Silence is argument carried out by other means. –Ernesto “Che” Guevara As this blog has repeatedly documented, it can be hard for insurers to assert the attorney-client privilege in the context of bad faith litigation. One difficulty arises in states that enforce a presumption against the privilege in bad faith suits. In many cases, insurers need to waive the privilege, to assert a defense based on advice of counsel. Last month, a federal court in South Carolina ... Keep Reading »
General Liability
Fifth Circuit Finds Erosion in Texas—Because Endorsements Are Transformative
In Amerisure Mut. Ins. Co. v. Arch Specialty Ins Co., No. 14-20239 (5th Cir. April 21, 2015), a case that applied Texas law, the U.S. Court of Appeals for the Fifth Circuit recently held that the word "expenses," as used in a liability policy, unambiguously applies to attorneys' fees—and that an endorsement dealing with "expenses" had "transform[ed] the policy in an 'eroding limits' policy." Among other things, the case shows that Texans and New Yorkers don't use words ... Keep Reading »
Who’s the Boss? In Policies Covering Multiple Insureds, the Details Matter
Liability policies for businesses are subject to a number of common exclusions; many, for example, do not cover liability to employees of the business who are injured on the job. Frequently, those policies do provide coverage to additional insured parties, such as lenders or property owners, that deal with the business. Recently, in Mutual Benefit Ins. Co. v. Politsopoulos, No. 60 MAP 2014 (Penn. May 26, 2015), the Supreme Court of Pennsylvania addressed the question ... Keep Reading »
Fourth Circuit: If You Want to Limit Additional Insured Coverage to Vicarious Liability, You Should Say So
In Capital City Real Estate, LLC v. Certain Underwriters at Lloyd's, London, No. 14-1239 (4th Cir. June 10, 2015), the Fourth Circuit Court ruled that a Maryland federal court erred in granting summary judgment to Certain Underwriters at Lloyd's, London (“Lloyd's") in a coverage dispute between it and its insured, a construction contractor, by misinterpreting the “additional insured" endorsement in the policy issued by Lloyds. The lawsuit arose out of a construction ... Keep Reading »
Looking Backward: West Virginia Retroactively Imposes Coverage for Faulty Workmanship
A notorious moving target in the field of coverage litigation is an insurer's responsibility under a commercial general liability policy for the policyholder's faulty workmanship. The key question is usually whether the defect in workmanship is an "occurrence" within the meaning of a policy; the answer can depend on which court you ask or how those courts deal with other policy terms. In 2013, West Virginia's highest court overruled its own precedents to hold that CGL ... Keep Reading »
Wait A Minute, Mr. Postman: Tenth Circuit Applies Statutory-Violation Exclusion To Junk Fax Claims That Try To Skirt The TCPA
Enacted in 1991, the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), inaugurated the era of "junk fax" class actions, in which recipients of mass fax advertisements may pursue statutory damages of $500 per class member. Insurers responded by adding terms to liability policies that expressly exclude coverage for claims under the TCPA. But the dialectic of coverage litigation is ineluctable, and plaintiffs began asserting, in effect, that the TCPA was ... Keep Reading »
Seeing the Finish Line: Courts Increasingly Exempt Claims-Made Policies from the Notice Prejudice Rule
In a majority of jurisdictions, the "notice-prejudice rule" provides that an insurer may not deny a claim on grounds of late notice without demonstrating prejudice. The rule is statutory in some states and judicially crafted in others. Most courts, however, also hold that the rule does not apply to late notice under a claims-made-and-reported policy, as opposed to an occurrence policy. In 2015, several cases have solidified this trend, and some of them actually extend ... Keep Reading »
Coverage Not Limited to Schedule of Locations in Fight Over Dam Liabilities
In C. Brewer & Co., Ltd. v. Marine Indem. Ins. Co. of Am., No. SCWC-28958 (Haw. Mar. 27, 2015), the Supreme Court of Hawaii ruled that liability coverage is not limited to only those locations defined in an insurer's schedule of locations. The court found that because a causal connection could be established between the negligent decisions of a business proprietor and the liabilities stemming from those decisions elsewhere, coverage could be applied irrespective of ... Keep Reading »
Down in the Dumps: Court Refuses to Apply Pollution Exclusion in Landfill Seepage Case
Claims involving potential coverage for pollution liability pose unique challenges for insurers. In many cases, the polluting activity occurred decades ago and over a large span of time, with only a fraction of the activity occurring during the policy period. As a result, an issue in pollution liability cases is whether an insurer is obligated to indemnify an insured for the entire amount of damages resulting from pollution, or whether an insurer's obligation may be ... Keep Reading »
Insurance is Big in Texas: In Deepwater Horizon Case, Texas Stretches a Policy’s Four Corners to Include Other Contracts
Last month, in In re Deepwater Horizon, Relator, the Supreme Court of Texas applied a fundamental principle of insurance law to a case with enormous financial implications. The owner of the Deepwater Horizon drilling rig had made BP an additional insured under its liability policies, but it did so pursuant to a drilling contract in which BP had agreed to be responsible for some of the losses those policies covered. When BP submitted a claim, therefore, a court had to ... Keep Reading »
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