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How to Recover for Breach of Contract - Insurance Bad Faith Law - YouTube
Channel: Medical Malpractice Lawyers of NY
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hello my name is michael glass I'm a
partner with Rappaport glass levine and
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Zullo we're attorneys in New York and
what we're going to talk about today are
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some general concepts in the law when a
homeowner's insurance carrier refuses to
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pay for damage that you believe is
covered under the policy the first and
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most important principle is that the
insurance policy is a contract it's a
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contract between the homeowner and the
insurance company the insured that's you
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the homeowner pays a sum of money which
is called a premium they pay that
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premium for the peace of mind and the
comfort of knowing that you will be
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protected in the event of some kind of
catastrophe but what happens when the
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insurance carrier refuses to pay or
delays payment under the policy
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when the insurance company fails to
comply with its end of the bargain
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it has breached the contract and it is
responsible to the homeowner for
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contract damages usually that means that the insurance carrier would be compelled
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to pay for the cost of the damage or the
cost of the repair that the insurance
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policy provided for these damages are
called actual damages many such claims
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have been made in the northeast
following the massive damage caused by
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superstorm sandy the more interesting
and difficult question however is
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whether the homeowner can recover
damages beyond the terms of the policy
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for losses which might be termed
consequential damages
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for example can the insured the
homeowner claim damages for his or her
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aggravation and upset due to the
carrier's bad faith failure to honor the
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policy or recover lost wages caused by
the inability to work as a consequence
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of the insurance carriers failure to
promptly resolve the claim these are
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damages caused by the carrier's bad
faith and there's an implicit promise in
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every insurance contract that the
carrier will deal with the homeowner in
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good faith now in New York our highest
court has opened the door at least a
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crack to such claims for consequential
damages or damages not specifically in
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the insurance policy in two important
cases in the field of insurance law
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damages our Court of Appeals that's our
highest court noted that under New York
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law consequential damages can be
available in a breach of contract action
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against an insurance carrier but those
damages must be of the type that the
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parties reasonably contemplated when the
insurance was written the rationale is
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that a party to a contract is liable for
those risks that were foreseen by the
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parties when the contract was entered
into as well as those risks which should
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have been foreseen at the time the
contract was made the consequential
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damages however must be specific
it cannot be speculative or conjectural
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so for example if the claim for
consequential damages was for the loss
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of profits from a business venture which
was shut down by virtue of the insurance
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carriers bad faith delay in paying
claims that kind of loss would have to
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be capable of proof by known and
accepted measures that are consistent
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with assessing that type of loss
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the decision in Chafee versus farmers
new century insurance company represents
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a good example of the possibility of
raising consequential damage claims in a
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homeowner's insurance context in New
York in Chafee a homeowner sued his
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insurer following a fire which burned
his house and its contents
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the homeowner claimed the insurance
carrier failed to pay the damages which
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were incurred and unreasonably delayed
review of the claim and also
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misrepresented the benefits of the
policy to the homeowner the homeowner
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sued for damages caused by the fire but
sought additional damages caused by the
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insurance carriers frustration of the
homeowners own attempts to lessen of
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what we lawyers call mitigate the damage
which was caused by the fire well the
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insurance company asked the court to
throw out those additional claims as
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outside the scope of the contract but
based on these higher New York Court
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decisions the court refused finding that
the claims were properly part of the
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homeowners breach of contract case and
the court ordered that the claim could
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go forward to a trial New York courts
have also held that although rare there
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can be circumstances in which an
insurance companies conduct is so
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outrageous it can give rise to a claim
for negligent or intentional infliction
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of emotional distress on the homeowner
one example is a case called ural versus
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encompass Insurance Company of America
in that case the court indicated that to
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support such a claim the insurance
carriers conduct would have to so
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transcend the bounds of decency as to be
regarded as atrocious and intolerable in
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civilized society
the pretty tough standards to meet and
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in that case the court found that the
claims did not rise to such a level and
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the claim was actually dismissed
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in summary then when an insurance
company fails to fulfill its promises in
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its insurance contract the homeowner can
assert a claim for breach of contract
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and within that claim demand
reimbursement of actual damages or
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losses that the homeowner sustains in
addition the homeowner can seek
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consequential damages as long as those
damages are reasonably foreseeable
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specifically identified and redeemed to
be within the contemplation of the
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parties at the time the insurance
contract was entered into nonetheless it
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is equally clear that the bar to proving
these extra damages these consequential
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damages in New York is high and it will
be the rare claimant whose proof has
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strong enough legs to clear that bar
this is Michael glass from Rappaport
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glass Levine and Zullo and I hope this
information has been of some help to you
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if you have any questions or would like
to contact our office we can be called
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at our toll-free number 800-734-9445
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