Disclaimers and Late Notice When to Raise and When Waived

businesswoman waving goodbye from tentWhen an insurance company decides to disclaim coverage it has to be very careful about timing the notice and the substance of the disclaimer. Courts have been generally strict in finding that a carrier’s failure to specify a ground for disclaimer precludes the carrier from raising that ground subsequently as an affirmative defense in a coverage action. Disclaimers based on late notice add additional complexity given the carrier’s need to demonstrate prejudice in many states.

In a recent coverage case in New York, a carrier sought to amend its answer to assert the affirmative defense of late notice. The motion court granted the carrier’s motion, but on appeal, the appellate court reversed, holding that the carrier waived its right to assert the late notice defense. The carrier appealed, and the New York Court of Appeals reversed and reinstated the motion court’s order allowing the answer to be amended to assert the affirmative defense of late notice.

Continue Reading

Additional Insured By Written Contract Clause Construed to Bar Coverage

Business People Meeting

Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors. These moving parts generally result in a web of interrelated insurance policies covering the project. Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies.

But not all additional insured clauses are the same. In this post, we discuss what a New York appellate court recently called an “additional insured by written contract” clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.

Continue Reading

Delaware Supreme Court Clarifies New York’s Injury-in-Fact Trigger of Coverage for Asbestos Losses

danger-asbestosWhether coverage for asbestos personal injuries is triggered under an injury-in-fact theory or under an exposure theory makes a world of difference to which insurance policies must respond to the asbestos losses. Asbestos, as we know, causes asbestos-related diseases that often manifest 20 or 30-years after the initial significant exposure to asbestos fibers. Most experts agree that the cellular and molecular damage that leads to these diseases is a continuous process. Which insurance policies must respond to cover the bodily injuries that result from that disease process is hotly debated.

In a recent decision by the Delaware Supreme Court, the court had to determine which, if any, of 35 excess insurance policies in a 14-year tower of insurance must respond to asbestos personal injury claims in a dispute that has been winding its way through the judicial system of multiple jurisdictions since 2005.

Continue Reading

The Distinction Between the Duty to Pay Defense Costs and the Duty to Indemnify Defense Costs

Businessman Wearing Cape Stands Cofidently While Protecting Dollar SignCommon forms of commercial general liability policies typically include provisions requiring the insurer to defend the insured regardless of whether the claim is valid or not, as long as the claim is within the coverage grant of the insurance policy. The typical language provides that the insurance company has the right and duty to defend the insured against any suit seeking damages for bodily injury or property damage to which the insurance applies. Other policies, however, including excess policies, may not include a duty to defend and may only provide for indemnification of defense costs actually paid for a covered claim. In a recent Summary Order, the Second Circuit reviewed this distinction in a coverage dispute involving marine primary and excess polices covering an oil transport and storage facility in Panama.

Continue Reading

7th Circuit Affirms Waiver of Removal Because of Reinsurance Agreement Service-of-Suit Clause

Removing materials containing some asbestosIn December 2015, an Illinois federal court held that the language of a service-of-suit clause in a reinsurance contract was a voluntary removal waiver and sent a case removed to federal court back to state court. That case went up to the Seventh Circuit Court of Appeals for review. The Seventh Circuit has now affirmed.

Continue Reading

New York Appeals Court Holds No Allocation of Environmental Losses to Insurers for Uninsured Years

Polluted Water AnalysisIn a case of first impression, a New York intermediate appellate court has held that the policyholder, rather than existing insurers, must be allocated  environmental cleanup costs for periods of time when environmental cleanup insurance was not available in the marketplace. The decision reverses the denial of the insurer’s partial motion for summary judgment.

Continue Reading

Squire Patton Boggs Reinsurance Newsletter September 2016

The September 2016 edition of the Squire Patton Boggs Reinsurance Newsletter is out! In this issue, we cover the 6th Circuit’s decision on ex parte communications that resulted in an arbitration award being vacated. We also cover a Massachusetts federal court’s rejection of a pre-award challenge to an arbitrator and an Arizona federal court’s granting a motion for attorney fees on bringing a motion to confirm an arbitration award. Many more cases are discussed along with a list of our recent presentations and publications. To find prior issues of the Reinsurance Newsletter, just search “Reinsurance Newsletter” under Insights & Events tab on the Squire Patton Boggs webpage.

Second Circuit Gives Amtrak a Possible Second Chance for Sandy Relief

Gloomy day and a flooded railwayNatural catastrophes have wide-ranging consequences and obtaining insurance coverage for alleged damages arising from natural catastrophes takes time. There are still Katrina cases percolating through the legal system.  In this case, decided by the Second Circuit on the last day of August 2016, nearly four years after Sandy, issues concerning flood sublimits, ensuing loss exceptions and additional coverage for demolition and increased cost of destruction have been resolved; in part.

Continue Reading

Ex Parte Communications and Vacating an Arbitration Award

Businesswoman WhisperingWhen a reinsurance arbitration is conducted under non-neutral rules or practices, when and how ex parte communications are allowed to take place between a party’s counsel and a party’s party-appointed arbitrator are important items to resolve at the organizational meeting. A typical, but not universal, formulation is to cut-off ex parte communications when the first pre-hearing briefs are filed. Ex parte communications typically are allowed to resume when the final award is issued. When there are motions made, typically ex parte communications cease when the first motion brief or request for a ruling is filed and are not recommenced on that issue until the panel rules. So what happens if the arbitration panel issues an interim final award resolving the substantive issue in the dispute on the merits, but requires additional briefing on damages? May ex parte communications recommence after the interim final award?

Continue Reading

The Impact of Reinsurance on Homeowners Insurance Rates

Human open palms over toy house

Most of our posts discuss disputes involving specific claims or specific insurance or reinsurance contracts. But sometimes disputes arise in the regulatory context. This post is about the cost of catastrophe reinsurance protection, which factors into homeowners insurance rates rates used to develop the premiums charged to policyholders. This is especially relevant in states where natural catastrophes like hurricanes take place.

Continue Reading

LexBlog