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.
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?
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.
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.
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.
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.
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.
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 notice under a commercial auto policy was untimely.
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 the insurance policy. When the allocation question arises between a policyholder and an excess insurer, where the excess insurer did not control the underlying defense, the situation becomes more complicated. The Eighth Circuit Court of Appeals recently addressed this issue.
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 the assumption of liability in a contract or agreement. And the one we will concentrate on in this post is the exclusion for breach of contract claims. The Sixth Circuit Court of Appeals recently addressed these exclusions. Continue Reading