Last week, in a unanimous decision, the Supreme Court of California changed the law governing anti-assignment provisions in liability insurance policies. Twelve years ago, in Henkel Corp. v. Hartford Accident & Indemnity Co., 29 Cal.4th 934 (2003), the court held that such provisions are fully enforceable, until a claim against the insured has been reduced to either a judgment or a settlement. The latest case, Fluor Corporation v. Superior Court, No. S205889 (Cal. ... Keep Reading »
Ninth Circuit Finds Defects in the Construction of a “Known-Loss” Exclusion
A mason who performed work on a residential project was notified in 2006 that cracks had developed in his work. Several months later, the mason purchased a commercial general liability policy that expressly excluded coverage for property damage, if an insured "knew that the … damage had occurred, in whole or in part." In 2007, the project's general contractor sued the mason, claiming that defects in his work had caused the property damage that was the subject of a suit ... Keep Reading »
For “At-Issue Waiver,” The Best Defense May Not Be An Affirmative Defense
Silence is argument carried out by other means. –Ernesto “Che” Guevara As this blog has repeatedly documented, it can be hard for insurers to assert the attorney-client privilege in the context of bad faith litigation. One difficulty arises in states that enforce a presumption against the privilege in bad faith suits. In many cases, insurers need to waive the privilege, to assert a defense based on advice of counsel. Last month, a federal court in South Carolina ... Keep Reading »
Fifth Circuit Finds Erosion in Texas—Because Endorsements Are Transformative
In Amerisure Mut. Ins. Co. v. Arch Specialty Ins Co., No. 14-20239 (5th Cir. April 21, 2015), a case that applied Texas law, the U.S. Court of Appeals for the Fifth Circuit recently held that the word "expenses," as used in a liability policy, unambiguously applies to attorneys' fees—and that an endorsement dealing with "expenses" had "transform[ed] the policy in an 'eroding limits' policy." Among other things, the case shows that Texans and New Yorkers don't use words ... Keep Reading »
Who’s the Boss? In Policies Covering Multiple Insureds, the Details Matter
Liability policies for businesses are subject to a number of common exclusions; many, for example, do not cover liability to employees of the business who are injured on the job. Frequently, those policies do provide coverage to additional insured parties, such as lenders or property owners, that deal with the business. Recently, in Mutual Benefit Ins. Co. v. Politsopoulos, No. 60 MAP 2014 (Penn. May 26, 2015), the Supreme Court of Pennsylvania addressed the question ... Keep Reading »
Fourth Circuit: If You Want to Limit Additional Insured Coverage to Vicarious Liability, You Should Say So
In Capital City Real Estate, LLC v. Certain Underwriters at Lloyd's, London, No. 14-1239 (4th Cir. June 10, 2015), the Fourth Circuit Court ruled that a Maryland federal court erred in granting summary judgment to Certain Underwriters at Lloyd's, London (“Lloyd's") in a coverage dispute between it and its insured, a construction contractor, by misinterpreting the “additional insured" endorsement in the policy issued by Lloyds. The lawsuit arose out of a construction ... Keep Reading »
Cyberclaim Coverage Denied: The TCPA Protects Privacy, Not Personally Identifiable Information
In Doctors Direct Ins., Inc. v. Beaute’ E’mergente, LLC, No. 1-14-2919 (Ill. App. Ct. June 22, 2015), an Illinois state appellate court recently affirmed that a medical malpractice liability insurer did not owe a duty to defend or indemnify its insured in an underlying class action lawsuit alleging violations of the Telephone Consumer Protection Act (the “TCPA”) and the Illinois Consumer Fraud and Deceptive Business Practices Act (the “ICFA”), because there was no ... Keep Reading »
Off Schedule: Texas Supreme Court Rules That Ambiguity Produces Blanket Coverage
Owners of multiple commercial properties can significantly reduce their insurance premiums by purchasing a scheduled policy, under which each item of covered property is separately reported (or "scheduled"), and the coverage limit for any one item is determined independently of damage to any other item. The alternative is a blanket policy, which applies a single coverage limit to the aggregate losses of all the covered properties. Recently, in RSUI Indem. Co. v. The ... Keep Reading »
Eleventh Circuit Affirms Summary Judgment for Insurer on Basis of “Other Capacity” Exclusion
On June 22, 2015, the Eleventh Circuit affirmed the grant of summary judgment in favor of National Union Fire Insurance Company of Pittsburgh, Pa., in an action where the insured sought coverage under a D&O policy. The court found that the claim was excluded under a provision barring coverage for claims “arising out of” alleged misconduct in a capacity other than as a corporate officer and director, and that, accordingly, there was no bad faith as a matter of ... Keep Reading »
In Overhead and Profit Class Actions, The Third Trade’s No Longer The Charm
When repairs to a damaged home reach a certain level of complexity, they call for supervision by a general contractor, who receives a percentage of the actual repair costs as "general contractor's overhead and profit" or "GCOP." Under "replacement cost" policies, insurers must pay GCOP for appropriate claims, even if the insured chooses not to use a contractor or elects not to make repairs. In the past, this obligation has been the subject of class action suits, in ... Keep Reading »
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