Policyholder Denied Discovery Into Handling of Other Insureds’ Superstorm Sandy Losses

Superstorm Sandy was a complicated loss because of its unique nature and the controversy over when it was a hurricane and whether damage caused by it was while it was a hurricane.  Many property policies have sublimits and deductibles specific to hurricanes or “named storms” or for flood losses.  How these sublimits or deductibles apply to Superstorm Sandy depends on the specific language of each policy and has been the subject of numerous coverage actions.  One of those actions reached a New York intermediate appellate court, which affirmed the denial of discovery into the insurance carriers’ handling  of Superstorm Sandy losses for other insureds.

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Life Reinsurer Gets Its Wish to Intervene

Life insurance policies issued in the past are often transferred in blocks to reinsurers on a 100% indemnity reinsurance basis.  These transfers often include servicing agreements, where the assuming reinsurer takes responsibility for all policy services, including determining the cost-of-insurance.  In the past several years, policyholders have brought putative class actions against life insurance companies claiming that the life insurance companies have been raising the cost-of-insurance improperly using factors not permitted by the policies thereby reducing the economic value of the investment portion of the life insurance policy.

In a recent case an interesting procedural question arose over whether the assuming reinsurer in a 100% indemnity reinsurance arrangement with a service agreement had the right to intervene in the putative class action cost-of-insurance case against the original policy issuing company.

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Lawyer Not Covered for Claim By Client to Recover Disputed Legal Fees

Did you hear the one about the lawyer and client fighting over paid legal fees?  When this happens lawyers often turn to their lawyers professional liability insurance policies for coverage.  In a recent case, under Connecticut law, the Second Circuit ruled against the lawyer and found no coverage.

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Appellate Court Grants Summary Judgment Obligating Coverage for Underlying Copyright Actions

In a recent cryptic coverage decision, a New York state intermediate appellate court reversed an order denying summary judgment to a media policyholder and held that the insurance companies were obligated to provide insurance coverage for underlying copyright infringement actions.  Although cryptic, the decision addresses exclusions and their applicability to media insurance policies.

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Eleventh Circuit Finds Duty to Defend Sufficient to Rebuff Claim of Illusory Auto Insurance Coverage

Some people who lease cars apply for car insurance with lower limits for themselves and higher limits to cover the leasing company’s requirements.  This is accomplished through a Lessor Liability Endorsement.  In a recent case, a putative class action was brought against insurance companies by lessees who sought damages alleging that the coverage provided was illusory because it provided coverage only for vicarious liability against lessors and that a federal statute, the Graves Amendment, 49 U.S.C. § 30106(a), bars claims of vicarious liability against vehicle lessors.

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Security! Professional Services Exclusion Bars Coverage

In my experience, companies (and people) who buy insurance often do not understand what they bought.  Policyholders often confuse directors and officers insurance with professional liability insurance.  The assumption is that the purchase of insurance (often through a broker) should cover all of the policyholder’s risks.  Sadly, that is not the case.  In a recent case, a security company found out the hard way that its commercial general liability policy did not cover it for a breach of contract and negligence claim.

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No Private Right of Action for Insurance Company’s Misconduct Report Against a Doctor

The Second Circuit Court of Appeals has affirmed the dismissal of an action brought by a doctor who sued an insurer for reporting alleged misconduct to the New York Department of Health’s Office of Professional Misconduct.  This dismissal comes on the heels of a decision by the New York Court of Appeals on a certified question as to whether Section 230(11)(b) created a private right of action for bad faith and malicious reporting.  We blogged about the New York Court of Appeals decision here.

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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.

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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 to these phishing attacks often turn to their insurance policies for a recovery.  Among the insurance policies that might provide coverage is the commercial crime policy, which provides coverage for losses directly related to fraudulent instructions.  In a recent case, the 11th Circuit was asked to determine whether coverage existed as a matter of law.

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Who Decides Consolidation Issue? A New Arbitration Panel or the Old One?

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It is pretty well settled under modern arbitration law, including reinsurance arbitrations, that procedural issues like consolidation are questions for the arbitrators and not the courts.  But what happens if there are multiple arbitration panels?  Which panel decides the consolidation application?  And what if one arbitration has been completed and a motion to consolidate is made to join the second arbitration to the first one?  Which panel decides the consolidation question?  The Third Circuit took a crack at this issue in a recent not precedential decision.

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