“Advertising injury” can be tricky. In theory, the term applies to the type of harm that can be inflicted through advertising media—defamation, disparagement, violation of privacy rights or misappropriation of intellectual property. Because trademark infringement injures plaintiffs in a different way, trademark claims are generally excluded from coverage—except where the insured has used an infringing text or trade dress in an advertisement. That wrinkle makes it ... Keep Reading »
Florida Appellate Court Rejects Bid to Curb Insureds’ Assignments to Contractors
Many property insurance policies contain terms that prohibit assignment, but Florida law has long deemed those terms inoperative once a loss has occurred. E.g., W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 74 Fla. 220 (Fla. 1917). As a result, contractors who repair or remediate damaged property increasingly offer to accept assignments from policyholders in lieu of payment—a practice that gives them greater leverage in setting prices, because it enables them to back ... Keep Reading »
Et tu, Buddy?: When Excess Insurers Sue for Bad Faith
Insurers don’t, as a rule, like bad faith suits. But life can play funny tricks—as when a judgment against an insured breaches a layer of excess coverage, because the primary carrier failed to settle within its policy limits. In those circumstances, a number of jurisdictions hold that the excess carrier is subrogated to the insured’s right to sue the primary insurer for bad faith failure to settle. Northwestern Mut. Ins. Co. v. Farmers Ins. Co., 76 Cal App. 3d 1031 ... Keep Reading »
Leap of Bad Faith: TPAs May Be Sued for Aiding Their Own Actions
Insurers have a duty to process claims in good faith, but sometimes they farm the job out to third-party administrators (TPAs). If the TPA fouls up, many states hold that the insurer is still liable—for its own breach of duty, even if a doctrine of vicarious liability does not apply. The rule is summed up in the statement that the duty of good faith is not delegable; the insurer must either handle the claim in good faith or cause someone else to do so. But what ... Keep Reading »
Peeking Around Four Corners: Wisconsin Insurers Have Found a Way to Use Extrinsic Evidence to Excuse the Defense of Pending Claims
It is a truism that a liability insurer’s duty to defend is extremely broad—especially in states that apply the “four corners rule.” Under that rule, the insurer has a duty to defend whenever the underlying complaint alleges facts that could constitute a covered claim—“even though facts outside the four corners of those pleadings indicate that the claim may be meritless or not covered.” Capstone Building Corp. v. American Motorists Ins. Co., 67 A.3d 961, 992 (Conn. ... Keep Reading »