exceptions.  According to a 2005 Sixth Circuit Court of Appeals case (interpreting Tennessee law), the costs of a contractor (overhead and profit) are recoverable if the the insured would reasonably be expected to hire a contractor to repair its property.   See Parkway Assoc., LLC v. Harleysville Mut. Ins. Co., 129 Fed. Appx. 955 (6th Cir. 2005).  

Several nationwide class actions have been filed over the past few years concerning insurance companies' refusal to pay profit and overhead.  Despite such class actions and the clear statement of the law by the Sixth Circuit, I still hear about this occurring from time to time.  If an insurance company tries to tell you its not going to pay overhead and profit, stand up for yourself and point out this case to the adjuster.  Somehow I doubt it will be the first time he or she has heard of it.  

Experts Hired by Insurance Companies to Assist with Claim Decisions Should be Unbiased

 As a result of the numerous tornados that have passed through Tennessee over the past decade, I have become acutely aware of the fact that insurance companies use the same engineering firms over and over again in their investigation of whether a claim constitutes a covered loss.  The obvious problem with insurance companies' repeated use of the same engineering firm is the fact that the engineering firm's opinions are clearly going to be biased.  After years and years of repeat business, the engineers rely on the income generated by the insurance claim inspections in order keep their lights on.  If an engineer finds in favor of the policyholder too often, he or she could soon feel the pain of a drop in referrals, and a corresponding drop in cash in his or her pocket. 

I believe that an insurance company's reliance on biased expert opinions can constitute bad faith, especially when combined with other aggravating factors.  If an insurance company is going to use the same engineer over and over again, it should certainly make sure the expert is qualified, that the engineer considers all possibilities, and that the expert utilizes accepted methodologies in determining the cause or scope of a loss.  Unfortunately, many experts hired by insurance companies go into the investigation looking for a reason that the claim should be denied rather than giving an independent assessment.  So for those policyholders out there who have recently been told by their adjuster that an engineer will be sent out to inspect the loss, you should consider hiring your own as well.  Although it can be expensive, it sure beats a denial.  You might even consider having your own expert present when the insurance company's engineer is conducting his site visit to make sure all appropriate factors are considered.

For a discussion on this same topic with references to a recent case out of Texas, click here for a post by Chip Merlin on his blog, Property Insurance Coverage Law Blog.   

The Florida Sun

You may have noticed I haven't posted any entries for a few days, but I've got a good excuse - - sunny, beautiful Florida. 

While I was out basking in the sun, banging a golf ball from sand-trap to sand-trap, and watching my little girls explore the ocean, John Day made reference to our new blog at his very popular weblog, Day on Torts.  John must have quite a following because the hits on this site skyrocketed after that post.  Thanks for blogging about us John! 

Top 10 Reasons Complaints are Made Against Insurance Companies

According to an April 28, 2009 report by the National Association of Insurance Commissioners ("NAIC"), the top ten reasons consumers complain about their insurance coverage are as follows:

  1. Claim Handling - Delays
  2. Claim Handling - Denial of Claim
  3. Claim Handling - Unsatisfactory Settlement/Offer
  4. Claim Handling - Other
  5. Underwriting - Premium & Rating
  6. Underwriting - Cancellation
  7. Policyholder Service - Coverage Question
  8. Policyholder Service - Premium Refund
  9. Policyholder Service - Premium Notice/Billing
  10. Policyholder Service - Information Requested

For the complete report, click here.