“Ensuing loss” provisions have long been the subject of nuanced arguments in insurance litigation. The provisions, which sometimes afford coverage for a “covered loss” stemming from an expressly excluded peril, serve as fodder for policyholders to attempt to argue a policy is ambiguous, often where the losses are clearly excluded. Ensuing loss provision disputes can be fact-intensive and should be evaluated carefully. While this area of the law is generally ... Keep Reading »
Exclusions/Exceptions
Texas Appeals Court Finds Project Owner Excluded From Coverage as Claimants’ Statutory Employer
On April 3, 2025, a Texas state appeals court reversed a trial court order awarding Exxon Mobil $25 million under an umbrella insurance policy issued by Lexington Insurance Co. to Brock Services Ltd. The appeals court found that the umbrella policy’s employer’s liability exclusion applied to preclude coverage for bodily injury claims made against Exxon given its status as a “statutory employer” of the injured claimants. Brock Services contracted with Exxon to provide ... Keep Reading »
New York Federal Court Enforces Exclusion Barring Coverage for Claims Based on Any Misrepresentation, Regardless of Perceived Materiality
When state law provides that an insurance contract can be rescinded for misrepresentations only if they are “material,” can an insurer contract around that rule by adding an exclusion for all claims based on any misrepresentation, regardless of materiality? The Southern District of New York says “yes” in Mt. Hawley Insurance Co. v. Beach Cruiser LLC. The insureds were the owner and property manager of various rental properties, including a house in downtown ... Keep Reading »
Eleventh Circuit Holds Course of Construction Exclusion Applies to Water Damage as Project Was Not Fully Complete
In Liberty Surplus Insurance Corp. v. Kaufman Lynn Construction Inc., the Eleventh Circuit Court of Appeals held that a “course of construction exclusion” in a commercial general liability precluded coverage for water damage caused by a hurricane during a construction project. However, the court found that the insured had standing to assert a claim for reformation of the insurance policy due to mutual mistake, even though the insured was not necessarily making a claim ... Keep Reading »
California Appellate Court Agrees Marijuana Delivery Driver’s Accident Not Covered Under Personal Auto Policy
A California Court of Appeals decision brought one auto policyholder decidedly down from “cloud nine” in Murphy v. AAA Auto Insurance of Southern California, which found no coverage over a cannabis delivery service employee’s collision in a personal vehicle while on the job. The court ruled the “compensated carrying exclusion” barred coverage, holding it was neither ambiguous nor contrary to public policy in this instance. The insured, Andrew Murphy, was a full-time ... Keep Reading »
Recent Denial of Business Interruption Coverage to Cannabis Manufacturer Highlights Importance of Diving Into the Weeds of Insured’s Business Practices
In Theraplant LLC v. National Fire & Marine Insurance Co., the U.S. District Court for the District of Connecticut denied the insured cannabis cultivator’s claim for business interruption coverage because the insured failed to demonstrate a causal link between its loss and the suspension of its operations. The insured, Theraplant, suffered a loss when a fire at its facility in Watertown destroyed 998 marijuana plants and damaged one of seven flowering rooms. After ... Keep Reading »
Square Peg, Round Hole: 6th Circuit Affirms Finding That Cyber Claims Are Not Covered by CGL Policies
In Home Depot Inc. v. Steadfast Insurance Co., Home Depot learned the hard way a rule every DIY enthusiast knows: measure twice, cut once. It appears Home Depot’s measurements were off when it sized up its insurance needs, and when its cyber coverage didn’t measure up to the costs of a data breach, the company tried to fit those cyber claims into its commercial general liability (CGL) policies. However, the Sixth Circuit ruled that those claims do not fit within the ... Keep Reading »
Texas Supreme Court Holds $220M Settlement Agreement Is Not Binding on Insurers Without Insurer’s Consent Where Insured Faced No Liability Beyond Non-Insurance Assets
In In re Illinois National Insurance Co., the Texas Supreme Court held that disclaiming insurers were not bound by any underlying settlement agreement, entered into without the insurers’ consent, where the claimants promised not to pursue the insured’s non-insurance assets. The underlying claimants were investment funds that filed suit in 2014 against Cobalt International Energy and its officers and directors. The claimants asserted securities fraud in connection with ... Keep Reading »
Divided Ninth Circuit Finds Toxic Dust From Wildfire Is Not “Pollutant” Under Policy’s Pollution Exclusion
In Wesco Insurance Co. v. Brad Ingram Construction, the Ninth Circuit Court of Appeals reversed a summary judgment ruling in favor of Wesco Insurance Co. after a split panel concluded that toxic dust and debris from a wildfire did not fall under the policy’s definition of “pollutant.” Background and Underlying Action The plaintiff in the underlying lawsuit, Richard Vargas, was allegedly exposed to toxic dust while loading and unloading his work truck during the ... Keep Reading »
Tenth Circuit Upholds Clear and Unambiguous ATV Exclusion in Homeowners Policy
The Tenth Circuit Court of Appeals declared that an insurer’s homeowners policy all-terrain vehicle exclusion barred coverage for a Utah insured’s injuries that did not occur at the “insured location.” The case, Farm Bureau Property & Casualty Insurance Co. v. Cleaver, involved a claim arising out of injuries sustained by minor E.C. while riding an ATV on an unpaved, county-owned public road from a nearby gravel pit back to the insured’s home, which was insured by ... Keep Reading »
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