As every lawyer knows, Aristotle distinguished four types of explanation, or “cause,” for natural phenomena. The “final cause” is “that for the sake of which” a thing is what it is. In nature, the final cause can be the end of a series of developmental changes that typical members of a species undergo: the chicken is the final cause of the egg, the oak the final cause of the acorn. This blog recently discussed a case in which the Supreme Court of South Dakota invoked ... Keep Reading »
Watching the Detectives: Washington Court Opens Door to Second-Guessing Insurers’ Investigations of Claims
In a case of first impression, the Supreme Court of Washington has ruled that an insurer’s express and unqualified contractual right to request an examination under oath is subject to an implied requirement that the request be “reasonable or material.” The court further held that an insured’s refusal of even a reasonable request for an EUO will not excuse the insurer from paying a claim, absent a showing of actual prejudice. The court’s ruling means insurers cannot ... Keep Reading »
If a Tree Falls, and No Court Held an Insurer Must Defend It, Is There a Breach of Contract?
A liability carrier claims a policy does not require it to defend a particular lawsuit. A federal district court agrees, and the insurer stops providing a defense. Five years later, a Court of Appeals reverses. Did the insurer breach its insurance contract? In what appears to be a case of first impression, a federal court in California has said “no,” because holding otherwise would “tip the scales too far in favor of the insured.” ... Keep Reading »
Complaint Charges that Law Firm Ads Deceptively Omitted Coverage Defenses
Selling insurance can be hard, because it can involve making simple statements about complex products. Brokers and agents (as well as insurers) can sometimes be held responsible for their customers’ failure to understand those complexities. A few months ago, New York’s Court of Appeals held that even a corporation’s failure to read its own policy did not bar its claim against its insurance broker for an allegedly negligent failure to obtain certain liability coverage. ... Keep Reading »
Ripeness Is All: Illinois Court Effectively Forbids Interlocutory Review of Arbitrators’ Discovery Orders
An Illinois Appellate Court has taken the next step in limiting the role of courts in insurance arbitrations. In Klehr v. Illinois Farmers Insurance Co., No. 1-12-1843 (Ill. App. Ct., First Dist. Jan. 22, 2013), the plaintiff tried to obtain interlocutory review of an arbitrator’s discovery order by filing an action for a declaratory judgment. Addressing what it declared to be a question of first impression nationally, the Appellate Court dismissed the action, on the ... Keep Reading »
Bad Timing Dooms Bad Faith Claim
A recent decision by a New Jersey Appellate Court clarifies both the scope of a New Jersey insurer’s duty of good faith in resolving a first-party uninsured motorist claim and the way in which claims for breach of that duty must be raised. The plaintiff in Wadeer v. New Jersey Manufacturers Ins. Co., A-3206-10T4 (N.J. Super. Ct. App. Div., Dec. 13, 2012), was severely injured when a “phantom vehicle” swerved into his lane and made him lose control of his car. He was ... Keep Reading »
To Boldly Go Where No Insurance Has Gone Before: New Mexico Redefines Portable Coverage
You might have missed the arrival of the future, but Wikipedia now reports matter-of-factly that Spaceport America “is a spaceport located in” a desert basin in New Mexico. (The only surprising fact is that the nearest town is called “Truth or Consequences.”) This month, a company called “Virgin Galactic,” a member of the Virgin Group that plans to provide sub-orbital spaceflights to “space tourists,” is scheduled to make its first monthly rent payment on the $209 ... Keep Reading »
Casting a Wide Net: Challenges to Lender-Placed Flood Insurance Erode Distinctions Between Banks and Insurers
As banks play an increasing role in the marketing and sale of property-casualty insurance products, the businesses of banking and insurance are becoming entangled. One place where they intersect is the purchase of lender-placed insurance protecting against floods and other hazards. Uniform mortgage agreements typically give banks a right to “require” their borrowers to maintain certain types of insurance on mortgaged property, and to separately purchase that insurance ... Keep Reading »
What’s in a Proper Name? Coverage Opinions Take Different Approaches
In his 1892 paper, “On Sense and Reference,” Gottlob Frege, the German philosopher who inspired the work of Bertrand Russell, explained that the definition of a word or name can have two components. One, “reference” (or “referent”), is simply the person or object to which the word refers. The “reference” of “Napoleon Bonaparte” is the French emperor who bore that name. The second element, “sense,” is the name’s “mode of presentation,” which reflects the manner in ... Keep Reading »
NAIC Hears Renewed Calls for Regulation of Automated Claims Tools
On December 1, 2012, for the second time this year, the Market Regulation and Consumer Affairs (D) Committee of the National Association of Insurance Commissioners heard presentations about insurers’ use of computerized systems to assist in the adjustment of bodily injury and property claims. The hearing concentrated on three products: Computer Science Corporation’s “Colossus,” ISO’s “Claims Outcome Advisor” and Xactware Solutions, Inc.’s “Xactimate.” The ... Keep Reading »