Legal Insights for the Insured

Category Archives: Commercial General Liability (CGL)

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Another State Court Limits the Enforceability of Anti-Assignment Clauses

We recently wrote about the California Supreme Court’s decision in Fluor Corporation v. Superior Court to limit the enforceability of clauses in third party liability insurance policies that prohibit the policyholder from assigning its interests in the policy without the insurer’s prior consent. The court held that these so-called anti-assignment clauses are not enforceable after … Continue Reading

Seventh Circuit Issues Stern Warning For Insurers That Reject Their Duty to Defend

The first line of the Seventh Circuit’s opinion says it all: “This case provides a warning for insurance companies who refuse to defend their insureds.” As the court’s admonishment suggests, insurers that improperly refuse to defend an insured do so at their own risk and – if not done through a reservation of rights or … Continue Reading

California Supreme Court Limits Enforceability of Anti-Assignment Clauses

In a unanimous decision handed down by the California Supreme Court yesterday afternoon in Fluor Corporation v. Superior Court, the court removed a significant obstacle facing companies that want to assign their interests in a third party insurance policy to a successor company as part of a corporate restructuring or sale. It held that an … Continue Reading

Georgia Supreme Court Complicates Policyholders’ Ability to Settle Claims Brought Against Them

As we previously reported here, the U.S. Court of Appeals for the Eleventh Circuit asked the Georgia Supreme Court to weigh in on the coverage dispute in Piedmont Office Realty Trust, Inc. v. XL Specialty Insurance Co. concerning consent-to-settle and no-action provisions in an excess insurance policy. The state high court’s answer was a disappointing … Continue Reading

Texas Says EPA Administrative Actions under CERCLA Trigger Duty to Defend

As any company facing EPA administrative action under CERCLA knows, the financial risk and defense costs associated with those proceedings can be the same as the risk and costs of an EPA lawsuit under CERCLA. But insurers have argued that administrative actions are very different from suits under standard CGL policies. Those policies, insurers argue, … Continue Reading

Third Circuit Finds Insured v. Insured Exclusion Precludes Recovery of Defense Costs

Many corporate executives may be under the impression that the defense costs they incur when sued for actions taken in their role as officers of the company would be covered by a “Management Protection” insurance policy. The name of the insurance policy even suggests this. However, executives are not always covered by such a policy. … Continue Reading

Pennsylvania Supreme Court Holds That Insured May Settle Tort Claim Without Insurer Consent Under “Fair and Reasonable” Standard

In Babcock & Wilcox Co. v. American Nuclear Insurers, a divided Supreme Court of Pennsylvania, deciding an issue of first impression under Pennsylvania law, recently held that when an insurer defends its insured subject to a reservation of rights, the insured may accept a settlement over the insurer’s refusal where the settlement is fair, reasonable, … Continue Reading

Montana Joins Majority of Courts Holding That Insurers Must Establish Prejudice to Disclaim Coverage Based on an Insured’s Late Notice

Joining a majority of states that have addressed the issue, the Montana Supreme Court recently held that “an insurer who does not receive timely notice required by the terms of an insurance policy must demonstrate prejudice from the lack of notice in order to avoid the obligation to provide defense and indemnification of the insured.” … Continue Reading

Policyholder Warning: What One Provision Giveth (Defense Costs), Another Provision May Taketh Away

Professional liability insurance policyholders often breathe a sigh of relief when their insurer begins funding the costs of defending against a civil claim or government investigation. That is one of the reasons they bought the insurance in the first place! However, as one policyholder recently learned, just because the insurer advances defense costs doesn’t mean … Continue Reading

Bank Bond Covers Third-Party Losses Arising out of Bank Employee’s Fraud, Eighth Circuit Holds

Fidelity bonds are purchased primarily to protect against loss to the policyholder’s own assets, from things like employee theft or embezzlement. In Avon State Bank v. BancInsure, Inc., however, the Eighth Circuit interpreted the language of a bank’s fidelity bond to provide broader coverage, holding that the bond indemnified Avon State Bank for liability to … Continue Reading

Terrorism Risk Insurance Program Reauthorized, But Some Uncertainty Remains

On Monday, President Barack Obama signed into law a six-year extension of the Terrorism Risk Insurance Program after the House and Senate passed the bill by votes of 416-5 and 93-4, respectively. As we previously reported, Congress’ failure to extend the program, under which the federal government is responsible for a substantial share of insured … Continue Reading

Policyholders Face Uncertainty after Lapse of Terrorism Risk Insurance Program

Congress’ failure to renew the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA”), a 2007 extension of the 2002 Terrorism Risk Insurance Act, could have significant implications for companies that rely upon property or casualty policies to manage risk.  TRIPRA expired on December 31, 2014, potentially triggering policy endorsements that exclude coverage, previously provided under those … Continue Reading

