RTFP – Court Reads the Full Policy
Barry Zalma
Nov 17, 2023
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Mark Scafella appealed the order granting Erie Insurance Company (“Erie”) and Stanley Geho’s summary judgment in the underlying declaratory judgment action. In Mark Scafella v. Erie Insurance Company and Stanley Geho, No. 22-ICA-173, West Virginia Intermediate Court of Appeals (November 14, 2023) the West Virginia Court of Appeals resolved the dispute by reading the full policy.
FACTUAL BACKGROUND
The insurance claims Scafella made following that fire loss did not provide the result he desired and litigation followed.
THE POLICY
The property was insured under a homeowner’s policy of insurance issued by Erie (“policy”).
The the policy contained a standard business pursuits exclusion, which excluded loss to property “1. used in whole or in part for “business” purposes …; or 2. used to store “business” property.”
It was undisputed that Mr. Scafella chose the insurance quote that did not include the incidental farming endorsement, a less costly option. It is further undisputed that Mr. Scafella averred that he did not conduct “any business or occupational pursuits at the premises.”
Mr. Scafella began operating a business out of the milk house contrary to the statements on the application and that Olivia’s, LLC (“Olivia’s”), was a retail store selling meat, cheese, and sandwiches.
THE CLAIMS
The Court of Appeals concluded that the large barn area where the fire occurred and the milk house (where Mr. Scafella operated Olivia’s) are the same structure. In fact, when providing a recorded statement to Erie after the fire loss, Ms. Smith identified the barn and the milk house as being part of one building.
ZALMA OPINION
When a person is given a choice of available coverages and chooses the one less expensive he or she is gambling that future losses will fit within the lesser coverages. If, in addition the prospective insured misrepresents the facts at the site of loss to obtain the less expensive coverage the insured is committing fraud. After the loss Scafella attempted to change the policy he purchased into the policy he refused to pay for, with multiple legal machinations that the courts of West Virginia refused to honor. The moral: always tell the truth to your prospective insurer and never buy a policy that does not provide coverage for the risks the property faces.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Company Overview:
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Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
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This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
