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.
Yesterday, I wrote a bit about the recent Tuturea v. Tennessee Farmers Mutual Insurance Company case that was decided last week by the Western Section of the Court of Appeals. Remember, this is the case where the plaintiff's allegedly insane husband set fire to the house in an unsuccessful effort to commit suicide. I saved the best part for today . . .
One of Mrs. Tuturea's arguments in favor of coverage was that the innocent co-insured doctrine should allow her to recover. However, like pretty much all policies I read these days, Tennessee Farmers had contracted around that doctrine to prohibit an innocent insured from recovering when another insured intentionally causes the loss. Accordingly, Mrs. Tuturea lost.
What's intriguing about this this case is that the Court of Appeals stepped outside of its scope of review and considered, without deciding, an issue that was not presented by Ms. Tuturea, i.e., whether the policy language excluding recovery by an innocent co-insured is enforceable at all. The Tuturea court stated,
We recognize that insurance companies have written policies in response to the proliferation of the innocent co-insured doctrine that often expressly exclude recovery by an innocent co-insured or, at the very least, more clearly impose joint responsibility on the co- insureds. An argument exists that these carefully written provisions return the relationship between insureds and the insurer to the former status quo previously deemed unacceptable, but it is not the duty of the judiciary to impose liability where none exists. See Certain Underwriter's at Lloyd's of London v. Transcarriers Inc., 107 S.W.3d 496, 499 (Tenn. Ct. App. 2002) (citations omitted) (recognizing that courts are not at liberty to rewrite an unambiguous insurance policy simply to avoid a harsh result). While courts in other jurisdictions have reformed or held unenforceable policies excluding recovery by an innocent co-insured where the policies did not comply with legislative limitations on liability exclusions, e.g., Sager v. Farm Bureau Mutual Insurance Co., 680 N.W.2d 8, 9 (Iowa 2004); Watson v. United Services Automobile Ass'n., 566 N.W.2d 683, 692 (Minn. 1997). Mrs. Tuturea has not argued that similar limitations govern the enforcement of insurance agreements in Tennessee. Because the specific language of the policies before us clearly excludes recovery by an innocent co-insured, the trial court’s decision is affirmed.
Needless to say, I'll be taking a hard look at the cases cited above as the Court's dicta seems to be a clear invitation for someone to present the issue. A favorable ruling would certainly be advantageous for policyholders, and I see plenty of opportunities to give the Court an opportunity to do just that.
The Tennessee Court of Appeals released Tuturea v. Tennessee Farmers Mutual Insurance Company on June 29, 2010. Its certainly an interesting opinion, although a bit long for fun reading (29 pages). The basic facts are this. Mr. Tuturea suffered from terminal cancer, and set fire to his house in an unsuccessful attempt to commit suicide. His home was destroyed in the fire, and he then passed away a few months later. His wife's claim for insurance proceeds was denied, and she sued to recover on the insurance policy.
The issue presented by Mrs. Tuturea on appeal was whether the fire was "intentional" within the meaning of the subject insurance policy. Relying on expert testimony, she argued that Mr. Tuturea did not form a conscious desire to bring about the fire because "he was insane, had an acute break with reality, and was not in control of his actions when he set the fire." After weighing the evidence, the trial court disagreed, and the Court of Appeals affirmed his decision. What's interesting about this case is the issue that wasn't decided. In a footnote, the court noted that "some jurisdictions hold that an insane person is incapable or forming the intent to commit an intentional act in the insurance context," while others hold "that an actor is able to commit an intentional act so long as the actor understands the physical nature and consequences of the act, regardless of whether the actor is able to distinguish right from wrong." Unfortunately, that issue wasn't presented, nor was it decided.
There was one other interesting twist about this case, but I'll save that for tomorrow.