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A 3-2 ruling by New Hampshire’s Supreme Court against an insurance broker for providing poor advice on a hotel’s insurance coverage drew considerable reader interest in 2021.
The state Supreme Court’s decision in 101 Ocean Blvd. LLC v. Foy Insurance Group Inc. was the ninth most read risk management story on Business Insurance’s website in 2021.
Foy had obtained a $2 million replacement cost policy on the Ocean Boulevard Hotel in Hampton, New Hampshire, that provided $10,000 in law and ordinance insurance coverage designed to pay for the increased costs associated with complying with current building codes and other ordinances when rebuilding a structure after a loss.
In October 2015 a fire severely damaged the hotel and its owner was told the cost to replace the existing structure would be about $1.1 million and that rebuilding it to comply with the current building code would cost an additional $905,070.
He decided to demolish the structure rather than rebuild it. After accounting for depreciation, the insurer paid Ocean $910,141 for the structure’s replacement cost.
Ocean filed suit against Foy, alleging that the broker had a duty to inform Ocean it had insufficient law and ordinance coverage to pay for reconstruction in compliance with the building code, and that Foy had been negligent. A jury returned a verdict largely in Ocean’s favor.
Foy appealed, saying there was insufficient evidence Ocean could have purchased additional law and ordinance coverage.
In ruling in Ocean’s favor, the majority state Supreme Court opinion said evidence was “sufficient for a rational trier of fact to have found that additional law and ordinance coverage was generally available in the marketplace and was specifically available to Ocean.”