New Jersey's Appellate Division recently affirmed each of several challenged rulings rendered in a long-running coverage dispute between plaintiff IMO Industries and its many historical insurers arising from asbestos exposure-related injuries dating back to the 1940's. IMO sought declaratory and other relief to establish IMO's and the defendant insurers' respective obligations for defense and indemnity of underlying personal injury lawsuits against IMO. Plaintiff IMO ... Keep Reading »
My Advice? Pay Me!
Shopping for insurance can raise hard questions: How much coverage do I need? What types of risk should be covered? What must I do to get the maximum benefits allowed? Policyholders who get the wrong answers often end up in litigation—claiming their homes were underinsured, their agents failed to obtain the coverage they requested, or they were tricked out of reimbursement for full replacement cost. In many contexts, courts have shown a good deal of indulgence for ... Keep Reading »
Cut! Eighth Circuit Excludes Non-Board Member from CGL Coverage for “Directors”
Directors and Officers liability policies are typically precise in defining the job descriptions of the individuals to whom they offer coverage. Recently, in United Fire & Cas. Ins. Co. v. Thompson, No. 13-2352 (8th Cir. July 11, 2014), the U.S. Court of Appeals for the Eighth Circuit had to decide whether the term "director," which was left undefined in a corporation's Commercial General Liability policy, could apply to a supervisory employee, whom one party ... Keep Reading »
Get Exhausted! The Tenth Circuit Schools an Excess Insurer on How to Preserve Subrogation Claims in a Settlement
When I die, I want to be exhausted. –Bryan Cranston Claims against insured businesses sometimes implicate multiple liability policies issued by several different carriers, and it is sometimes prudent for some of those carriers to settle the underlying action, even if others are unwilling to contribute to the settlement. At that point, it is important for the settling insurer carefully to analyze the relevant coverage terms, before the structure of the settlement has ... Keep Reading »
You’re Not on the List: Failure to Name Names Knocks Lloyd’s Out of Federal Court
It is impossible today to imagine a world without insurance. Individuals can't buy houses or cars without insuring them against loss. Businesses cannot operate without any number of coverages—against damage to their property and equipment, against interruptions to their operations and against liability to employees, customers and the world at large. But ‘twas not ever thus. Recently, in a dispute over whether a group of Lloyd's underwriters could establish diversity ... Keep Reading »
If it Races like a Tortoise: Connecticut Deconstructs a Policyholder
From Zeno of Elea to the Washington Nationals, images of racing have ceaselessly troubled Western thought. But as ancient metaphysics has given way to philosophy of language, the questions we ask ourselves have changed. In Sonson v. United Services Auto. Ass'n No. 35890 (Conn. Ct. App. Sept. 16, 2014), an automobile policyholder had to show that a "racing" exclusion did not apply, so he argued that Achilles could never overtake the tortoise if he was not "competing ... Keep Reading »
With Sewers Backing Up, Messy Damage Claims are On the Rise
Andy crawled to freedom through five hundred yards of - - - smelling foulness I can't even imagine. Or maybe I just don't want to. Five hundred yards. The length of five football fields. Just shy of half a mile. –The Shawshank Redemption (1994) Many homeowners and other property insurance policies contain an exclusion to address one of the by-products of the increased frequency of severe weather: it bars coverage for property damage caused by "water which backs up ... Keep Reading »
Claims Handlers: It’s Time to Adjust Our Claims!
Many insurers have a longstanding practice of paying claims adjusters a set weekly salary, regardless of the number of hours they actually work. The practice has support in federal labor regulations; the regulations expressly exempt claims adjusters from the overtime requirements of the Fair Labor Standards Act (FLSA), if their duties include discretionary and administrative activities such as interviewing witnesses, inspecting property damage, reviewing information for ... Keep Reading »
Leap of Bad Faith: TPAs May Be Sued for Aiding Their Own Actions
Insurers have a duty to process claims in good faith, but sometimes they farm the job out to third-party administrators (TPAs). If the TPA fouls up, many states hold that the insurer is still liable—for its own breach of duty, even if a doctrine of vicarious liability does not apply. The rule is summed up in the statement that the duty of good faith is not delegable; the insurer must either handle the claim in good faith or cause someone else to do so. But what ... Keep Reading »
Drive, He Said: When “Yes” Means “Don’t Shoot!”
Bad things can happen to innocent people, and sometimes the people responsible for them are judgment-proof. When that happens—and when the perpetrator also has potential coverage under an automobile or homeowners policy—victims sometimes view the circumstances of their injury more generously; they describe them with words like "careless" and "negligent" in place of harsh, judgmental terms, such as "intentional" or "criminal." Something of this sort seems to have been ... Keep Reading »
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