Is Faulty Workmanship an “Occurrence” Under a CGL Policy?

Manufacturers often face multiple lawsuits when their products fail to perform as expected.  Sometimes, the cause of the product’s failure is the faulty workmanship of a component manufacturer.  When that is the case, the product manufacturer will seek damages from the component manufacturer for the underlying product defect claims.  The component manufacturer will then turn to its insurance carriers to cover it for the dispute with the product manufacturer.  In a recent case, the Third Circuit Court of Appeals addressed claims by a window component manufacturer against its insurance carriers after the insurance carriers disclaimed coverage for a settlement between the component manufacturer and the product manufacturer.

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Ohio Supreme Court to Confront Whether Return Premium Required Before Seeking Rescission

The Ohio Supreme Court recently accepted a case that presents two issues with significant implications for insurers seeking to void policies based upon misstatements in policy applications: (1) whether “an insurance policy sufficiently warns the insured of the consequences of warranty misstatements where the policy states that it ‘may be held void ab initio,’” and (2) whether an insurer is required to void a policy and return an insured’s premium before bringing a declaratory judgment action to declare a policy void ab initio.

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Non-Signatory Surety Bound By Arbitration Clause in Incorporated Contract

Bond

An arbitration provision in a contract typically applies only to the contracting parties.  Where, however, the contract is incorporated by reference into a second agreement, if it is broad enough, the party to the second agreement–although a non-signatory to the original agreement–may find that the arbitration provision applies to them as well.  This was the result in a case before the Second Circuit involving a surety on a performance bond.

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September 2019 Reinsurance Newsletter

The September 2019 Reinsurance Newsletter is now available for your reading pleasure.  You may access it on the Squire Patton Boggs website or here.  In this issue, we discuss a decision concerning the preclusive effect of an interim security award, a captive reinsurance dispute and an update on EU Third Country Equivalence.  Please enjoy.  Comments are welcomed.

No Point in “Wining” About It — No Coverage for Missing Wine

In an interesting case about wine and wine collectors, purchasers of fine wines sought coverage for wine they ordered from a seller but never received.  Turns out the seller was running a wine Ponzi scheme and hundreds of customers never received thousands of bottles of wine ordered.  The case reached the Tenth Circuit Court of Appeals.  Was there coverage?

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Does a Directors and Officers Insurance Policy Cover the Settlement of Criminal Charges?

Directors and Officers (“D&O”) insurance policies cover individuals and entities for a wide variety of claims for “wrongful acts.”  Many D&O policies provide coverage for claims based on criminal proceedings.  When criminal charges are settled against corporations and officers, very often the settlement includes fines, penalties, cost of investigation and other payments.  Are these payments covered under the D&O policy?  The Eleventh Circuit Court of Appeals recently addressed this issue under Florida law.

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Delaware Court Concludes Shareholder Appraisal Action Is a “Securities Claim” Under a Directors and Officers Insurance Policy

This is a client alert that we recently put together addressing a recent case on whether an appraisal action is a “securities claim” under a D&O policy.

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STOLI Mackerel – Life Insurance Policy Void Ab Initio

Life insurance used to be simple.  You took out a policy on your own life to protect your family.  Then along came a life insurance product where investors funded the purchase of a policy on your life even though they had no insurable interest in your life.  These stranger-owned life insurance policies (“STOLI”) have been controversial.  Recently, the Third Circuit Court of Appeals had to determine whether a STOLI policy violated public policy under New Jersey law and, therefore, was void ab initio.

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Forum Selection Clause in Excess Policy Overrides Appraisal Clause in Primary Policy

Hurricane over Cuba

When primary and excess polices cover the same property many assume that the excess policy will follow the form of the primary policy.  That is not always the case, which is a good reason why reading the actual terms of both policies is important.  In a recent case involving hurricane damage to a Florida development, the policyholder sought to invoke the primary policy’s appraisal provisions against the excess insurer over a dispute about the value of the damage to the property.  The excess insurer refused and, instead, insisted that the dispute must be resolved in the New York courts.

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Assigning Insurance Policies Can Get Tricky

Handshake

Insurance disputes sometimes arise out of transactions.  Those of you who are involved in transactions, including transactions arising out of insolvencies, might be interested in a cautionary tale from a recent Illinois appellate court case addressing the assignment of insurance policies as part of an asset purchase agreement.  This drafting lesson may help avoid future litigation.

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