 ThinkTek Hawaii. Civil engagement lives here. Aloha. Welcome to Kondo Insider, Hawaii's show about living in an association, both for homeowners and board members. We talk about interesting talk weeks every week that affect associations and its owners. I would remind you if you have any questions or feel free to call in on 808-374-2014. Over the last couple weeks we've talked about insurance and thinking back in history and even recent history in Hawaii, I've seen and read where people think they have insurance and they buy insurance only to find out that the insurance company denies them coverage and there's a very prominent case in the paper recently here about the volcano and the Big Island and an owner who alleges that he and she have insurance and the insurance company refused to pay. So I thought it would be interesting to bring that topic up. There's a lot of changes going on in the industry and I invited a good friend of mine, Trent Ierle, local attorney who specializes in this field, to come on the show. Welcome. Thank you very much. Glad to be here. Tell us a little about yourself, your background and the company you work for. Well, I'm originally from California. I've been here in Hawaii for about 17 years. I work for Damon Keleon, Cupchuck Hastert and I specialize in insurance coverage issues. I represent mostly policyholders but also represent some insurance companies. So it sounds to me since that's kind of your field, this happens often or more than once a year. That's true. There's lots of people that have insurance coverage disputes with their insurance company and vice versa. Sometimes the insurance company is suing other insurance companies think they're responsible for the coverage. If you're just a basic person and you're looking at issues, do they go to a lawyer? Do they go to an agent? Where do they begin to look at their insurance needs? Well, I think if you purchase a business or purchase a home, you probably don't go to a lawyer initially. You go to an insurance broker who is familiar with what's available, who sits down and interviews you and asks what your business is like or what your home is like. And they are familiar with what products are out there and should be able to help you get adequate coverage. And in that case, I don't know of any, quote, policy holder that's ever read the policy. Now, am I alone at that thinking or do you find that people kind of have a general, I need insurance, I buy insurance, what's the limits I'm covered for and they don't read all the nitty gritty inside of that? Yeah, unfortunately, insurance policies are very, very complex to read. And even for lawyers, they can be very difficult to read. Typically, you have boilerplate provisions. Maybe it's like a 15 page policy. And then there might be endorsements or things that are added on or taken away from the policy. So it really takes a lot of study and a lot of understanding to really know what's in that policy. What seems to me it'd be extremely important for the person who the policyholder or future policyholder when talking to his broker to put time into this and really explain their business or their home and what they're trying to ensure so that the broker is carefully aware so that nothing is slipped through the cracks for lack of a better word. That's right. That's the way it should work. I think some brokers maybe aren't fully aware or knowledgeable about what's out there and maybe don't have the time or the patience to really delve into what's needed. But I think if you're a policyholder or a homeowner or a business owner, it really will help you if you find a good broker and sit down and take the time to really explain what your business or your home is like and what kind of coverage you need, what sort of risks you anticipate so that you're adequately covered. And I say may a culpa because after this big high rise fire we had on Coppola and Boulevard. We ran about the issues where tenants didn't realize they didn't have coverage for another place to live. They didn't have coverage for their personal belongings. We had owners who were renting the property didn't realize that they didn't buy sufficient coverage for lost income. And I was looking at my own policies after that and I realized that I had two properties I used for vacation rentals. And my policy covered loss of rental income of long term rentals but it excluded vacation rentals. So I thought I had coverage but the truth be told I didn't have coverage. And of course this all inspired me to go back and review in detail on my policies and find a company that would also ensure me for the lost rental income of a vacation rental. So I don't think enough emphasis can be made to make sure you put time and not just look at the limits of liability and think everything is covered really scope out what you are with included what may not be included. Yeah I think it might be really hard to anticipate exactly what what the risk might be who would have thought that you might need coverage for for the vacation rentals. Right. I assume that that'll never come up so I don't have to worry about that or it's just something you don't think about when you're thinking about insurance coverage. Well if you had a successful income from a vacation of $5,000 a month let's say and you're paying your mortgage and your maintenance fees and other costs taxes insurance and you lost that income. Well you may not have the taxes anymore because you have no income but the reality of it is you still got to pay your maintenance fees you still got to pay your mortgage you still got to pay these costs. So you probably need to look at what your exposure is when working with your broker to make sure theoretically covered. So what do you see the most common misunderstandings are with insurance companies and policy elders. Is there a common misunderstanding? Well I think you sort of hit the nail in the head when you said frequently you just assume everything is covered you paid your premiums you have policy limits you have some sort of disaster at your home and you just anticipate or believe that you're going to be covered. But like we said the insurance policy can be very complex. There's usually two parts one part gives you coverage it says