Oklahoma Courts Uphold Theft Of Personal Contents Exclusion

A homeowner searching for a low-cost insurance policy for his home purchased an insurance policy for his residence. The property coverage policy differed from a traditional homeowner’s insurance policy in that the property coverage provided reduced coverage for certain types of losses and didn’t cost as much as homeowners coverage would have. The contract provided coverage to the structure as a result of a burglary, however "theft" of personal contents was specifically an excluded loss.

After the policy was issued, the homeowner was burglarized and filed a claim with his insurance company for the loss of personal property associated with the theft. Since the insurance policy did not provide coverage for theft loss of personal contents, the insurer denied the claim.  The homeowner filed a lawsuit alleging there was an improper denial of the claim payment. The homeowner prevailed in the trial court and the insurer appealed.

The Oklahoma Court of Civil Appeals found in favor of the insurance company holding that theft loss was specifically excluded from coverage and that the policy was limited strictly to actual damage to the structure and reversed the trial court decision.  The Oklahoma Court of Civil Appeals stated:  "Loss of personal property arising out of burglary of insured's home fell outside scope of covered peril for burglary damage to actual premises." Jones v. Union Mutual Insurance Company, 295 P.3d 612, 2013 OK CIV APP 12.

Cancellation Of Homeowners' Policy

Cancellation of a homeowners' insurance policy requires compliance with terms and conditions of the policy. It may sound simple, but we have seen several full blown lawsuits arise over the years where the manner in which the policy was cancelled before a loss occurred was challenged. The starting point is a review of the requirement and the procedure for cancellation inside the insurance policy as well as a review of the Oklahoma statutes. The statutory fire policy provides five days' written notice of cancellation with or without tender of the excess premium pro rated for the remaining time not used. The notice of cancellation is required to state that the excess premium (if not tendered) will be refunded on demand.

Some insurance policies provide for a greater notice period than the statutory five days. An insurance company should comply with its own policy terms and conditions for cancellation and provide the additional time per the policy. Some policies prescribe notice of cancellation by registered mail which is not the same as certified mail. In these cases, the insurer should use the procedure for registered mail.

We saw an interesting blog not long ago by Jason W. Anderson commenting on a Washington Supreme Court decision.  The insurer attempted to cancel a policy by using certified mail as opposed to regular mail. The State of Washington has a statutory requirement for notice of cancellation and the question was whether certified mail was the equivalent of mailing under the statute.

The court decided certified mail was not the equivalent of regular mail and the policy was never actually cancelled. The court found there were some practical differences between regular mail and certified mail in that there is a greater imposition placed upon the insured as it requires the policy holder to be at home to receive the letter or actually travel to the post office to retrieve it. A cancellation notice sent by regular mail would arrive without the hassle and aggravation of signing for the certified envelope or going to the post office to pick it up.

In summary, when there is an issue of cancellation involved, the insurer should follow the applicable regulations as well as the insurance policy guidelines. When the applicable regulation and the policy provide different notice requirements, then the insurer should follow the insurance policy (provided it doesn't attempt to give less notice than the statute).  If in doubt, consult with an attorney who practices in areas of insurance coverage.

Homeowners' Insurers Must Furnish Blank Proof Of Loss Forms Within 60 Days

The purpose of a sworn proof of loss is to document the amount claimed is accurate and a genuine loss. If it later turns out the claim was inflated or fraudulent, the sworn statement can be used by a prosecutor for insurance fraud in a criminal case or denial of the claim for insurance for fraud in Oklahoma.

According to Oklahoma insurance law attorneys, there is a wide and varied practice in the insurance industry concerning the requirement for a signed, sworn proof of loss before payment of an insurance claim.  Some insurers insist on a signed proof of loss and others could care less.

Oklahoma law provides an insurer cannot assert the failure of the insured to tender a proof of loss as a defense to payment of the homeowners' claim unless the insurance company has furnished the policy holder with two blank proof of loss forms and warned the insured that the proof of loss must be tendered to the insurer within 60 days from the date of receipt of the blank forms. An insurer adjusting a loss under a fire policy can waive the requirement for a signed proof of loss if it doesn't make demand within a suitable time.

Insurers sometimes overlook the requirement to submit two blank proof of loss forms. Many Oklahoma insurance defense lawyers are critical of the requirement.  The reason for providing two forms appears to be a carryover from many years ago when scanners, copiers, and other means of reproduction were not as common and convenient. The second blank form was so the insured would have a copy for their own records.  Insurance attorneys in Oklahoma see the requirement for submission of duplicate blank forms as a requirement that no longer meets any real need of the insured.

