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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Chutzpah: After Criminal Prosecution Defendant Sues USA
Post 5164
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Dr. Segun Patrick Adeoye, a medical doctor, filed a lawsuit against the United States of America, seeking damages for alleged violations during his criminal prosecution. He was acquitted by a jury but claims to have suffered significant harm, including financial losses, damage to his professional reputation, and personal distress.
In Dr. Segun Patrick Adeoye v. The United States Of America, Civil Action No. 4:25-cv-83, United States District Court, E.D. Texas, Sherman Division (July 23, 2025) the USDC dismissed Adeoye’s suit.
FACTUAL BACKGROUND
Dr. Adeoye was indicted on charges of conspiracy to commit wire fraud and money laundering. The indictment alleged that he and his co-conspirators obtained at least seventeen million dollars through various fraudulent schemes. Despite being acquitted, Dr. Adeoye claims that his ...
Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
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Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
Read the full article at https://lnkd.in/dNpKKcYx, see the full video at https://lnkd.in/dNgwRP8q and at https://lnkd.in/dA9dvd-D, and at https://zalma.com/blog plus more than 5150 posts.
Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
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 ...
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 ...
