Archives: Duty to Defend

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Absolute Liquor Liability Exclusion Is Not Illusory

General liability policies sometimes contain exclusions that preclude coverage for losses that relate to the business insured.  Whether that renders the policy coverage illusory is a question for the courts.  In a recent case, the 11th Circuit addressed an Absolute Liquor Liability Exclusion involving a night club.… Continue Reading

Phishing and Fraudulent Instructions Under a Commercial Crime Policy

Warnings are plentiful about phishing schemes where a bad actor pretends to be an officer of a company and directs an employee to wire transfer funds to a foreign bank.  Despite these warnings, employees regularly fall for these phishing schemes and wire funds to off-shore accounts never to be seen again.  Companies that fall victim … Continue Reading

Outside Business Exclusion Precludes Coverage Under a Professional Liability Policy

Professional liability and other errors and omissions policies are purchased to protect the insured from claims brought against the insured by third-parties alleging breaches of professional duties and other failures to perform professional or other services appropriately.  Stated another way a professional liability policy issued to a law firm protects the law firm and its … Continue Reading

Nothing Cheesy About Needing to Allege Personal Injury for Coverage

Nearly all commercial general liability and excess liability insurance policies require in their coverage grants that the damages the insureds are legally obligated to pay are because of bodily injury or property damage.  It may seem simple, but for insurance to apply, the allegations made have to fit reasonably within the coverage provided.   In a … Continue Reading

Not an Accident When Victim is Intentionally Dragged By the Hair

When someone gets injured and sues, sometimes the defendant defaults and the claimant is left to pursue its remedies against the defendant’s insurance policy.  It’s basically a coverage suit, but brought by the claimant instead of the policyholder.  The same defenses to coverage also apply.  Paramount, however, is that the loss complained of has to … Continue Reading

The 5th Amendment and Insurance Coverage

When a property is destroyed by fire, the property owner’s property insurance likely will cover the loss all things being equal.  But if the fire was intentionally set, coverage likely will be denied.  In the case of a residential property, policies often condition coverage on occupation of the premises.  In a recent case before the … Continue Reading

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 … Continue Reading

Totality of the Circumstances and Late Notice

The defense of late notice to coverage applies differently depending on the jurisdiction.  In Illinois, whether a policyholder’s notice to its insurer was timely is determined by the totality of the circumstances.  Prejudice is just one of five non-dispositive factors. In a recent case involving an excess insurer, the Seventh Circuit addressed whether the policyholder’s … Continue Reading

Covered and Uncovered Claims — When Allocation Is Required

Plaintiffs usually don’t bring claims based on the defendant’s insurance coverage.  So it is not unusual for an insurer and policyholder to have a dispute about what claims are covered and what claims are not covered under the insurance policy and, if there are covered and uncovered claims, how to allocate the covered claims to … Continue Reading

Breach of Contract Exclusion Precludes Coverage

Liability insurance policies are meant to cover claims brought against insureds by third-parties alleging a fortuitous event that causes damages.  But most liability policies have exclusions that preclude coverage for certain events.  For example, many policies exclude coverage for property damage to property owned by the insured.  Another exclusion precludes coverage for damages resulting from … Continue Reading

Crime Coverage — Who Is an Employee and Who Is an Authorized Representative?

In a recent case, a parent company took out a crime insurance policy for itself and its subsidiaries.  When a property manager for its subsidiary stole funds through forged checks over several years, the policyholder sought a recovery under the crime insurance policy.  Unfortunately for the policyholder, there was no insurance coverage.… Continue Reading

Prior Publication Exclusion and the Duty to Defend

Remember my recent post on how broad the duty to defend was?  Well it’s still broad.  In a new opinion, the 4th Circuit Court of Appeals, under North Carolina law, reversed a district court’s order on a motion on the pleadings that had dismissed a policyholder’s complaint based on application of the “prior publication” exclusion.  … Continue Reading

The Consequences of Not Giving Notice of Disclaimer to Additional Insureds

Statutes and case law make it tough for insurance companies to disclaim coverage.  In most jurisdictions, if an insurance company receives a claim or tender it must respond quickly and with specificity to avoid losing the right to assert an exclusion or other basis to deny coverage.  Where the notice of claim comes in from … Continue Reading

Exclusion Relieves Insurer of Duty to Defend in Sex Trafficking Case

Human trafficking is a serious problem.  The current news cycle is filled with stories about human trafficking in the context of immigration and with recent criminal proceedings accusing the rich and famous of underage sex and sex trafficking.  In the mundane world of insurance, sex trafficking has become a coverage issue for insurance companies when … Continue Reading

War (Exclusions), What Is It Good For?

Back in the day, policyholders and insurers (and maybe everyone) understood what war was.  War was a military action between government forces of sovereign nations.  Today, not so much.  With the proliferation of terrorism and armed groups controlling various jurisdictions like pseudo-governments, it is often difficult to know when an attack is war or terrorism.  … Continue Reading

Claims of False Advertising and Unfair Competition Are Not Disparagement or Defamation

Most commercial general liability policies include coverage for personal and advertising injury claims by third parties.  In a recent case, the Third Circuit Court of Appeals addressed the issue of whether claims of false advertising and unfair competition brought against a competitor entitled the policyholder to a defense under its personal and advertising injury coverage.… Continue Reading

How Specific Does a Specific Litigation Exclusion Have to Be?

Insurance policies often have general exclusions for known losses or prior acts.  The reason for this is that most insurance is for fortuitous risks–risks that will take place in the future; not risks that already have taken place.  For large policyholders that have ongoing litigation, it is not uncommon for a new carrier to craft … Continue Reading

Second Circuit Rules on Timely Disclaimers Where Two Insurance Companies Are Involved

Under New York law, the rules for a timely disclaimer arising out of an auto accident are found in Insurance Law section 3420(d)(2).  That section requires an insurer to disclaim liability as soon as is reasonably possible or otherwise the disclaimer is ineffective.  In a recent non-precedential appeal, the Second Circuit reversed the district court … Continue Reading

New York Court of Appeals Holds Non-domiciliary RRG Not Covered Under New York Late Disclaimer Rules

The federal Liability Risk Retention Act allows for the creation of industry groups–Risk Retention Groups (“RRG”) or Purchasing Groups–that are exempt from certain state insurance regulation requirements outside the RRG’s state of charter.  Most states, if not all, have unfair claims practices acts and those statutes are expressly applicable to RRGs.  Many states also have statutes … Continue Reading

Untimely Notice Causes Loss of Directors and Officers Coverage

Claims-made and reported policies typically contain, as a condition precedent, fairly strict notice requirements.  The entire point of a claims-made policy is to restrict the policy to claims made during the policy period and reported during the policy period or any extended reporting period.  Giving notice early and often is a mantra that is often … Continue Reading

When Seeking Coverage for Trademark Infringement Policy Exclusions Matter

In a recent case, the 4th Circuit Court of Appeals affirmed the dismissal of a coverage dispute based on unambiguous exclusions barring coverage.  Nothing dramatically unique here, but it serves as a good example of the need to read and understand the insurance policy and all of its exclusions.  … Continue Reading
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