Archives: Insurance

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Assigning Insurance Policies Can Get Tricky

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 … 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

To Match or Not to Match, That Is the Question

After Hurricane Sandy, I found some shingles missing off my roof.  My contractor said the entire roof should be replaced.  My insurer would only pay for replacing the missing shingles.  The type of shingle was readily available.  But what happens if the damage to the roof, siding, facade, floor occurs to only parts of those … Continue Reading

Interrelatedness, Prompt Notice and Prior and/or Pending Litigation Exclusion Collide

Directors and Officers (“D&O”) insurance policies have been written on a claims-made basis for decades.  Because of the nature of claim-made policies, D&O policies often have provisions addressing prior claims and the relationship between similar allegations in pending claims.  D&O policies also often have exclusions for prior and/or pending litigation.  These provisions address the circumstances … 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

Faulty Excavation Support Not Covered By Contractor Controlled Insurance Plan

Construction projects are often subject to myriad claims.  Subcontractors can cause damage to third-parties and their property, the project can be delayed by municipal inspections or citations, workers can get injured, and property can be damaged by fire, collapse or weather.  To organize construction projects, sometimes insurance is purchased through a plan.  A contractor controlled … 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

No Fraud In Structured Settlement Payments Because of Broker Commissions

When insurance companies settle cases they often enter into structured settlements where they take a certain amount of money to purchase an annuity to fund the settlement.  The annuity then provides the periodic settlement payments to the settling party over time.  The principle amount used to purchase an annuity is generally the amount necessary today … 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

Invasion of Privacy Exclusion Bars Coverage for TCPA Action and Settlement

Where an insurance policy has an express exclusion for Telephone Consumer Protection Act (“TCPA”) claims it is pretty clear that coverage will not be available.  But where the insurance policy does not have an express TCPA exclusion, does an Invasion of Privacy Exclusion bar coverage for alleged TCPA violations?  A Florida federal court recently found … Continue Reading

Breach of Cooperation Clause Shields Carrier From Duty to Indemnify

The cooperation clause in an insurance policy is an essential part of the insurance bargain.  If the policyholder does not cooperate in the reporting or investigation of a claim, the coverage the policyholder paid for may be lost.  In a recent case, a policyholder whose employees lied to investigators was found to have breached the … Continue Reading
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