On July 23 and 24, 2014, respectively, intermediate appellate courts from South Carolina and Massachusetts released opinions upholding the application of the "your work" exclusion in a commercial general liability policy against claims based on contracted work that had been performed improperly. These two decisions buttress application of the "your work" exclusion, but they also illustrate the fact that the area of business risk exclusions (which typically refers to the ... Keep Reading »
General Liability
On Remand, District Court Expands Subcontractor Exception to Rule Against Coverage for Faulty Workmanship
Recent decisions from the U.S. Courts of Appeal for the Tenth and Second Circuits have partially overturned a longstanding rule against coverage for faulty workmanship under commercial general liability policies. The rule, known as the “fortuity doctrine,” was based on insuring clauses that provided coverage only for claims arising out of an “occurrence,” and which defined “occurrence” to mean “accident.” For many years, courts held that claims based on the insured’s ... Keep Reading »
It’s All About the Pleadings: Florida Court Expands Insurers’ Obligation to Provide Separate Counsel for Insured Co-Defendants
The duty of a liability insurer to provide a defense for its insured is controlled by the contents of the pleading against that insured: the duty can arise on the basis of allegations that establish grounds for coverage, even if the insurer knows those allegations to be false. If, in those circumstances, the insurer reserves its right to dispute coverage (and especially if, in doing so, it relies on a theory that would prejudice the insured’s position in the underlying ... Keep Reading »
In Faulty Workmanship Cases, Insuring Clause Dogs are Wagged by Exclusion Tails
In Greystone Const., Inc. v. National Fire & Marine Ins. Co., 661 F.3d 1272, 1289 (10th Cir. 2011), the U.S. Court of Appeals for the Tenth Circuit articulated an important rule for construing commercial general liability policies: [A] CGL policy ‘begin[s] with a broad grant of coverage, w[hich is then limited in scope by exclusions. Exceptions to exclusions narrow the scope of the exclusion and . . . add back coverage. But it is the initial broad grant of ... Keep Reading »
As Gunfire Thins the Ranks of the Employed, Employee Exclusions Hold the Line Against Coverage
As this blog has previously reported, accidents with guns are not likely to become less common any time soon. With home- and business-owners striving to find increasingly original ways to get shot, they will put increasing strain on the traditional language of the coverage exclusions in insurance policies. In Gear Automotive v. Acceptance Indemnity Insurance Company, No. 12-2446 (8th Cir. Mar. 18, 2013), the U.S. Court of Appeals for the Eighth Circuit recently ... Keep Reading »
Too Much of a Good Thing: Household Product Triggers Pollution Exclusion, Because “Quantity Matters”
Pollution exclusion clauses began appearing in commercial general liability policies when federal laws began making businesses liable for the cost of massive environmental clean-ups—like the remediation of “Volatile Organic Compounds” that was recently at issue in Chubb Custom Ins. Co. v. Space Systems/Loral, Inc., No. 11-16272 (9th Cir. March 15, 2013). A recent Colorado case presented the issue of when the grease that goes into your bacon double cheeseburger becomes a ... Keep Reading »
Eighth Circuit Declines to Expand Definition of “Conflict of Interest” in Reservation-of-Rights Scenario
A liability insurer’s reservation of rights can affect the insurer’s ability to participate in the litigation of the underlying action. In most states, an insurer must provide independent counsel if the insurer’s coverage position might benefit from a failure of the insured’s defense on one or more issues in the underlying suit. As this blog has reported, it is a rule in some other states that the reservation of rights, in and of itself, creates a conflict that ... Keep Reading »
Impleading an Insured Proves “Mighty” Costly
Nuances of procedure can make a big difference in coverage disputes. In Danaher Corp. v. Travelers Indemnity Corp., No. 10 Civ. 0121(JPO)(JCF) (S.D.N.Y. Jan. 31, 2013), Travelers was required to pay the attorneys’ fees its insured had incurred filing a summary judgment motion in a case against Travelers. The ruling was not based on any impropriety in the insurer’s opposition to the motion, but rather, on the fact that Travelers had chosen to bring the insured into the ... Keep Reading »
To Boldly Go Where No Insurance Has Gone Before: New Mexico Redefines Portable Coverage
You might have missed the arrival of the future, but Wikipedia now reports matter-of-factly that Spaceport America “is a spaceport located in” a desert basin in New Mexico. (The only surprising fact is that the nearest town is called “Truth or Consequences.”) This month, a company called “Virgin Galactic,” a member of the Virgin Group that plans to provide sub-orbital spaceflights to “space tourists,” is scheduled to make its first monthly rent payment on the $209 ... Keep Reading »
No, SIR: The Self-Insured Retains a Duty of Self-Defense
In the realm of liability insurance, the terms “deductible” and “self-insured retention” are often used interchangeably, but the two provisions have important differences. Among other things, “policies which are subject to self-insured retentions are ‘excess policies' which have no duty to indemnify until the self-insured retention is exhausted.” Century Indemnity Co. v. The Marine Group, No. 3:08-CV-01375-AC (D. Ore. Dec. 3, 2012), quoting Pacific Employers Ins. Co. ... Keep Reading »