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August 23, 2024
Move From Colorado to Missouri Defeats Coverage

Insured Must Reside at Premises at Time of Loss
Post 4860

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Perla Olave owned a house in Thornton, Colorado, that was insured by American Family Mutual Insurance Company, S.I. In late 2017, Ms. Olave began spending a majority of her time in Missouri, and starting in March 2018, she allowed the family of her brother, Jamie Darci Olave-Hernandez, to live in the Thornton house. In September 2020, the house was damaged by fire. Ms. Olave had last stayed there in December 2019, and she had not spent a day in Colorado in 2020.

In Perla Olave; Jamie Darci Olave-Hernandez v. American Family Mutual Insurance Company, S.I., No. 23-1337, United States Court of Appeals, Tenth Circuit (August 15, 2024) the Tenth Circuit resolved the dispute over the meaning of the term “reside.”

BACKGROUND

American Family denied Ms. Olave’s and Mr. Olave-Hernandez’s claims under the insurance policy on the ground that Ms. Olave did not reside in the Thornton house at the time of the fire and had not complied with the policy’s requirement to notify American Family of her change in residence.

Ms. Olave and Mr. Olave-Hernandez (collectively, the Appellants) sued American Family and the district court granted summary judgment to American Family.

The Policy.

In December 2016, Ms. Olave represented in her application that she and her child would be the only residents of the Property, it would be her primary residence, and it would be owner-occupied. American Family renewed the policy in December 2019 (the Policy). The Policy’s Declarations identified Ms. Olave as the named insured and the Property as a “Primary Residence”.

Change in Occupancy.

In January 2018, she enrolled her child in school in Missouri and obtained a business license there. At that point, the Property was vacant. When the Policy was up for renewal in December 2019, Ms. Olave told her insurance agent that her mailing address had changed to Missouri, but that she was still living at the Property and was going back and forth to Missouri for work.

The Claim and Investigation.

The Property was damaged in an electrical fire on September 15, 2020. Ms. Olave was in Missouri.

The last time she had stayed at the Property was some weeks in December 2019; the time before that was in August 2019. But due to the COVID-19 pandemic, she had not spent a single day in Colorado in 2020. She also stated she had a Missouri driver’s license, and her Colorado driver’s license had expired in 2018.

American Family Denied Coverage.

In January 2021, American Family denied coverage because:

1 Ms. Olave’s Colorado vehicle registration for a 2018 Jeep Grand Cherokee expired in 2018;
2 Social media posts by Ms. Olave since 2018 were from Missouri;
3 Ms. Olave was the owner of Frida Microblading Studio located in [the city of] Town and Country Missouri and Ms. Olave maintains her tattoo license with the State of Missouri;
4 A blog focused on Ms. Olave’s business states that Ms. Olave “move[d] to the St. Louis area . . . to ensure that her daughter grew up around extended family;” and
5 Most notable, Ms. Olave registered to vote in Missouri beginning on 2/01/2018 and continuing through the date of loss.

Ms. Olave’s residency at the Property the District Court identified four relevant factors:

1 the subjective or declared intent of the individual,
2 the formality or informality of the relationship between the individual and members of the household,
3 the existence of another place of lodging, and
4 the relative permanence or transient nature of the individual’s residence in the household.

The District Court held that Ms. Olave breached her obligation under the Policy to notify American Family of her change of residence within 30 days.

The District Court granted summary judgment to American Family on the bad faith and statutory delay/denial claims.

DISCUSSION

Under Colorado law, residence denotes a place where a person dwells. It simply requires bodily presence as an inhabitant in a given place. Ms. Olave’s focus on her intent, without regard to her physical presence, is not a reasonable interpretation of “reside” under Colorado law.

The Court Did Not Err In Holding The Misrepresentations Were Material.

A misrepresentation will be considered material if a reasonable insurance company, in determining its course of action, would attach importance to the fact misrepresented.

No reasonable juror could conclude that an insurance company would not attach importance to the alleged reason for Ms. Olave’s travel where the Policy specifies a “work related travel” exception to the requirement to report the Property as “uninhabited” and no reasonable juror could conclude that an insurance company would not attach importance to a statement of ownership of items at the Property in determining whether Ms. Olave truly resided at the Property, as she claimed.

ZALMA OPINION

A homeowners policy is a contract of personal indemnity that requires the person who is the subject of the insurance actually live in the property that is the subject of the insurance. Ms. Olave did not live at the Colorado house and lied to the insurer when she renewed the policy that she lived there as her primary residence. It burned when someone else lived there and she resided in Missouri not Colorado.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:10:18
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Ambiguity in Insurance Contract Resolved by Jury

Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105

See the full video at https://lnkd.in/gPa6Vpg8 and at https://lnkd.in/ghgiZNBN, and at https://zalma.com/blog plus more than 5100 posts.

Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.

In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.

BACKGROUND

Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....

00:07:02
June 23, 2025
The Clear Language Of The Insurance Contract Controls

Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104

Read the full article at https://lnkd.in/gbcTYSNa, see the full video at https://lnkd.in/ggmDyTnT and at https://lnkd.in/gZ-uZPh7, and at https://zalma.com/blog plus more than 5100 posts.

Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy

In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.

The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS

Parties Involved:

CAEA is insured by Associated Industries Insurance Company, Inc. ...

00:08:22
June 20, 2025
Four Corners of Suit Allows Refusal to Defend

Exclusion Establishes that There is No Duty to Defend Off Site Injuries

Post 5103

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Attack by Vicious Dog Excluded

In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)

Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that

1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.

Presently before the Court are two ...

00:08:29
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:

Health Care Fraud Trial Results in Murder for Hire of Witness

To Avoid Conviction for Insurance Fraud Defendants Murder Witness

In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Immigrant Criminals Attempt to Profit From Insurance Fraud

People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.

The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

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