Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
September 25, 2024
Genuine Dispute Requires Reversal of Summary Judgment

Property Damage Invokes Insurer’s Duty to Indemnify
Post 4898

Posted on September 25, 2024 by Barry Zalma

See the full video at https://rumble.com/v5g6cgt-genuine-dispute-requires-reversal-of-summary-judgment.html and at https://youtu.be/1sdBmIg4KnY

The Fifth Circuit was asked to determine if “property damage” existed that would invoke an insurer’s obligation to indemnify under a common Commercial General Liability insurance policy had occurred. The district court determined there was no property damage under the policy, and the insurer therefore had no duty to indemnify the insured for an adverse state arbitration award.

In TIG Insurance Company v. Woodsboro Farmers Cooperative, No. 23-40435, United States Court of Appeals, Fifth Circuit (September 20, 2024) the court determined that there was property damage.
FACTUAL BACKGROUND

In March 2013, Woodsboro contracted with E.F. Erwin, Inc. to construct two Brock 105′ diameter grain silos in Woodsboro, Texas. Erwin hired subcontractor AJ Constructors, Inc. (“AJC”) to construct the silos, and Erwin was responsible for supervising the work.

Brock silos start as kits shipped from the manufacturer and are then assembled according to the manufacturer’s manuals and specifications. In short, constructing a silo is a matter of assembly. It requires putting the pieces together pursuant to the manufacturer’s instructions.

AJC began erecting the silos in May 2013 and completed its work in June or early July.

According to Woodsboro, at this time Erwin represented that the silos were ready to be used as intended. However, several defects were discovered that caused the silos to leak. Erwin attempted to repair the defects but was unable to make them watertight.

Woodsboro then contacted Buck Pitcock of Pitcock Supply, Inc., to inspect the silos. Pitcock observed numerous faults with the silos’ assembly. Pitcock attributed the damage to AJC’s “poor workmanship.” Woodsboro hired Pitcock Supply to repair the silos. When Pitcock Supply finished its work in June, Woodsboro’s total cost was $805,642.74.

In August 2014, Woodsboro sued Erwin in Texas state court for breach of contract and the case was sent to an arbitration panel. The panel found AJC had negligently constructed the silos; the silos were defective and did not conform to the construction contract and subcontract; and Erwin was unwilling or unable to repair them. The panel awarded Woodsboro a total of $988,073.25 in damages.

TIG Insurance Company (“TIG”), sued Woodsboro and Erwin and sought declaratory relief on its duty to defend and indemnify as Erwin’s insurer. The court granted TIG’s motion as to its duty to defend, finding the underlying pleadings failed to show that Erwin’s breaches resulted in “property damage” required for coverage under the policy and, even if such damage existed, several exclusions would apply.

The district court granted the remainder of TIG’s motion for summary judgment. The court concluded there was no “physical injury to tangible property” because of Erwin’s breach apart from defective construction, nor was there any “loss of use” of the silos because the arbitration panel found that Woodsboro had lost profits on account of Erwin’s late delivery of the project.
DISCUSSION

The duty to defend is governed by the eight-corners rule, that is determined solely by the facts alleged in the petition and the terms of the policy. The duty to indemnify, on the other hand, is determined by the actual facts establishing liability in the underlying suit, and therefore generally cannot be ascertained until the completion of litigation.

Once Woodsboro filed a petition for breach of contract, there existed a potential claim for coverage sufficient to constitute a case or controversy and confer standing on TIG as Erwin’s insurer.

The Fifth Circuit concluded that the district court did not err in “defer[ring] resolution of indemnity issues until the liability litigation [was] resolved” and a final judgment was entered.
TIG’s Motion For Summary Judgment

TIG may have a duty to indemnify. Erwin holds a standard Commercial General Liability (“CGL”) insurance policy. Under Texas law, “physical injury” to tangible property requires tangible, manifest harm and does not result merely upon the installation of a defective component in a product or system. The district court determined Erwin’s role was more akin to defective installation requiring repair than defective work which caused physical damage to other property.

Based on testimony and evidence, the panel found the silo bins as originally constructed by AJC, were defective. Although the district court’s interpretation might be reasonable on the face of the arbitration decision, it failed to make all inferences in Woodsboro’s favor as the nonmoving party. Pitcock observed degradation to the rest of the structure.

The record reveals at least some evidence of wind and weather damage during the policy period. Satisfied that the evidence, when viewed in the light most favorable to Woodsboro, supports the determination that “property damage” occurred, the Fifth Circuit looked at the exclusions.

There is evidence suggesting that sometime between AJC’s exit from the project and Pitcock’s assessment in May 2014, wind and weather damaged the silos. Thus, damage from the wind and weather could have occurred after AJC’s “active performance of work.”

The Fifth Circuit concluded that a genuine dispute of material facts existed making the district court’s grant of summary judgment improper. Physical injury can be inferred from the arbitration panel’s findings and the evidence, but that is inappropriate at this stage so the district court’s judgment was reversed.
ZALMA OPINION

Property damage was seen to have occurred after all work was done on the silos before they were replaced. Since wind may have caused damage to the defectively built silos there was evidence of property damage and raised a potential for the existence of coverage to indemnify the insured who improperly and defectively constructed the silos.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.

Subscribe to my substack at https://barryzalma.substack.com/subscribe

Go to X @bzalma; Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg

Go to the Insurance Claims Library – https://lnkd.in/gwEYk

00:09:15
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
July 22, 2026
The Real Cost of Fraud

The Largest Residential Burglary of All Time
Post 5407

Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma

See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv

This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.

This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.

After ...

00:12:33
July 20, 2026
Search Warrant Produces Evidence of Insurance Fraud

Chutzpah is not Enough
Post 5397

Posted on July 20, 2026 by Barry Zalma

See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX

Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.

In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”

As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.

LAW:

The ...

00:08:22
July 17, 2026
The Great Jewel Theft

Fraud Shouldn’t Pay

Post 5396

See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA

This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.

The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.

One month after the policy was ...

00:09:42
9 hours ago
Plaintiff Sues Because State Employees Stigmatized Her

Day Care Owner Loses Subsidies Because She Criticized State

Post 5421

Posted on August 11, 2026 by Barry Zalma

First Amendment Right Will be Allowed to Go to Trial

In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.

She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...

post photo preview
August 05, 2026
It Doesn’t Pay to Lie in an Application for Insurance

Rescission for Material Misrepresentation
Post 5418

Posted on August 5, 2026 by Barry Zalma

An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.

In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:

A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...

post photo preview
August 05, 2026
It Doesn’t Pay to Lie in an Application for Insurance

Rescission for Material Misrepresentation
Post 5418

Posted on August 5, 2026 by Barry Zalma

An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.

In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.

LAW:

A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.

DISCUSSION/ANALYSIS:

As a result, the...

See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals