Appellate Court Rules a Waiver of UM Coverage Can Only Be Changed at the Insured’s Written Request

In Dunlap v. Empire Trading Group, LLC, the buyers of a home sued the seller and the seller’s real estate agent for fraud after the home flooded three times in the first year after they bought the home. The seller was a home-flipper who disclosed two prior flooding incidents, both of which occurred during the ten months the seller owned the home.

However, the plaintiffs later discovered the home had a substantial flooding history when they requested a flood insurance quote from the National Flood Insurance Program. The quote included a report that identified eighteen incidents of flooding and flood insurance claims at the property over the ten years before the plaintiffs purchased their home.

The plaintiffs argued the seller’s agent committed fraud because she concealed her knowledge of previous flood claims. The seller’s agent moved for summary judgment, arguing that the plaintiffs could not prove that she knew about any of the prior undisclosed flooding incidents. The plaintiffs had no direct evidence to dispute the agent’s defense.

Instead, they argued that circumstantial evidence was sufficient to defeat the motion. They claimed that because the seller had a flood policy on the home, it also would have received the same flood claim history the plaintiffs received in connection with the same federal program. However, the plaintiffs had no evidence to show the seller, or anyone affiliated with the agent’s firm, actually received the flood claim history as they alleged.

Based upon these facts, the court agreed that without evidence that the seller’s agent actually received the flood claim history or otherwise had knowledge of it, the plaintiffs could not carry their burden of proving misrepresentation by the agent.

Case Reference: Dunlap v. Empire Trading Group, LLC, 2021-0180 (La. App. 1 Cir. 10/18/21), 331 So. 3d 932.

Louisiana insurance law recognizes a practical problem faced by many: the need to obtain alternative transportation when the car won’t start. Under La. R.S. 22:1296, any insurance on your personal vehicle must also extend to vehicles that are used as “temporary substitute autos.”

The statute provides that a car’s status as a “temporary substitute auto” depends on how the term is defined in the particular auto policy at issue. However, some rules typically apply to determine whether the auto is a “temporary substitute.” First, the use must be temporary, i.e. limited in duration. Second, the car must be a substitute for the auto insured under the policy and used for the same purpose. Third, policies typically limit coverage to substitute vehicles that the driver does not own.

Some policies also limit coverage by requiring that the substitution be needed for a purpose identified in the policy, such as the breakdown, repair, or destruction of the covered auto.

While the statute generally defers to the definition of “temporary substitute auto” provided in the policy, sometimes courts will overrule the insurer’s definition. For instance, in State Farm Mutual Automobile Insurance Company v. Safeway Insurance Company, 50-098 (La. App. 2 Cir. 9/30/15), 180 So.3d 450, the relevant policy defined a “temporary substitute auto” as a substitute for the owned auto when the owned auto was “being serviced or repaired by a person engaged in the business of selling, repairing, or servicing motor vehicles.” The case involved a motor vehicle accident that occurred while the policy holder operated a borrowed vehicle but before she brought her usual vehicle to a mechanic.

Citing the terms of the policy, the insurer denied coverage on grounds that the policy required the “temporary substitute auto” not only take the place of the driver’s usual vehicle, but also that the driver take the car to a mechanic before coverage would extend to the substitute vehicle. However, the court found this requirement to be against the public policies behind La. R.S. 22:1296 and found coverage under the policy extended to the borrowed vehicle.

Unfortunately, recent flooding and storm events have again affected our area in Louisiana. Many people experienced flooding and storm damage to their homes and businesses. If you experienced flood or storm damage, please consider following these steps to ensure your damage claim is properly documented and submitted:

• DOCUMENT, DOCUMENT, DOCUMENT - Once you are able, make sure to document the damages to your home and contents. Whether for a homeowners or flood insurance policy or to obtain government assistance, take plenty of photos and video of the damage. Make a list of the items that were damaged or destroyed. One way to organize this list is to group items from each room together, approximate its age, where it was purchased, and its value when purchased. It will be more difficult to document your claim once the cleanup or rebuilding begins.

• OBTAIN MULTIPLE ESTIMATES -To the extent you are able, obtain multiple estimates for the work needed on your home. Pay for the estimate if necessary. If you have three estimates and the amounts are close, they are much more credible. Also, try and get as much detail as possible in each estimate, including specific materials to be used, dimensions, and finishes.

• NOTIFY YOUR INSURER – Whether a homeowners or flood policy claim, or other insurance claim related to your business, promptly notify your insurer of your damage. Your insurer will send someone to inspect the damage and start your claim. Provide as much information as possible to make their job as easy as possible. That will likely quicken the pace of your claim.

• FLOOD CLAIMS – If you have flood insurance, it is likely provided by the federal government through the National Flood Insurance Program (NFIP). There are specific rules for submitting your claim through the NFIP. YOU MUST SUBMIT FEMA FORM 086-0-11 (NOTICE OF LOSS) WITHIN 120 DAYS OF YOUR DAMAGE. You can find this form here.