we're going to ensure you for your loss or ensure you if you're sued for property damage or bodily injury but then on the backside of the policy there's lots of exclusions which take away coverage under specific instances. So to really understand what's covered and you know you really need to read the entire policy and understand the entire policy so I think there's a lot of misunderstanding on the part of policy holders if they're not familiar with all all the terms in the policy. So if you had a traditional homeowner policy and you lived in the volcano risk zone and the big island what do you say if someone said to you I know we don't have a policy or example in the technical but in general terms what do you say if someone says why don't you're not covered you're in a you're in a volcano risk zone you should have been smarter. Well if the Paul if the homeowner has told that by the insurance company I would ask the insurer to let me look at that policy and read through it and find out exactly what's covered and also get an understanding as to what a loss is what's happened because there might be there might be an argument for coverage. The insurance company might be looking at one exclusion and just automatically saying there's no coverage but you know there might be an argument for coverage if there's an ambiguity in the policy where there's a reasonable interpretation for coverage yet the insurance company is saying well we're reading this provision that says there's no coverage that's an ambiguity there's two reasonable interpretations and under Hawaii law the ambiguity has to be construed in favor of the policy holder. So a lawyer might be able to help help you figure out an argument to persuade the insurance company that there's coverage. Yeah I know typically in that particular area of the I'm going to call it the volcano risk zone that may not be the correct technical term but that the state put together a program of insurer to provide coverage for those some of those people but it was expensive of high deductibles and and probably wasn't going to fully restore them to the value but surely insurance company would think twice about ensuring those areas but they may have bought now one example on television was that the people had bought a policy from a company and they believe they have coverage and they believe that the insurer is denying coverage and I guess your recommendation is have a lawyer look at the policy itself before you just accept the insurance company's word. Right I think that that's always a smart choice. You know so give you an example of another issue that comes up with I think commonly misunderstood is I'll try to describe this. Assume you have one of our association clients have the policy as required by their contract they have to name the management company as a digital insurance. And so then they get into a dispute with the management company and threaten legal action or file a claim against the management company through a lawsuit. Is that management company insured what is this kind of like you're suing yourself kind of mentality or may not be covered. How does that all shake up. Right. So if the management company is an additional insured under the association's policy there's probably a separation of insured's provision in the policy which means if one insured is suing another insured then there's no coverage but probably the managing company is going to have their own policy so they will probably step in and defend and and indemnify if the managing company is is found to be liable. I think you mentioned something else earlier which frankly I see all the time in the paper is that sometimes you end up in these insurance coverage issues in a sense you may cross claim and sue someone because they have insurance or there's some other insurance it's almost like a protection mechanism to make sure all the potential bodies all their insurances and play on the claim. Does that make any sense. So a good plaintiff's lawyer is going to know that an entity a business or even a homeowner is covered because there's only going to be more in the pot that's available should the plaintiff be successful. There's a problem if they're colluding like you know the plaintiff is colluding with the party that it's suing and the party is saying well I have this insurance coverage so I'm not worried about this. The defendant who's being sued who's insured can't work with the plaintiff you know to to construe an argument so that there's coverage but a good plaintiff's lawyer you know in discovery is going to find out what sort of coverage there is they can ask for the insurance policy and get an understanding as to what sort of coverage the defendant has. And probably the defendant is looking at other sources that may be insured that may be maybe parties to and haven't been named yet. Right. So they'd be cross claims I guess. Sure. Or third party complaints. Third party complaints to try to bring in everybody as possible. Right. It gets pretty complex. So in the end the insurance company pays the lawyers get rich and poor management management company people are stuck with the work of fixing the building or fixing the problem. Well hopefully you have a good defense lawyer and you can get out of the claim I can prevail. So is there a duty to defend by the insurance companies versus sometimes you get this comment about well I have I'm going to defend you by my reserve my rights as far as the any damage is kind of a thing. I'm not a lawyer so I may not express this accurately to you. But right. So in a liability policy or what we call third party policy which protects you if you are sued such as a commercial general liability policy there is a duty to defend. So under Hawaii law it's a very broad duty. You only look at the language of the policy and compare it with the allegations in the complaint. You don't look at anything else to see if there's a duty to defend. And the Hawaii Supreme Court has said if there is any possibility of coverage based upon the allegations then the insurance company has a duty to defend and they must defend that claim all the way through an appeal. So it can be very expensive. It might be the defense costs might exceed you know what the indemnity the payment