Although large or protracted losses can implicate more than one liability policy, sometimes only one insurer steps up to provide a defense. When that happens, the insurer can try any of several ways to recover its expenses from other carriers, including a declaratory judgment action, an action for equitable subrogation and a claim for contribution. But the law in this area is not uniform, as two recent cases illustrate. In Travelers Cas. & Surety Co. of America ... Keep Reading »
Business Risk Exclusions in CGL Policies Produce a Patchwork of Decisions
On July 23 and 24, 2014, respectively, intermediate appellate courts from South Carolina and Massachusetts released opinions upholding the application of the "your work" exclusion in a commercial general liability policy against claims based on contracted work that had been performed improperly. These two decisions buttress application of the "your work" exclusion, but they also illustrate the fact that the area of business risk exclusions (which typically refers to the ... Keep Reading »
Fifth Circuit Holding Breathes Life Back Into the Contractual Liability Exclusion
Liability insurance policies typically exclude coverage for obligations arising out of the insured’s "assumption of liability in a contract or agreement." Earlier this year, the Texas Supreme Court took a narrow view of this exclusion: in the landmark decision in Ewing Construction Co. v. Amerisure Insurance Co., 420 S.W.3d 30 (Tex. 2014), the court held that a contractor’s agreement to perform construction work "in a good and workmanlike manner" did not assume any ... Keep Reading »
A Flood by Any Other Name is Still a Flood – or Why Losses Caused by Flood Are Subject to Flood Sublimits
Lawyers are students of language, and they have a reputation for building arguments out of long-ago lessons of grammar and language arts. That reputation is not undeserved. Something as small as the placement of a comma can have a significant impact on coverage. But, at the end of the day, insurance contracts are intended to be enforced on the basis of their plain language. Two recent decisions from New York courts uphold this proposition in the context of applying ... Keep Reading »
The Meth Business is Dangerous; (En)trust No One
For a landlord, it’s a bad day when your tenant gets busted for operating a meth lab, and the local authorities condemn your house because it’s contaminated with the byproducts of his business. It’s even worse when you learn there is no coverage for the cost of cleaning up the contamination. Neighborhood Investments, LLC, leased a house in Louisville, Kentucky, to a Mr. Kenneth McCormick. As neighborhood investments go, this was not a winner. Mr. McCormick was ... Keep Reading »
California Supreme Court Halts Creeping Expansion of Advertising Injury
Commercial general liability policies typically provide coverage for claims based on “personal and advertising injury.” Increasingly, enterprising insureds have invoked this coverage in connection with a variety of legal theories arising out of the alleged use of advertising to engage in otherwise unfair business or competitive practices. Two years ago, for example, in Travelers Property Casualty Co. of America v. Charlotte Russe Holding, Inc., 207 Cal.App.4th 969 ... Keep Reading »
Louisiana’s Direct Action Statute Does Not Modify Terms of Coverage
"Direct action" statutes permit an injured plaintiff to sue an insurer for coverage under someone else’s policy—the liability insurance policy of the tortfeasor who caused the injury. They have been enacted in only a minority of states, because they abrogate the common law, which bars suits by plaintiffs who are not in privity with the insurer. Louisiana’s statute, which dates from 1918, was one of the earliest. It expresses the long-held policy of the Bayou State ... Keep Reading »
“Mend the Hold”: A Nineteenth-Century Wrestling Doctrine Keeps its Grip on Coverage Litigation in the WWE Era
The issue confronting an Illinois appellate court in BNSF Railway Company v. Probuild North LLC, No. 1-12-3648 (Ill. App. Ct. June 11, 2014), was not uncommon. The plaintiff sought coverage from its insurer under a commercial general liability policy. In defending the suit, the insurer asserted a different defense from the one it had identified in its original denial letter. The plaintiff argued that the insurer was estopped from changing its rationale for denying ... Keep Reading »
In Opposing Global Capital Standards for International Insurers, NCOIL Roils Domestic Industry
In July, the International Association of Insurance Supervisors (IAIS), a membership organization that represents insurance regulators and supervisors in more than 100 countries, released for public consultation a set of proposed basic capital requirements for “global systemically important insurers” (“G-SIIs”). Within days, the National Conference of Insurance Legislators (NCOIL), a nonprofit group that represents state legislators in Washington, adopted a ... Keep Reading »
If the Suit Fits: A Washington Court Clarifies Triggers for the Duty to Defend
Like many other federal and state environmental laws, Washington’s Model Toxics Control Act (MTCA) exposes property owners to strict liability, regardless of fault or intent, for certain types of environmental contamination. Twenty years ago, in Weyerhaeuser Co. v. Aetna Cas. & Surety Co., 874 P.2d 142 (Wash. 1994), the Supreme Court of Washington held that a property owner’s efforts to remediate polluted sites triggers a liability insurer’s duty to indemnify the ... Keep Reading »
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