“It’s a big enough umbrella, but it’s always me that ends up getting wet.” - Sting (1981) “Here’s a second umbrella” – Montana Supreme Court (2016) Although the terms are often used interchangeably, there are several key differences between umbrella and excess coverage. One such distinction is that an umbrella policy can apply to multiple underlying policies. This makes it essential to clearly delineate and define the policy’s aggregate limit of liability— the maximum ... Keep Reading »
For Excess Liability Insurers, Consent-to-Settle Clauses Still Count
When a liability insurer defends its insured under a reservation, recent decisions limit the insurer’s right to enforce a policy’s consent-to-settle clause. But can the reservation affect the rights of an excess carrier? And does it matter if the carrier declines to participate in an upcoming mediation? Last month, in The Doe Run Resources Corp. v. The Fidelity & Cas. Co. of N.Y., G050689 (Cal. Ct. App. Feb. 1, 2016), a California appellate court (applying Missouri ... Keep Reading »
We Don’t Feel Your Pain: Massachusetts Limits Recoveries By Workers Compensation Insurers
When an injured employee sues a third party for negligence, the law usually permits her employer’s workers compensation insurer to share in the recovery. Last month, in DiCarlo v. Suffolk Construction Co., Nos. SJC-11854 and SJC-11853 (Mass. Feb. 12, 2016), the Supreme Judicial Court of Massachusetts found that this right does not apply to any portion of a settlement designated as compensation for “pain and suffering.” The decision turns on a highly questionable ... Keep Reading »
In Examinations Under Oath, Friends Must Let Friends Testify Alone
The cooperation provisions in most personal lines insurance policies require policyholders to sit for Examinations Under Oath ("EUO") to answer questions about the validity of a claim. What if the insured refuses to attend without having his non-lawyer friend sit beside him? May the insurer insist on examining the insured without the friend in the room? That was the question in Foremost Insurance Company v. Freeman, 2016 WL 380126 (S.D. Miss. Jan. 29, 2016). When Bad ... Keep Reading »
Florida Makes it Safer to Collect Subrogation Claims from Consumers
As insurers show increasing interest in pursuing recovery opportunities after paying claims, they face increased exposure to litigation hazards associated with the debt collection industry. A recent decision by a federal court in Florida will help ameliorate that risk—at least within the Sunshine State. In Schaefer v. Seattle Service Bureau, Inc., No. 2:15-cv-444 (M.D. Fla., Dec. 16, 2015), the court ruled, as a matter of first impression, that insurance subrogation ... Keep Reading »
Too Little, Too Late: The Harsh Bright Line of Suit Limitation Provisions
Approximately twenty percent of Americans have been classified as chronic procrastinators, which means one in five policyholders faces a potential problem when suing for coverage. While the statute of limitations for breach of contract varies by state, it is typically three years or more. However, insurance policies often impose their own, contractual suit limitations, and it is often only a year or two. When and how these provisions operate to bar coverage varies ... Keep Reading »
Coverage for Direct Physical Loss Does Not Necessarily Include “Matching” or Require “Aesthetic Uniformity”
When a property insurance policy covers a multi-story building or multi-building property, and a portion sustains damage, there is often a question regarding the extent to which undamaged property should be replaced to ensure matching and/or aesthetic uniformity throughout the property. In Great American Insurance Company of New York v. The Towers of Quayside No. 4 Condominium Association, 15-CV-20056 (S.D. Fla. Nov. 5, 2015), a District Court recently determined that ... Keep Reading »
There’s A Problem With Your Reservation: Citing Reservation of Rights, Mississippi Court Nullifies “Defense Within Limits” Provision
When liability insurers have reasonable questions about coverage, courts traditionally encourage them to defend their insureds, subject to a reservation of rights. E.g., Drawdy v. Direct Gen. Ins. Co., 586 S.E.2d 228 (Ga. 2003) (“[b]y acting in this manner, the insurer eliminates any detriment to the insured …”). But the decision to reserve can have serious, negative consequences for the insurer. In some states, a reservation is deemed to create a conflict between ... Keep Reading »
Arkansas Court Finds Extension of Coverage for Contingent Time Element includes Contingent Extra Expense
All risk insurance policies typically provide coverage for loss of or damage to the insured property unless otherwise excluded. Coverage is provided for physical damage, as well as resulting business interruption losses. Such policies sometimes also include coverage for loss resulting from damage to property that wholly or partially prevents a supplier from providing goods to the insured. This coverage is referred to as Contingent Time Element coverage. In Lion Oil ... Keep Reading »
After Pit Bull Case, Questions Dog New York’s “Unfortunate Event” Test
Where an insurance policy contains a “per occurrence” limit on coverage, New York courts apply what they call the “unfortunate event” test to determine how many “occurrences” are involved in a given claim or set of claims. The test does not apply at all, however, where the policy language indicates “an intent to aggregate separate incidents into a single occurrence.” As this blog recently discussed, the U.S. Court of Appeals for the Second Circuit ruled in September ... Keep Reading »
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