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 »
Professional Liability
Illinois Supreme Court: Innocent Insured Doctrine? For a Lawyer? (cough)
In Illinois State Bar Assoc. Mut. Ins. Co. v. Law Office Of Tuzzolino and Terpinas, the Illinois Supreme Court held that the "innocent insured" doctrine does not protect an innocent prospective insured, if his law partner makes misrepresentations in the application for insurance that void the policy. The parties to this case were the two partners in a law firm, and a client who sued the firm for malpractice, on the one hand, and the Mutual Insurance Company on the ... Keep Reading »
Is There a Duty to Defend Pollution Claims? It’s the Complaint, Stupid
This Spring, cases from Florida and Wisconsin reaffirmed the general proposition that a liability insurer’s duty to defend must be determined from the specific claims in the underlying complaint against the insured, and not from facts available from other sources. Both cases dealt with contamination or pollution conditions, and, in both instances, the courts held it was the nature of the underlying claim, rather than the actual presence of a pollutant, that established ... Keep Reading »
Live Free of Actual Knowledge or Coverage Will Die
In September 2012, the highest court of the Granite State reversed a decision that rescinded an insurance contract on the basis of a material false statement in the application. The Supreme Court held that rescission was unavailable, because the policy was ambiguous. The court suggested, in other words, that an insurance policy must clearly express the insurer’s intention not to be forced to provide coverage on the basis of misrepresentations. Parties to other types ... Keep Reading »
Reservation of Rights can put Insurers on the Hook for Cost of Independent Counsel
When a liability insurer provides a defense subject to a reservation of rights, it seeks to preserve its own rights, while avoiding prejudice to the insured in the underlying claim. If the insurer ultimately wins the coverage battle, it can try to recover the cost of the defense it provided. Whether it can succeed is a question that different states answer in a wide variety of ways. In New York, insurers can recoup defense costs by establishing a lack of coverage. ... Keep Reading »