As a North Carolina Bad Faith Insurance lawyer, I deal with cases where homeowners insurance or commercial insurance wrongfully adjusts or wrongfully handles storm claims. These claims typically include refusing to pay for storm damage, refusing to properly replace a damaged roof, excluding flood damage, or simply low balling repair estimates.

So what can you do right now before the storm hits?

1) Make sure you have a copy of your insurance policy and declarations page. Read through what is covered. Know your coverage when you report your loss.

2) Prepare your home and business. You have a duty to mitigate damages when you can do that safely. Preposition tarps and repair equipment in a safe place so you can immediately plug holes and leaks. Have some buckets ready to catch water from leaks.

3) Take video of your home and business inventory. Preserve copies of important records before the storm hits. Take your phone and walk around your home or business and record items of value. Narrate the video and explain what the item is. For businesses, make sure you know and document exactly what is in inventory. Keep these papers with you when you evacuate.

Did you know that you can hire a lawyer to negotiate losses with your insurance company? There are non-lawyers who act as “public adjusters” and charge you a percentage of what you recover. But most public adjusters are no lawyers, so that can not advise you on the legal meaning of your insurance contract, or whether the behavior of the insurance company is in violation of good faith requirements for insurance companies. Furthermore, if the insurance company won’t do the right thing, only a lawyer can file a law suit to enforce your rights under your insurance contract. Many law firms charge exactly the same as non-lawyer public adjusters to negotiate claims before litigation begins.

Nichols Law Firm has experience handling storm losses and works with experienced engineers, architects, roofers, and general contractors to make sure you get the fair and full value for your loss.

On a personal note, I grew up in Hurricane country. I lost my home in 2004 to a huge tree when a micro-burst toppled a 100 ft pine tree on my house during Hurricane Isobel, right here in North Carolina. I, my wife, and my 2 year old were in the home when it happened- thankfully no one got hurt. I know exactly what it is like to be displaced from your home and have your insurance company haggle with you over everything. It’s very personal to me.

So be prepared for the worst, but hope for the best!

Chris Nichols
Nichols Law Firm
www.NicholsTrialLaw.com

The gist of the problem was that the while the Uniform Arbitration Act provides that arbitration Awards can be reduced to judgments and filed as judgments, AND judgments in North Carolina are subject to prejudgment interest at 8% per annum, the insurance policies were not clear as to whether pre-judgment interest was covered under the policy.

That problem lead many arbitration panels to conclude that they did not have the authority to award pre-judgment interest. Then as an extra twist, there is North Carolina case law (seePalmer v. Duke) which stands for the proposition that if an arbitration panel does not award a certain damage, a Superior Court Judge can not change or modify that award to include the damage. In 2000, there was another Court of Appeals case which went on to say that if a panel failed to award something in their award, even if both parties agreed that the award was incorrect but one party objected to an amended award, the panel did not have the authority to amend the award (see North v. North)

Thus, Courts were ruling that they could not add prejudgment interest to the Award even when they were reducing the Award to a judgment.

Major Catch 22.

Finally, this has come to a Court of Appeals panel and we have some clarification. Sprake v. Lech, NC COA 06-1690. The case is best summarized in the last few paragraphs:

Defendant argues that the language of the agreement did not include any specific provision allowing prejudgment interest. The contract permits an insured party to demand arbitration when the parties “do not agree: 1. Whether that insured is legally entitled to recover compensatory damages from the owner or driver of an uninsured motor vehicle or underinsured motor vehicle; or 2. As to the amount of such damages . . . .” It is true that there is no explicit mention of prejudgment interest in this section. However, as our Supreme Court has stated,
[a]n ambiguity can exist when, even though the words themselves appear clear, the specific facts of the case create more than one reasonable interpretation of the contractual provisions. In interpreting the language of an insurance policy, courts must examine the policy from the point of view of a reasonable insured.

This Court has applied the rule that “prejudgment interest up to the amount of the carrier’s liability limit is part of compensatory damages for which the UIM carrier is liable.” Austin v. Midgett, 159 N.C. App. 416, 419, 583 S.E.2d 405, 408 (2003) (citing Baxley v. Nationwide Mutual Ins. Co., 334 N.C. 1, 11, 430 S.E.2d 895, 901 (1993)). This Court has also noted that “unless the policy of insurance provides to the contrary, prejudgment interest constitutes a portion of a plaintiff’s damage award.” Ledford v. Nationwide Mutual Ins. Co., 118 N.C. App. 44, 50, 453 S.E.2d 866, 869 (1995). Given the law as it stands in this State, we hold that the provision granting the arbitration panel authorityto address issues of “compensatory damages” was ambiguous as to whether prejudgment interest was available. As such, we resolve our doubt “against the insurance company and in favor of the policyholder.” Register, 358 N.C. at 695, 599 S.E.2d at 553. The arbitration panel had the authority to address the issue and the trial court properly confirmed the amended award. Defendant’s assignment of error regarding the trial court’s denial of its motion to vacate the arbitration award is likewise without merit. We therefore affirm the order of the trial court.

Congratulations to Jay Ferguson, of Thomas, Ferguson & Mullins, L.L.P., of Durham. The above link tracks to the unpublished opinion, but the COA has agreed to make the case a published opinion so you can cite it in briefs now. This case will have two great side effects. First, insurance companies will not drag their feet on scheduling arbitrations because the extra time will cost them money. Second, arbitration panels will finally have some authority to “back up” interest awards.

If you have an arbitration in North Carolina, bring this case with you for your panel to consider. And as always, it is best to have this issue resolved in a pre-arbitration agreement if possible. Finally, I would calculate interest (or present to your panel) the interest running from the day the 30 day notice of tender of liability limits is made to the UIM carrier, or the day that the Demand package is sent to the UM carrier.

I think it is sufficient for the arbitration award to simply cite “that upon motion of the Plaintiff and based upon the authority vested in this pane pursuant to Sprake v. Lech, NC COA 06-1690, this arbitration panel awards prejudgment interest on the award to be paid by defendant or any unnamed defendant responsible for paying the award.” Probably it would be better for the panel to award an actual sum so there is no post award battle over how the interest should be calculated.

Chris Nichols
www.NicholsTrialLaw.com