When a liability insurer provides a defense subject to a reservation of rights, it seeks to preserve its own rights, while avoiding prejudice to the insured in the underlying claim. If the insurer ultimately wins the coverage battle, it can try to recover the cost of the defense it provided. Whether it can succeed is a question that different states answer in a wide variety of ways. In New York, insurers can recoup defense costs by establishing a lack of coverage. ... Keep Reading »
Giving Short Rate: Farmers Potentially Liable for Unused Premium
Certain homeowners policies issued to California insureds by Farmers Group, Inc., contained the following cancellation terms: “(1) If you cancel this policy, we shall return the short rate unused share of the premium. (2) If we cancel this policy, we shall return the prorated unused share of the premium.” While indicating in this way that cancelling homeowners would receive something other than a “prorated” share, the policies did not state what the “short rate” share ... Keep Reading »
Slamming the Door: Innovative Procedural Gambits Fared Poorly Last Month
Procedural hurdles to maintaining cases in certain courts, or in a certain configuration of parties, can sometimes affect the outcome of litigation as much as the underlying merits. For a class action plaintiff (and especially for class counsel), the ability to resolve disputes over the defendant’s insurance coverage can be an immense boost in formulating a litigation and settlement strategy. For an insurer disputing coverage, access to federal court might be what makes ... Keep Reading »
Courts Leaning Anti-Anti-Assignment
In October, in a case of first impression, the Kentucky Supreme court decided that Kentucky will follow the “majority rule,” under which anti-assignment clauses in insurance policies may not be enforced, if the assignment is made after the underlying loss has occurred. In December, the Supreme Court of California agreed to decide whether to extend that rule to “assignments” that occur by virtue of the merger of an insured into another business. In re Wehr ... Keep Reading »
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