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 »
No, SIR: The Self-Insured Retains a Duty of Self-Defense
In the realm of liability insurance, the terms “deductible” and “self-insured retention” are often used interchangeably, but the two provisions have important differences. Among other things, “policies which are subject to self-insured retentions are ‘excess policies' which have no duty to indemnify until the self-insured retention is exhausted.” Century Indemnity Co. v. The Marine Group, No. 3:08-CV-01375-AC (D. Ore. Dec. 3, 2012), quoting Pacific Employers Ins. Co. ... Keep Reading »
Live Free of Actual Knowledge or Coverage Will Die
In September 2012, the highest court of the Granite State reversed a decision that rescinded an insurance contract on the basis of a material false statement in the application. The Supreme Court held that rescission was unavailable, because the policy was ambiguous. The court suggested, in other words, that an insurance policy must clearly express the insurer’s intention not to be forced to provide coverage on the basis of misrepresentations. Parties to other types ... Keep Reading »
Excess is Enough: Courts Decline to Expand Liability of Excess Insurers
Judicial opinions that purport to construe “the policy as a whole” are often bad news for insurers, but two recent decisions used that analysis to defeat plaintiffs with novel arguments for making their excess insurers liable for losses within the primary layer. Intel Corp. v. American Guarantee & Liability Insurance Co., No. 692, 2011 (Del. Sept. 7, 2012), arose out of antitrust litigation against the chip manufacturer, in which Intel paid more than $50 million ... Keep Reading »
Be Careful what you Incorporate: Insurer Bound by Insured’s Arbitration Agreement
When an insurance policy relates to particular contractual obligations of an insured, having the policy specifically identify the underlying contract can help define the insurer’s obligations with precision. But the reference needs to be precise, too. In a recent Fourth Circuit case, an insurer’s performance bond recited the fact that the principal had entered into a construction subcontract, and it stated that the “subcontract is by reference made a part hereof.” ... Keep Reading »
Excess Policy Covers Liability for Occurrence Continuing After the Policy Period Ends
The Second Circuit has held that property damage occurring after the term of an excess liability policy may be included in the calculation of whether damages from a single occurrence reach the policy’s attachment point. In Olin Corp. v. American Home Assurance Co., 11-4055-cv (2d Cir. Dec. 19, 2012), an insured manufacturer of industrial chemicals filed suit against its excess liability insurers, claiming they owed a duty to indemnify it for its costs of remediating ... Keep Reading »