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 »
Florida Court Enforces Condition on Post-Loss Assignment of Benefits, Creating Conflict Between District Courts of Appeal
As we have reported, an assignment of benefits (AOB) is a legal tool that allows a third party, like a contractor, to be paid for services performed, like repairs following an insured loss, for an insured property owner who would normally be reimbursed by the insurance company directly after making a claim. Most AOBs allow the contractor to stand in the shoes of the property owner for insurance collection purposes. Such post-loss assignments are enforceable in most ... Keep Reading »
Professional Services Exclusion Precludes Coverage for False Claims Act Suit
It is not unusual for a directors and officers liability policy to have an exclusion for professional services. A such, a question often arises regarding whether the claimed wrongful conduct involved the rendering or failure to render professional services in a particular context. In HotChalk, Inc. v. Scottsdale Ins. Co., No. 16-17287 (9th Cir. June 4, 2018), the Ninth Circuit found that coverage was precluded for a False Claims Act suit because the insured’s ... Keep Reading »
An Absolute Pollution Exclusion: Reading the ‘Fine’ Print
A federal judge recently relied on a pollution exclusion to find that Great American Insurance Company was not obligated to cover losses associated with the unintended distribution of rock fines into New Jersey’s Spruce Run reservoir. In Great American Ins. Co. v. ACE American Ins. Co., No. 4:18-CV-114-A (N.D. Tex. Jul. 10, 2018), the Northern District of Texas examined the scope of an absolute pollution exclusion and found that it applied to bar coverage, despite the ... Keep Reading »
Common Sense Prevails Over Dictionary Definitions: Rolling Trash Bins Are Not ‘Vehicles’ Judge Explains
A federal judge recently refused an insured’s attempt to escape a policy exclusion by contending that a large “storage bin” on wheels was a “vehicle” under an exception to the exclusion, which prohibited coverage for costs associated with gas system tests. In 1070 Park Ave. Corp. v. Fireman’s Fund Ins. Co., No. 17 CIV. 2474 (CM) (S.D.N.Y. June 19, 2018), appeal docketed No. 18-1961 (2d Cir. June 29, 2018), the judge ruled that the storage bin was not a “vehicle” as that ... Keep Reading »
New Opinions From Second and Sixth Circuit Courts Rock Phishing Loss Coverage Landscape
On July 6, the Second Circuit Court of Appeals set off some fireworks in the insurance coverage litigation field when it found coverage for a “social engineering”/phishing scheme loss, bucking the trend among its sister courts. The appellate court affirmed a Southern District of New York decision that had been a relative outlier, finding coverage under a crime/fidelity policy for a scheme where fraudsters used spoof emails to trick company employees into changing wiring ... Keep Reading »
Defining ‘Logical Connection’: NC Federal Court Tackles ‘Related Claims’
Insurance carriers and policyholders often argue about the scope of policy provisions. Generally, policyholders take an expansive view of insuring agreements, while carriers often construe them more narrowly. But not all coverage arguments follow these familiar lines. Take, for instance, the “related claims” debate. Most third-party liability policies contain aggregation language. Such policies deem “related claims” to be a single claim “first made” when the first ... Keep Reading »
To Defend or Not to Defend? Northern District of Ohio Provides Guidance for Determining Whether to Defend an Arbitration
While the rules for determining whether a liability insurer has a duty to defend a lawsuit are generally well-known, questions can arise when an insurer is asked to defend an arbitration. For example, can an insurer’s duty to defend be determined by looking solely at the initial request for arbitration even if that document is not required to fully clarify the claims asserted and damages sought? According to the Northern District of Ohio’s decision in Maxum Indemnity ... Keep Reading »
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