on any damages the defense cost might exceed that amount. That is the assured have any rights over whether or not the insurance company can settle the matter. Typically the insurance company wants to be a party or work with the insured to make sure that they both agree on the settlement. The insurance company doesn't want to be in bad faith and make a poor decision. But typically under the language of the policy the insurance company has not only a duty to investigate and to defend but it also has the right to participate and really take control of a settlement. And I want to ask some more questions about that but we want to take a short break here. We'll take a one minute break be right back with you. I'm enjoying our conversation with Tread Ireland and we'll talk more about insurance defense and insurance matters that may be questionable. Be right back. Hi I'm Dave Stevens the host of Cyber Underground. Every Friday here at 1 p.m. on thinktechkawaii.com. And then every episode is uploaded to the Cyber Underground. That library of shows that you can see of mine on youtube.com. And I hope you'll join us here every Friday. We have some topical discussions about why security matters and what could scare the absolute bejesus out of you if you just try to watch my show all the way through. Hope to see you next time on Cyber Underground. Stay safe. When it comes to managing your pain, you have a choice. Don't mask your pain with opioids. Choose to treat it with the help of a physical therapist. Physical therapists treat pain through movement and exercise. No warning labels required. And you get to actively participate in your care. Choose to improve your health without the risks of opioids. Choose physical therapy. We're back talking with Tread Ireland about insurance and whether what to do if someone says your claim is not covered and we mentioned briefly that we saw that recently on Hawaii News with an owner that lives in the volcano area and believes that their insurance company covered the policy. And if you go nationally there's been issues with Hurricane Katrina, Hurricane Sandy, where there was all sorts of national claims that insurance companies intentionally tried to avoid paying claims. I think that's an issue. I mean, do insurance companies try to avoid paying claims? You think they honestly look at them? Well, yeah, we discussed some examples. I know in Hurricane Katrina, the insurance companies tried to argue that the damage was not caused by wind but caused by flood because flood is a national policy funded by Congress and the insurance company administers the flood policies but they don't have to pay the indemnity if there's coverage. So they tried to funnel a lot of these cases to argue that the damage was caused by flood and not by wind. And we discussed in Hurricane Sandy a lot of the investigations that were going on of property. There were a lot of false affidavits and whatnot. So there are some pretty terrible stories about actions of some adjusters or it's not always the insurance company at IEP and adjusting agency that they've hired on the scene to go and investigate the claim. Well, in the world of condos, anyway, you've mentioned for some the magic word flood insurance. Well, what does flood insurance cover versus a regular property policy, for example? Well, homeowners need to be aware that their typical homeowner's policy does not cover flood. A lot of people think well, I'm covered, but flood is a separate policy. The insurance companies don't want to assume the risk of flood because it can be so expensive if there's flood damage. So you need to talk to your broker about a separate policy. They're usually administered by the insurance company, but they are controlled by federal law and federal regulation. You know, one interesting thing I just read a study that's been done like after Hurricane Harvey in Houston, a lot of people purchase policies right away after the hurricane. Of course, it's too late for coverage. And they said this is a pattern that was done after Hurricane Katrina. But then in two or three years, it's going to fall off because people, you know, there's no catastrophic storm. They don't, they figured they don't need the coverage. And they assume they're going to be safe for the next so many years. But that typically is a bad choice, leaving, you know, your major asset, your home. If you live in a flood zone, you know, you really, you really need that coverage. Well, I understand that the flood insurance is done to the federal government national flood. But didn't that probably, is either expiring July 31 of this year or August 31? Right. It's coming up very close to, if it hasn't already expired, it's going to expire very soon unless Congress takes some action too. And so what does that mean? Let's just say it was July 31. Does that mean there is no flood insurance for all these people? Well, there would be insurance, but they wouldn't write any new policies, which is kind of a terrible thing. They would still be responsible for existing policies, but they wouldn't, you know, in the next year or two when these policies expire, there wouldn't be any new policies that are written. So the fact that owners out there, associations out there have flood insurance today, and we have a hurricane heading towards the central Pacific, hopefully it doesn't hit us. But the fact that the Congress hasn't done anything wouldn't affect existing policyholders, in regard to whether or not they have flood insurance. Right. The insurance company and the federal government would still have to honor the existing policy. But they may not write any new policies for the future when the current policies expire. So if a current policy expired, you're saying they wouldn't be able to get flood insurance because the program had ended. Right. Yeah. So it's a, have you heard what's going on with the Congress on that? I mean, I haven't, which is kind of surprising. Of course, there's so many things going on in Washington, D.C., but you know, it's really, really important to renew that program and to get funding for it, because so many people are exposed to very dangerous conditions. Is this the Russian's fault? I don't know. No, I think it's something that everybody should