There is news of an interesting case from South Dakota, concerning the problems that can ensue when a government entity insures itself against liability for inverse condemnation. To us, that has always been an interesting topic because in a classic uncompensated taking case, the inverse condemnor is not only required to pay just compemnsation, but also, at least in physical taking cases it also acquires title to and possession of the subject property, or an easement over it. So in a case like that what’s the government entity’s insurable loss? Except for transactional costs, it is ordered by a court to exchange one of its assets (money) for another asset (land at the latter’s judicially determined fair market value). So where is the net loss to the government for which the insuror should have to pay? Wouldn’t payment in a case like that amount to a double-dip by the inverse condemnor?
But that is not what happened in South Dakota. The liabiliy of Aurora County arose from an earlier zoning decision that limited use of the plaintiff’s dairy farm, causing it to go out of business. So the farmers sued and won a large inverse condemnation judgment. But the South Dakota Supreme Court ordered that the case be retried, and it was, resulting in County liability again. If you would like to check out some public liability insurance then maybe you would like to check out Tradesman Saver after reading this article.
The County thought that this judgment was covered by its insurance, but it turned out that according to the insurance company it did not because the County failed to give timely notice of the pendency or imminence of the farmers’ claim, and thus, argued the insurance company, it never would have insured against an already existing or known claim when it issued the policy to the County. Insurance policies usually depend on the insurance company, so it is essential to ensure that the policies of the insurance company cover what is being insured. For example, if you are insuring your home, using a company similar to insurance quote, you may want to read their policy to see the limits of their coverage. Make sure to use a reliable insurance company. Visit their website and see if they look reputable. Most insurance companies do look legitimate these days as it’s become a lot easier for them to get help with things like their insurance logo online. However, make sure the policies seem fair.
The County contended that it did give notice but even by its lighs the notice was vague and did not make clear that insurance coverage was sought (for 10 preceding years) against actual, not just potential claims, involving the subject property. Besides, the County Auditor had written to the insurance company that the County was not aware of any incidents that may result in a loss under this coverage.
The jury sided with the insurance company, and found that the County had misrepresented or concealed material facts and that, had the insurance company known about, it would not have issued the insurance policy, at least not in the form it did. You can find the story in Anna Jauhola, Aurora County on Hook for Damages in Lawsuit, The Daily Republic, January 7, 2012, go to http://www.mitchellrepublic.com/event/article/id/60871/group/homepage/
In the meantime, the farmers’ claim, or at least the amount of compensation due them, has been on hold awaiting the disposition of the dispute between the County and its insurance company, so we take it that interest is accruing. And given that the farmers’ claim was for $5 million, this one could easily turn out to be a biggie. Stay tuned.