Proof of Accidental Direct Physical Loss Shifts Burden to Insurer on an All Risk Policy
Post 5024
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Insured Must Prove Actual Loss Causing Peril to Claim on Named Peril Policy
In Mark Alan Barger, Jr.; Margie Barger v. State Farm Fire and Casualty Company, No. 24-60178, United States Court of Appeals, Fifth Circuit (March 7, 2025) the difference between the burden of proof needed for an “all risk” coverage and named peril coverage.
Mark Alan Barger, Jr., and Margie Barger (“the Bargers”) appealed the district court’s grant of summary judgment in favor of their homeowners’ insurer, State Farm. The Bargers contended that the district court, in evaluating their insurance claim, erroneously assigned them the burden of proving that a specified “named peril,” or “covered event,” caused damage to their roof and necessitated its replacement.
FACTS
In June 2021, a storm in Greenwood, Mississippi, caused significant rainfall, leading to rainwater leaking through the Bargers’ roof and interior ceilings, causing damage to multiple rooms in their house. State Farm refused to cover the cost of replacing the entire roof, concluding that only nine wind-damaged shingles and a small area of roofing membrane were covered by the policy. The Bargers eventually paid for a new roof in March 2022 and subsequently sued State Farm for breach of contract.
The district court granted summary judgment in favor of State Farm, reasoning that the Bargers failed to prove that a covered event caused the additional damage.
ANALYSIS
Under Mississippi law, when an insured makes a claim under an “all-risk” coverage the insured (the Bargers) only needed to prove that an “accidental direct physical loss” occurred to their dwelling. Once established, the burden shifted to the insurer (State Farm) to prove that a policy exclusion applied.
State Farm maintained that the district court’s reference to Coverage B, rather than Coverage A, had no impact on the application of the burden of proof and was nothing more than a clerical error [that] did not affect the outcome of the case and should be disregarded as harmless.
The language of the “Coverage A-Dwelling” section of the Bargers’ State Farm policy unquestionably provided “all-risk” coverage, whereas the “Coverage B- Personal Property” section only covered property loss caused by certain specified perils the “named perils” coverage of “Coverage C-Personal Property.” The Bargers were required to prove, by a preponderance of the evidence, that the “direct physical loss” to the property described in Coverage C was caused by wind.
The Fifth Circuit was convinced that the district court improperly allocated the burden of proof regarding causation to the Bargers, rather than to State Farm. The Fifth Circuit was not convinced that the error had no impact on the district court’s summary judgment decision and, therefore, the Fifth Circuit reversed the district court’s summary judgment ruling, vacated the dismissal of the Bargers’ breach of contract claim, and remanded the case for further proceedings.
ZALMA OPINION
The State Farm policy contained two different types of coverage: (1) an all risk policy for the structure and (2) a named peril coverage for the contents. The District Court erroneously applied the named peril coverage to the entire claim when it should have applied the “all risk” requirements to structure and named peril requirements to the contents. The Bargers fulfilled the all risk requirement but may not have fulfilled the named peril requirement for loss to their contents so the court reversed and returned the case to the District Court to rule on both aspects of the policy.
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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
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 ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
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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 ...
Professional Health Care Services Exclusion Effective
Post 5073
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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 ...
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...
