It is Prudent to Read the Policy Before You Sue
Barry Zalma
May 10, 2023
Read the full article at https://lnkd.in/gFsmsfuq and see the full video at https://lnkd.in/gjyA88Eg and at https://lnkd.in/gZPVXAzY and at https://zalma.com/blog plus more than 4500 posts.
The insured sued its insurer for what it believe was the limit of liability of its policy for damage to property by fire. The insurer defended based on the fact that as an excess policy in one of multiple lawyers of insurance coverage it was only obligated to pay that proportion of the loss as described in the policy. The Insured sued and the USDC for the Eastern District of Washington resolved the dispute by reading the full policy in Oregon Potato Company v. Kinsale Insurance Company, No. 2:22-CV-0049-TOR, United States District Court, E.D. Washington (May 5, 2023).
BACKGROUND
In a first-party property insurance excess coverage dispute the USDC was faced with competing motions for summary judgment. Plaintiff Oregon Potato Company (“OPC”) sued Kinsale Insurance Company for (1) declaratory judgment, (2) breach of contract, (3) insurance bad faith and breach of the covenant of good faith and fair dealing, (4) violation of Washington’s Unfair Claims Settlement Practices Act and Consumer Protection Act, and (5) reservation to assert claims for violation of Washington’s Insurance Fair Conduct Act.
OPC is a Washington corporation headquartered in Pasco, Washington that processes vegetable products and has a facility in Warden, Washington.
On January 21, 2021, a fire destroyed or damaged OPC property in Warden.
Before the fire OPC had purchased first-party property insurance covering its properties written in three layers, with the last insurer, Kinsale taking (20%) over the second excess layer for $25,000,000 to $50,000,000 for the shares shown in their respective parentheses. Kinsale expresses liability as “$5,000,000 Part of $25,000,000 Excess of $25,000,000 Per Occurrence.”
Kinsale’s policy contains the following Insuring Agreement: "The company will indemnify the Insured for our share, as shown in Item 1 of the Declarations Page of this Policy, of the Ultimate Net Loss caused by the direct physical loss or damage to Covered Property in excess of the Primary and Underlying Excess Insurance as shown in the Schedule of Underlying Insurance of this Policy, occurring during the policy period. This agreement is subject to the following terms, conditions and any endorsements to this Policy."
Kinsale’s policy defines “Ultimate Net Loss” as follows: "Ultimate Net Loss shall mean the actual loss sustained by the Insured as a direct physical result of the peril(s) insured against by the policy(ies) of the Primary and/or Underlying Excess Insurer(s) limited by: a. Any sub limited contained within this Policy or the policy(ies) of the Primary and/or Underlying Excess Insurer(s), and b. Making deductions for any salvage and recoveries from any source other than this Policy and the policy(ies) of the Primary and/or Underlying Excess Insurer(s)."
The first sub-location listed on the Statement of Values, shown in paragraph 10, was severely damaged. Kinsale initially viewed OPC’s loss as “a complete loss to our layer/capacity” and set reserves at is full $5 million limit. Kinsale does not dispute that this was its preliminary determination but contends that it was subsequently superseded by a more accurate determination of a lower loss reserve after investigation and evaluation proceeded.
OPC sent an Insurance Fair Conduct Act notice to Kinsale asking to pay its full $5 million limit. Kinsale responded that its policy “unambiguously” provides only “limited liability for Location 1 to the $25,100,000 stated value” and that its limit of liability is not $5 million, but instead 20% of every dollar of loss above $25 million.
OPC contends it is currently entitled to payment of the remaining balance of Kinsale’s $5,000,000 policy limit and Kinsale contending that it has paid all sums due according to proofs of loss submitted to date.
DISCUSSION
The “Occurrence Limit of Liability Endorsement” (“OLLE”): OLLE is a modification to the underlying policy and sets the upper limits of Kinsale’s liability. The OLLE is read in conjunction with the rest of the policy as “ALL OTHER TERMS AND CONDITIONS OF THE POLICY REMAIN UNCHANGED.”
The underlying policy states that Kinsale will indemnify OPC “for our share … of the Ultimate Net Loss . . . in excess of the Primary and Underlying Excess Insurance as shown in the Schedule of Underlying Insurance of this Policy”.
Taken together, the language of Kinsale’s policy is not ambiguous. Kinsale’s insurance policy provides excess coverage, which when triggered, is for their “share”, i.e., $5 million out of the $25 million, or 20 percent. Kinsale’s proportional/share liability does not automatically entitle OPC to $5 million under the OLLE – to read otherwise would entitle OPC to overlapping, not excess, coverage. It was only required to pay 20% of the amount owed by its share of the total loss.
Therefore, summary judgment in Kinsale’s favor is appropriate.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.
Consider subscribing to my publications at substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected]
Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257
Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.
Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://lnkd.in/gfFKUaTf.
Consider subscribing to my publications at substack at https://lnkd.in/gcZKhG6g
Go to Newsbreak.com https://lnkd.in/g8azKc34
Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected]
Follow me on LinkedIn: https://lnkd.in/guWk7gfM
Go to Barry Zalma videos at Rumble.com at https://lnkd.in/gV9QJYH; Go to Barry Zalma on YouTube- https://lnkd.in/g2hGv88; https://lnkd.in/gAXsGjdi;
Go to the Insurance Claims Library – https://lnkd.in/gWVSBde.
Happy Law Day
ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
See the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
Read the full article at https://lnkd.in/gzvvdkMZ and at https://zalma.com/blog.
Below you will read from this post until you reach the the end of this blog post as the free part of an Excellence in Claims Handling post. To read the full article and receive all articles for members of Excellence in Claims Handling you should consider joining as a paid member to get full access to articles for members only, to our news, analysis, insurance coverage, claims, insurance fraud and insurance webinars, by clicking at the subscription link below.
A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
