As this blog has reported, a line of cases deciding coverage disputes over faulty workmanship runs against (or, at least, around) a basic rule for interpreting insurance policies. Under that rule, the scope of coverage is determined by a policy’s insuring clause, which may be narrowed by one or more exclusions. Exceptions to the exclusions can add back coverage that the exclusions remove, but they cannot create coverage beyond the ambit of the insuring clause. E.g., ... Keep Reading »
In Indiana, an Absolute Pollution Exclusion May Exclude Absolutely Nothing
A recent article in the Sports section of The Miami Herald read "Shooting coach helps Winslow." Perhaps, but it probably didn't help the coach much. The admonition to "eat every carrot and pea on your plate" undoubtedly elicits laughs from the children to whom it is directed. The point is, some things are unambiguously ambiguous. Others are not. Consider these basic principles of Indiana contract interpretation: Limitations on coverage in insurance policies must ... Keep Reading »
NAIC Exposes Revised Draft Model Cybersecurity Law for Insurers for Public Comment
Insurers are a prime target for hackers as a result of the vast stores of valuable data they maintain. Not all information is created equal, and it varies in value. Hacker services and software, illegal drugs, cyberweapons, and all kinds of other types of stolen, confidential, and compromised information is monetized and traded daily on darknet markets using various forms of cryptocurrency, by governments, hackers, criminals, and businesses. While a stolen credit card ... Keep Reading »
Look, up in the sky! It’s a bird, it’s a plane, it’s… uh oh… a Super Lien!
Liability insurers have always gnashed teeth over the dreaded “super lien” – aka a lien asserted by Medicare for treatment expenses where the patient is reimbursed through a settlement obtained in personal injury litigation. This is because Medicare has a right of action against the primary payer (e.g., a tortfeasor’s liability insurer) that is effectively absolute, even if the insurer has already paid settlement funds to the injured party that includes an amount meant ... Keep Reading »
Greed is Not Good: The Personal Profit Exclusion
As this blog has frequently discussed, many limitations and exclusions in liability policies address “moral hazard” situations by declining to provide insurance for bad behavior. One such exclusion is the “personal profit exclusion” contained in most D&O policies, which bars coverage for claims where an insured gains a profit or other advantage to which it is not legally entitled. This exclusion was recently addressed by a Massachusetts appellate court in Winbrook ... Keep Reading »
A Plague A’ Both Your Clauses: Insurance Probably Won’t Cover Businesses Stung By Zika
During the past several months, Zika virus has rapidly spread across Latin America and into the United States. While Congressional action has stalled, the Centers for Disease Control and Prevention (CDC) has issued a number of travel warnings, including one stating that “[p]regnant women should not travel” to the popular Wynwood neighborhood of Miami. This warning will almost certainly harm the many restaurants, art galleries and retail shops that cater to Wynwood’s ... Keep Reading »
Washington Court Finds Coverage For “Collapse” Is Not Set In Stone
As this blog has documented, the language of insurance policies evolves; it changes to address new risks, and it also responds to new interpretations of old policy provisions. Even if a policyholder maintains a long-standing relationship with a single carrier, the availability of coverage might turn on whether the loss occurred in a particular policy term. Property coverage for “collapse” provides an example of this development. After a number of courts found that the ... Keep Reading »
Tenth Circuit Drills Down Into Roots Of Moral Hazard, Comes Up Dry
Moral hazard (one of this blog’s preoccupations) usually comes up in disputes over the scope of coverage under an insurance policy. (See, for example, here, here and here.) But state legislatures often address it, too—for example, by imposing limits on agreements to indemnify a party against the consequences of its own negligence. This week, in Lexington Ins. Co. v. Precision Drilling Co., No. 15-8036 (10th Cir. July 26, 2016), the U.S. Court of Appeals for the Tenth ... Keep Reading »
Third Circuit Slams The Door On Coverage For The Cost of Defending Excluded Claims—Then Leaves It Wide Open
An insured corporation settles a class action, and a portion of the settlement pays the plaintiffs’ attorneys. Payments to the class are excluded from coverage under the terms of the corporation’s liability policy. But can the company still get coverage for the attorneys’ fees? In April, this blog discussed a case in which the answer turned on the nature of the company’s underlying conduct. The following month, in PNC Financial Services Group, Inc. v. Houston Casualty ... Keep Reading »
Not Seeing Double: In Reversal, New York Court Holds That Third-Party Liability Payments May Not Offset UIM Benefits
In New York, uninsured/underinsured motorist coverage “does not function … to fully compensate … insureds for their injuries.” Weiss v. Tri-State Consumer Ins. Co., 98 A.D.3d 1107, 951 N.Y.S.2d 191 (2d Dep’t 2012). UIM coverage is subject to limits, and those limits are generally reduced by the amount of coverage available to the person who caused the injury. Standard UIM endorsements also provide that coverage “shall not duplicate” payments the insured receives from ... Keep Reading »
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