Appraisal Clause In Homeowner's Policy Is A Useful Tool

Most homeowners' insurance policies provide disputes over the value of the claim can be taken to appraisal and the amount determined by disinterested parties. The appraisal clause has its roots in the statutory fire policy addressed in earlier posts. The statutory provision provides for appraisal upon the request of either party to the claim. The insurer can request appraisal or the insured can request it. The process is one in which each side selects a competent and disinterested appraiser to determine the extent of the loss. Before the appraisers ever meet to appraise the damage, they select a competent and disinterested third person to serve as an umpire for the resolution of any disputes between the appraisers. If the two appraisers cannot agree upon an umpire, there is a provision made for appointment of the umpire by the court.

Initially, it is the job of the appraisers to try to reach an agreement as to the amount of the claim. The umpire is supposed to resolve any dispute upon which an agreement cannot be reached by the appraisers.  In many cases, the umpire is never actually utilized as the two appraisers are able to reach an agreement. In other situations, the dispute is so contentious that the decision of the appraisers and the umpire is rejected by one or both parties and suit filed.

It is important to remember in Oklahoma that the party invoking the appraisal process is usually bound by the decision of the appraisers, while the non-requesting party has the right to litigate the amount of the award.  You will want to carefully consider the aspect of the appraisal provision before actually making demand for the procedure.

The Statute Of Limitations For Filing Suit On A Homeowners' Fire Policy Is One Year

It has come as a surprise to many an attorney that Oklahoma has a one year statute of limitation in which to file a lawsuit for a claim involving a fire loss. The one year limitation is set forth by statute in the statutory fire policy. This rule is a significant exception to the typical five year statute of limitations for a written contract. The one year time period has been given the approval of the Oklahoma Supreme Court since 1916 in the case of Wever v. Pioneer Fire Ins. Co., 1915 OK 1046, 153 P. 1146. www.oscn.net/applications/oscn/deliverdocument.asp

Legal writers have observed over the years this one year statute of limitation may not be valid under Oklahoma’s Constitution. The Supreme Court has held in other cases that special legislation designed to protect a certain industry or class of individuals is unconstitutional. The one year requirement in which to file a suit involving a fire loss under a homeowners’ policy has been considered the law for close to 100 years and is recognized by most Oklahoma attorneys as the required time period.

Oklahoma Has A Statutorily Mandated Fire Insurance Policy

The Oklahoma legislature in 36 O.S. § 4803 has adopted a statutory version of a fire policy sometimes referred to as the "New York Standard Fire Policy". The statute requires all insurance companies issuing homeowners' policies in Oklahoma to have the minimum coverage required by the statute unless special approval has been received from the insurance commissioner allowing them to sell something less than the minimum requirement. Typically, obtaining the commissioner's approval for a nonstandard policy form is difficult unless the insurer is enlarging or expanding the available coverage.

Section 4803 provides for many of the defenses that are normally used by insurers in denying claims.  Fraud by insureds upon Oklahoma insurance companies is a valid concern.  There is provision for denial for fraud or concealment on the part of the insured. The statute also provides that bills, currency, deeds, evidences of debt, money, or securities are not covered by the insurance policy unless specifically provided by the insurance contract.

The statutory insurance policy provides there is no coverage for certain types of perils such as military invasions, rebellions, insurrections, civil war, neglect on the part of the insured to use all reasonable means to save and preserve property, and further that the insurer is not responsible for theft losses.

The statute sets minimum time periods in which the policy can be cancelled and the type of notice that must be given to an insured as well as a mortgage company before coverage is actually cancelled. In the event of a claim, it requires the insureds to tender a proof of loss within 60 days of the event and allows the mortgage company to submit the proof of loss if the policy holder does not take timely action.

The statute also makes provisions Oklahoma insurance attorneys use in taking examinations under oath, inspection of damaged property, and require preparation of a complete inventory detailing the quantities, cost, and actual cash value of the items claimed.  

Most homeowners' policies provide more coverage than the statutory minimum. For instance, the typical homeowners' policy will have coverage for theft, wind storm, liability coverage, and contain other clauses that give greater protection to a homeowner than the statutory framework enacted many years ago.  Questions about the minimum required coverages under a homeowners' policy should be reviewed by a competent attorney knowledgeable about Oklahoma insurance laws.