As cyber hacking and phishing schemes become more common, one issue that is often raised is whether, and to what extent, damages resulting from these incidents fall within the coverage afforded under a standard commercial general liability policy. The United States District Court for the Middle District of Florida recently addressed this issue Innovak Int'l, Inc. v. Hanover Ins. Co., No. 8:16-CV-2453-MSS-JSS, (M.D. Fla. Nov. 17, 2017), and held that a data breach was not ... Keep Reading »
Duty to Defend
First Circuit: The Best Offense Is a Good Defense?
In Mount Vernon Fire Ins. Co. v. VisionAid, Inc., No. 15-1351P2-01A (1st Cir. Nov. 15, 2017), the First Circuit Court of Appeals ended long-running insurance coverage litigation arising from policyholder VisionAid, Inc.’s termination of a former vice president, Gary Sullivan. Sullivan sued his former employer, alleging age discrimination. VisionAid tendered the claim to its employment practices liability insurer, Mount Vernon Fire Insurance Company. Mount Vernon ... Keep Reading »
Poisoning the Well: Washington Supreme Court Applies Efficient Proximate Cause to Eviscerate Pollution Exclusion in Liability Policy
Professionals and practitioners in first party property insurance are likely familiar with the efficient proximate cause rule, which requires an insurance policy to provide coverage where "a covered peril sets in motion a causal chain," even if subsequent causes-in-fact of the loss are excluded by the policy. As indicated by our previous coverage [1, 2, 3] of this doctrine, this can be a confusing analysis that leads to unpredictable results. Until recently, the ... Keep Reading »
One Way Out: California District Court Finds Insurer Had Right to Pay Limits Despite Possible Defense
In Film Allman, LLC v. New York Marine and General Insurance Company, Inc., 2:14-cv-7069-ODW, (C.D. Cal. May 23, 2017), a California district court granted summary judgment in favor of an insurer of a production company. The court found no breach and no extra-contractual damages were warranted because the insurer paid full policy limits to settle the claims. Midnight Rider The insurance coverage dispute arose after production company Film Allman, LLC was sued as a ... Keep Reading »
Fifth Circuit Reverses Mississippi District Court’s Interpretation of “Ambiguous” Language to Nullify Defense Within Limits Coverage
Insurance policies that include the cost of defending a particular claim or action within the policy’s limit of liability, often referred to as “burning,” “eroding,” or “defense within” limits policies, are common in the management liability insurance market. As we previously reported, a 2015 United States District Court for the Southern District of Mississippi decision cast a cloud of doubt over liability insurers issuing defense within limits policies in Mississippi ... Keep Reading »
Connecticut Appellate Court Addresses Trigger, Allocation, Exclusions, and Other Issues of First Impression in Coverage Litigation Over Long-Latency Asbestos Injury Cases
Connecticut’s intermediate appellate court addressed a number of novel issues in a wide-ranging opinion regarding primary and excess insurers’ respective duties to defend and indemnify their common insured for long-tail asbestos-related injury claims. The opinion was rendered unanimously and authored collectively by the three-judge panel of Robert Beach, Douglas Lavine, and Stuart Bear (ret.). The case, styled R.T. Vanderbilt Company, Inc. v. Hartford Accident and ... Keep Reading »
Eleventh Circuit Deems Voluntary Dismissal of a Coverage Action Sufficient to Award Attorneys’ Fees to a Policyholder as the Prevailing Party
In a recent unpublished opinion, the Eleventh Circuit issued a decision that should serve as a warning to insurers to be sure to resolve all issues before dismissing a coverage action, particularly when involved in the settlement of an underlying suit. A Tale of Two Cases In W&J Group Enterprises, Inc. v. Houston Specialty Ins. Co., No. 16-15625 (11th Cir. Apr. 6, 2017), the insurance carrier filed a declaratory action against its policyholder in the Middle ... Keep Reading »
A Stitch in Time Saves … An Insured From Incurring Non-Covered Defense Costs
Timely notice is typically a condition precedent to coverage under an insurance contract, though many states require an insurer to demonstrate prejudice before denying coverage solely based on a failure to comply with a notice provision. However, as the court found in EmbroidMe.com, Inc. v. Travelers Property Casualty Company of America, No. 14-10616 (11th Cir. Jan. 9, 2017), even in the absence of demonstrable prejudice to an insurer, late notice by the insured may ... Keep Reading »
Third Circuit Affirms Rescission of $25 Million Contaminated Products Policy
In H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., No. 16-1447 (3d Cir. Jan. 11, 2017), the Third Circuit affirmed a District Court’s order allowing insurer Starr Surplus Lines Insurance Company (“Starr”) to rescind a $25 million Contaminated Products Insurance (CPI) policy that it sold to food manufacturer H.J. Heinz Company (“Heinz”), on the basis that Heinz failed to disclose material information in its insurance application. After Starr declined coverage, Heinz ... Keep Reading »
Unlike Friendships, Policy Exclusions Are Not Severable In West Virginia
A homeowners insurance policy often covers every member of a family, and many policies state that the insurance applies separately to each insured. The same policies usually exclude coverage for intentional acts. But what happens when one insured is accused of negligently permitting a different, separately-covered family member to cause harm intentionally? Last month, in American National Property & Casualty Company v. Clendenen, No. 16-0290 (W. Va. Nov. 17, 2016), ... Keep Reading »
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