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 »
Florida Appellate Court Rejects Bid to Curb Insureds’ Assignments to Contractors
Many property insurance policies contain terms that prohibit assignment, but Florida law has long deemed those terms inoperative once a loss has occurred. E.g., W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 74 Fla. 220 (Fla. 1917). As a result, contractors who repair or remediate damaged property increasingly offer to accept assignments from policyholders in lieu of payment—a practice that gives them greater leverage in setting prices, because it enables them to back ... Keep Reading »
Looking Backward: West Virginia Retroactively Imposes Coverage for Faulty Workmanship
A notorious moving target in the field of coverage litigation is an insurer's responsibility under a commercial general liability policy for the policyholder's faulty workmanship. The key question is usually whether the defect in workmanship is an "occurrence" within the meaning of a policy; the answer can depend on which court you ask or how those courts deal with other policy terms. In 2013, West Virginia's highest court overruled its own precedents to hold that CGL ... Keep Reading »
Cybersecurity Coverage Litigation: Learning to Survive After the Second Wave Hits
It’s a familiar pattern. First, new risks inspire legislation and regulations that impose new penalties. Next, insurers and policyholders fight over whether the new liabilities are covered under traditional liability policies. Finally, insurers craft new coverages to define their obligations in the changed environment. See, e.g., DeMeo, Eldred, Utiger & Scruggs, "Insuring Against Environmental Unknowns," 23 J. Land Use & Envtl. L. 61, 62-65 (2007). In this ... Keep Reading »
Florida’s Immune System: No First-Party Bad Faith Claims Against The State-Created Property Insurer
Earlier this month, in Citizens Property Insurance Corp. v. Perdido Sun Condominium Association, Inc., No. SC14-185 (Fla. May 14, 2015), the Supreme Court of Florida held that the immunity from suit granted to Citizens under its enabling statute, Fla. Stat. § 627.351(6), applies to the cause of action for an insurer's first-party bad faith that was created by a different statute, Fla. Stat. § 624.155(1)(b). Because Florida does not recognize a common law cause of action ... Keep Reading »
Of Mice and Manpower: Companies That Lease Employees Cannot Be Self-Insured
In the recent California case of Kimco Staffing Services v. The State of California, the Court of Appeals for the 2nd Appellate District agreed with the lower court that staffing services that provide temporary service employees cannot self-insure their workers compensation liabilities. In making this decision, the Court rejected the plaintiff’s arguments that the State’s position of prohibiting self-insurance was a violation of equal protection. This litigation arose ... Keep Reading »
Wait A Minute, Mr. Postman: Tenth Circuit Applies Statutory-Violation Exclusion To Junk Fax Claims That Try To Skirt The TCPA
Enacted in 1991, the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), inaugurated the era of "junk fax" class actions, in which recipients of mass fax advertisements may pursue statutory damages of $500 per class member. Insurers responded by adding terms to liability policies that expressly exclude coverage for claims under the TCPA. But the dialectic of coverage litigation is ineluctable, and plaintiffs began asserting, in effect, that the TCPA was ... Keep Reading »
Seeing the Finish Line: Courts Increasingly Exempt Claims-Made Policies from the Notice Prejudice Rule
In a majority of jurisdictions, the "notice-prejudice rule" provides that an insurer may not deny a claim on grounds of late notice without demonstrating prejudice. The rule is statutory in some states and judicially crafted in others. Most courts, however, also hold that the rule does not apply to late notice under a claims-made-and-reported policy, as opposed to an occurrence policy. In 2015, several cases have solidified this trend, and some of them actually extend ... Keep Reading »
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