As this blog has reported, a line of cases deciding coverage disputes over faulty workmanship runs against (or, at least, around) a basic rule for interpreting insurance policies. Under that rule, the scope of coverage is determined by a policy’s insuring clause, which may be narrowed by one or more exclusions. Exceptions to the exclusions can add back coverage that the exclusions remove, but they cannot create coverage beyond the ambit of the insuring clause. E.g., ... Keep Reading »
Exclusions/Exceptions
In Indiana, an Absolute Pollution Exclusion May Exclude Absolutely Nothing
A recent article in the Sports section of The Miami Herald read "Shooting coach helps Winslow." Perhaps, but it probably didn't help the coach much. The admonition to "eat every carrot and pea on your plate" undoubtedly elicits laughs from the children to whom it is directed. The point is, some things are unambiguously ambiguous. Others are not. Consider these basic principles of Indiana contract interpretation: Limitations on coverage in insurance policies must ... Keep Reading »
Greed is Not Good: The Personal Profit Exclusion
As this blog has frequently discussed, many limitations and exclusions in liability policies address “moral hazard” situations by declining to provide insurance for bad behavior. One such exclusion is the “personal profit exclusion” contained in most D&O policies, which bars coverage for claims where an insured gains a profit or other advantage to which it is not legally entitled. This exclusion was recently addressed by a Massachusetts appellate court in Winbrook ... Keep Reading »
A Plague A’ Both Your Clauses: Insurance Probably Won’t Cover Businesses Stung By Zika
During the past several months, Zika virus has rapidly spread across Latin America and into the United States. While Congressional action has stalled, the Centers for Disease Control and Prevention (CDC) has issued a number of travel warnings, including one stating that “[p]regnant women should not travel” to the popular Wynwood neighborhood of Miami. This warning will almost certainly harm the many restaurants, art galleries and retail shops that cater to Wynwood’s ... Keep Reading »
Washington Court Finds Coverage For “Collapse” Is Not Set In Stone
As this blog has documented, the language of insurance policies evolves; it changes to address new risks, and it also responds to new interpretations of old policy provisions. Even if a policyholder maintains a long-standing relationship with a single carrier, the availability of coverage might turn on whether the loss occurred in a particular policy term. Property coverage for “collapse” provides an example of this development. After a number of courts found that the ... Keep Reading »
Third Circuit Slams The Door On Coverage For The Cost of Defending Excluded Claims—Then Leaves It Wide Open
An insured corporation settles a class action, and a portion of the settlement pays the plaintiffs’ attorneys. Payments to the class are excluded from coverage under the terms of the corporation’s liability policy. But can the company still get coverage for the attorneys’ fees? In April, this blog discussed a case in which the answer turned on the nature of the company’s underlying conduct. The following month, in PNC Financial Services Group, Inc. v. Houston Casualty ... Keep Reading »
Defining the Contours of Cyber Coverage for Data Breach: a Warning in Arizona
A year ago in this space, we looked at the receding wave of coverage litigation regarding whether various cyber-related exposures were covered under traditional policies, such as CGL and professional liability policies. Deemed “square peg” litigation, those cases were mostly a mixed bag. And, as predicted, since the advent of the now burgeoning cyber-specific coverage market, those cases are largely becoming irrelevant, as insurers have begun to place exclusions in ... Keep Reading »
Alabama Puts The Mystery Back Into All-Risk Coverage
“There is, one knows not what sweet mystery about this sea …” -- Moby-Dick Insuring property against loss creates an unavoidable moral hazard: policyholders often have an incentive to cause or allow their property to disappear. Early efforts to limit insurers’ exposure to that risk—such as requiring the insured to prove the cause of a loss by “direct and affirmative evidence”—proved unsustainable. Eventually, the problem gave rise to express exclusions for losses ... Keep Reading »
Eighth Circuit Orders Coverage For Hackers’ Fraudulent Wire Transfer
Financial institution bonds come in various forms, depending on the nature of the insured business (e.g. bank, broker, insurance company). Common forms are fidelity bonds and commercial crime policies. These policies provide first party coverage against losses caused by employee dishonesty, forgery, kidnap, ransom & extortion, computer fraud and other specified financial frauds. These policies are common, and in some cases required by law, for banks, insurers, and ... Keep Reading »
Colorado Takes A Stand Against Unauthorized Settlements
The “notice-prejudice” rule gives a pass to policyholders who breach the notice or cooperation provisions of their policies, if the breach is found not to have prejudiced the insurer. Sometimes, the late notice does not arrive until after the policyholder has settled an underlying claim; even in those cases—and even where the policy contains a “no voluntary payments” or a “consent-to-settle” clause—dozens of cases have found that the notice-prejudice rule applies. Last ... Keep Reading »
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