be aware about there, because I know that C.A.I. Community Association Institute, our representatives in Congress were all fighting or lobbying or working on getting the National Flood Program bill, so it's reestablished. But we should all be aware that it's theoretically possible because Congress seems to move slow on these things. It's theoretically possible. People could get harmed out of this. If we had a hurricane and nothing is done in the short term, and we had a hurricane in the short term, it's theoretically possible people could be really hurt. Right. Yeah. I think it's time to write your congressmen or your senators and ask for their help in getting this program. I know the industry is working very hard on trying to get that done, because, you know, the other area is with FEMA. You know, those people don't realize that if you're insured and you had a hurricane in a home in our association, like Mililani, Princeville, places like that, that the cleaning of the roads wouldn't be covered by FEMA. You would need to pay for it out of your own pocket, and they mean we're all paying tax dollars. And so private roads are not covered by FEMA. And having been in Hurricane Ike in 1992 and being there on Kauai at that exact moment, I can tell you the devastation and the blockages that are roads and trees was humongous and the cost would have been huge to clear those roads. And that's another bill before the federal government today that are trying to do to get these private associations roads covered for they're covered by FEMA. What about cyber insurance? That seems to be the big bug these days. Right. So, you know, a lot of there's quite a body of case law on cyber issues under traditional policies, such as crime policies or property policies. But, you know, some courts have found there's no coverage under those policies. Typically, there has to be a direct physical loss of property to be covered under a crime policy or a property policy. And if you lose your data, is that is that a property law? Some courts have said no. So, the industry is working on developing specific cyber policies that only address cyber coverage. I've heard good things and bad things about such policies. It's still sort of an experimental area, you know, where the insurance companies aren't sure exactly what the risk might be. And maybe the coverage isn't is inadequate yet. So, I'm sure it's going to be several years before there's really adequate coverage that is going to protect potential cyber loss. The two examples I've been told and I'll try to describe them as best I can about cyber insurance that is I'm going to call the gray area may not be covered or twofold. Number one, someone accesses my database and gets your personal account information and gets your personal checking account and steals from you. And the only reason they did that is they were able to get information through my database saying I'm exposed to some liability. What's your thoughts on that? Well, you really need to know what the facts are and you need to know what the policy language is. If you intentionally pushed a button and transferred those funds to someone else, that's probably not an accident or an occurrence under a liability policy. And there's probably an argument that there's no coverage. You might be liable, but you may not have insurance coverage. The other one I've heard is they do the same thing. And then they get information that's derogatory about me. They posted all over Facebook or this Twitter social media type stuff, defaming me in a way because they were able to access my database and get information about me that I use it in some of the public forum. But the causation was all because they had access to my database. Right. What about that? Well, if there's if you sue them, they might have coverage. You know, defamation is something that's usually covered under a liability policy. As far as you're being defamed, I think your remedy would be to sue them. And then hopefully their insurance company would stand behind them and pay any damages. My thoughts are the Russians that we don't know where they are. We can't find them to sue them. But yeah, but I think it's an interesting point because the cyber insurance here is kind of a new area. And there really is no rules to speak of. I think some real basic things probably which we know, but this is expanded beyond one's imagination, but the types of potential problems, liabilities you might have through the cyber world for lack of other choice. And like I said, there are some new policies that are coming out, but there's a little to no case law interpreting what those policies mean. So that's that's going to be a developing area. So in general, how do you see the insurance industry changing? Well, I think it's it's a difficult business. You know, there's a lot at stake and the insurance companies have to be very careful about what risk they're willing to ensure, you know, what the proper premiums should be, what the limits should be on the policy. They may want to they may be a need to revise the policy, you know, based on case law, there may be a surprise that a court finds coverage and they didn't intend to be coverage. So they have to write a whole new exclusion, you know, to prevent that. So it's really a moving target at all times. Well, we've had a tremendous conversation. We're out of time. I guess the magic words for the summary for today's show is have a real conversation with your insurance broker about what your needs are and make sure you have the proper coverage endorsements to make sure you're protected because it's a complex world of insurance. We don't know everything. But if you don't look at it seriously and responsibly, you could find yourself not covered under the event of a claim. Right. And then I think if you're not covered, you need a good coverage lawyer to delve into it and see if you think you've been harmed by this and you should be covered. Talk to a lawyer and I can tell you from experience I've had claims that I was denied coverage by talking with a lawyer. I ended up getting coverage that's a worthwhile endeavor. So thank you so much for being here today. We thank all of you for watching Kondo Insider. See you next Thursday, 3 30. Aloha.