The Consequences of Not Giving Notice of Disclaimer to Additional Insureds

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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 a policyholder, the insurance company–if it chooses to disclaim coverage–simply notifies the policyholder in a timely manner of the basis for the disclaimer.  Things get a bit more complicated when there are multiple additional insureds and the claim arises out of a construction project.  To whom is the disclaimer owed?

In a recent case, a New York intermediate appellate court, addressed the consequences of not giving notice of a disclaimer to additional insureds.

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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 faced with an insured’s request to defend and indemnify against sex trafficking claims.  In a recent case, the Third Circuit Court of Appeals had to address a coverage dispute over whether an insurance company had a duty to defend a hotel management company accused of allowing sex trafficking in its motel.

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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.  Insurers who cover risks operating in volatile regions often add war exclusions to their policies.  The question the 9th Circuit Court of Appeals had recently was whether the war exclusions contained in a television production insurance policy precluded coverage when a production was delayed and then moved from its original location in Israel because of Hamas rocket attacks.

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Reinsurance Collateral, Captive Reinsurance and Rescission

What happens when a captive deal is put in place with a captive reinsurer set up off shore and the captive reinsurer does not provide the collateral for security promised?  A New York federal court had to address that issue recently.

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Pre-Answer Security and Preclusion Based on Arbitral Decision — Who Decides?

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In reinsurance disputes where one party is insolvent or has financial difficulties, the other side often demands security.  Where a non-domiciliary is involved, some states have pre-answer security requirements, which have been held to apply in reinsurance arbitrations.  In a procedurally complicated case, where an arbitration panel issued a security award and then stayed the arbitration pending litigation, a federal court was faced with its own motion for security after the arbitrator’s interim order for security was confirmed and reduced to a judgment.

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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 insurance plan (“CCIP”) provides coverage to all enrolled parties and usually includes all subcontractors. But, by enrolling in a CCIP or even by having your own insurance, not all things that happen on a construction site are covered by insurance.  In a recent 4th Circuit opinion, claims by a subcontractor to recover damages it paid to others for its faulty excavation supports that caused damage to adjacent properties was not covered by the CCIP. Continue Reading

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

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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.

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How Specific Does a Specific Litigation Exclusion Have to Be?

Insurance Policy Paper Document

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 a specific exclusion to preclude coverage for an existing claim or set of circumstances that already exists.  The First Circuit recently addressed a specific litigation exclusion to determine whether it was broad enough to cover new litigation and investigations arising out of the same investment product.

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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 and found that an insurer timely disclaimed in the face of what the district court had determined was a 52-day delay.

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Is a Recycling Bin With Wheels a Vehicle for Insurance Purposes?

So what happens when you run over a gas line with a wheeled electronic recycling bin in a residential building and rupture the gas line?  Does the building’s all risks insurance cover the cost of restoring the gas service?  Not according to the federal courts in New York.

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