Third-party liability policies often include aggregation clauses. As the name suggests, these clauses aggregate "related claims" or "interrelated wrongful acts" into one claim or occurrence. This provides the parties with certainty as to when a claim was "first made" or when an occurrence "first occurred." These clauses often lead to litigation, with carriers and policyholders asserting narrow or broad readings of the language, depending on the desired result. A trio ... Keep Reading »
Clearing the Air: Tenth Circuit Strikes Down an Indoor Air Quality Exclusion, Citing Ambiguity
Ambiguity strikes again. While the heavily litigated pollution exclusion is well-known in the insurance world, its progeny—the indoor air exclusion—only recently has started making its way around the block. Insurers should be aware of the trend in cases holding that indoor air quality exclusions are ambiguous. Such holdings are resulting in courts applying a strict and narrow construction. For example, in Siloam Springs Hotel v. Century Sur. Co., No. 17-6208 (10th Cir. ... Keep Reading »
SEC-ordered Disgorgement is an Uninsurable “Penalty,” not a Covered “Loss”
A New York intermediate appellate court has ruled that a $140 million “disgorgement” payment ordered by the SEC in resolution of an investigation into securities laws violations was a “penalty” that was not covered by insurance rather than a covered “loss.” The case, J.P. Morgan Securities, Inc. v. Vigilant Ins. Co., 2018 NY Slip Op. 06146 (App. Div., 1st Dept. Sept. 20, 2018, stemmed from a 2003 investigation into claims that Bear Stearns employees knowingly ... Keep Reading »
Another Sentinel Strike: California District Court Dismisses Financial Elder Abuse and Fraud Claims
The Hartford affiliate Sentinel Insurance Company continued its successful campaign to limit dubious claims by securing another favorable decision – this time in California in the rapidly developing area of financial elder abuse law in Davis v. Sentinel Insurance Co., No. 17-CV-1845 W (JLB) (S.D. Cal. Oct. 18, 2018). This case centered on a coverage dispute arising out of James and Cecelia Davis’ uninsured motorist (UM)/underinsured motorist (UIM) claim against ... Keep Reading »
Failure to Procure Cyber Insurance Could Haunt Your Company
A federal court in Florida recently adopted the now well-developed consensus that data breach losses are not covered under standard Commercial General Liability (CGL) policies. As the Department of Homeland Security’s officially designated 15th annual Cybersecurity Awareness Month comes to a close, the case stands as yet another stark warning that companies of all sizes – any company that uses, collects, stores or handles confidential personal information such as credit ... Keep Reading »
Six Degrees of Separation: Eleventh Circuit Upholds a Broad ‘Related Claims’ Provision
“Related Claims” provisions in directors and officers (D&O) and errors and omissions (E&O) policies, while common, can spawn disagreement as to scope and application. Beyond these substantive questions, an issue arises as to what information a court may consider in determining whether two or more claims are “related” within the meaning of a given policy. The Eleventh Circuit recently analyzed this issue in Health First, Inc. v. Capitol Specialty Insurance ... Keep Reading »
Eleventh Circuit Finds Exclusion Bars Trademark Infringement and Dependent False Designation and Unfair Competition Claims
Duty to defend principles are generally well-settled in most jurisdictions: If the allegations in an underlying complaint potentially fall within the scope of coverage, the insurer must defend. In many – but not all – jurisdictions, the insurer must defend the entire suit as long as it alleges any potentially covered claims. Once implicated, the duty may be negated if the allegations against the insured fall entirely within a policy exclusion. While ingrained in ... Keep Reading »
Sixth Circuit Weighs in on Coverage for Marijuana-related Property Loss
The Sixth Circuit Court of Appeals issued a colorful opinion in a property insurance coverage dispute affirming a denial of coverage for loss arising out of an illicit marijuana growing operation in Michigan. The case is captioned K.V.G. Properties Inc. v. Westfield Ins. Co., No. 17-2421 (6th Cir. Aug. 21, 2018). The insured was the lessor of commercial properties, including a property leased to certain tenants who, unbeknownst to the lessor, built a large-scale ... Keep Reading »
Crime Policy Won’t Cover Strip Club That Overcharged for Undressing, Says Nevada District Court
In CP Food & Beverage, Inc. v. United States Fire Insurance Company, No. 2:16-cv-024210APG-GWF (D. Nev. Aug. 6, 2018), the U.S. District Court in Nevada found that a commercial crime policy’s coverage for loss “resulting directly” from employee theft did not cover the insured’s liability to reimburse its customers who were overcharged by employees. Instead, the court followed the “direct means direct” approach and ruled that the policy provided coverage only for the ... Keep Reading »
Underlying Assertion of Negligent Misrepresentation Is Not Necessarily an Occurrence
Courts sometimes struggle with the issue of whether property damage arising in the context of a contractual relationship, particularly in construction contracts, constitutes an “occurrence” under a standard commercial general liability (CGL) policy. Generally, but not always – and it varies from jurisdiction to jurisdiction – courts regard contractual breaches as non-accidental conduct, and/or apply the so-called “business risk” exclusions (such as the standard CGL “Your ... Keep Reading »
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