Texas Supreme Court Denies Policyholder’s Discovery Regarding Claims Handling

It is rare to see a state’s highest court address a discovery issue.  But the Supreme Court of Texas did just that recently in In re National Lloyds Insurance Co., holding that a policyholder’s demands for discovery about how her homeowner’s insurance carrier’s claims adjusters handled other insurance claims was an impermissible “fishing expedition.”  The … Continue Reading

Eleventh Circuit Requests Assistance in Interpreting Consent-to-Settle Provision

Most cases in the United States settle.  Insurers are well-aware of this fact.  Thus, insurance companies employ consent-to-settle provisions in insurance policies to limit and control their liability in the likely event of a settlement involving policyholders.  Essentially, consent-to-settle provisions require the insurer to approve a proposed settlement of the policyholder with a third party … Continue Reading

More “Texas Justice” For Policyholder On Contractual Liability Exclusion

On October 29, the Fifth Circuit reversed itself for the second time this year in a case involving the interpretation of a contractual liability exclusion in a CGL policy.  This recent decision by the Fifth Circuit in Crownover v. Mid-Continent Casualty Co., coupled with decisions from the Texas Supreme Court and Fifth Circuit earlier this … Continue Reading

California Federal Courts Tell Insurers Not to Jump the Gun in Suing Policyholders for Reimbursement

In a series of opinions issued over the past few months, federal judges in California have reiterated that insurers must wait until they are finished defending their policyholders before they sue those policyholders for reimbursement of defense costs.  While California remains one of the handful of states in which an insurer can try to claw … Continue Reading

Pennsylvania Court Recognizes That A Payment Required By Law Is Not A “Voluntary Payment” Requiring The Insurer’s Consent

If you are required by law to perform an act, the act is not “voluntary.”  This proposition may seem obvious enough to most, but one insurer recently needed to be reminded of this common sense point by a Pennsylvania federal court in First Commonwealth Bank v. St. Paul Mercury Insurance Company.  There, the Court held … Continue Reading

“Prior or Pending Litigation” Exclusion Bars Coverage for Litigation that Was Unknown to Policyholder

Companies that do business with the federal government, or whose business transactions otherwise involve payments by the government, undoubtedly understand the exposure they face to “whistleblower” or “Qui Tam” lawsuits brought by private individuals on behalf of the government alleging fraud under the False Claims Act.  But it may surprise them to know that the … Continue Reading

Fifth Circuit Requests Input from the Supreme Court of Texas Regarding Interpretation of Commercial General Liability (“CGL”) Policy Exclusion Language

The rule courts generally employ to interpret undefined words in insurance policies — essentially, to look to the words’ plain or ordinary meaning — sounds simple.  However, many times, there is more than one meaning of such words, lending to more than one reasonable interpretation of the particular provision at issue.  In this situation, courts … Continue Reading

New York State Court Rules That Darwin Has Duty to Defend but AIG Does Not, for Same Risk, Based on Differing Policy Language

New York state court Judge Shirley Werner Kornreich recently ruled that American International Group, Inc. (“AIG”) didn’t have to pay certain defense costs for various suits brought against QBE Holdings, Inc. and its affiliates (collectively, “QBE”), but that QBE’s other insurer Darwin Select Insurance Co. (“Darwin”) did, despite the apparent similarities in language of the … Continue Reading

Insurer’s Liability for Breach of Contract Is Not a Condition Precedent to Insured’s Bad Faith Claim

A Florida appeals court recently held in Cammarata v. State Farm Florida Insurance Co. that an insured is not required to show that its insurer breached the insurance policy before it can bring a claim for bad faith.  Although the insured must show that the insurer is liable for coverage, this prerequisite can be established … Continue Reading

Pennsylvania Supreme Court Denies Review of Faulty Workmanship Decision

Last week, the Pennsylvania Supreme Court let stand the appellate decision in Indalex, Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pa., which held that mold related health problems and property damage allegedly arising from defective doors and windows constituted an “occurrence,” triggering coverage under the door and window manufacturer’s commercial general liability policy.  … Continue Reading

Sixth Circuit Says Misappropriation of Customer List Not Insured Under Advertising Injury Liability Coverage

The Sixth Circuit Court of Appeals recently ruled that Liberty Corporate Capital did not have to defend a firearms retailer in a lawsuit alleging that the retailer improperly obtained and used its competitor’s customer list to send e-mail blasts about its own products.  The customer list did not qualify as a misappropriated “advertising idea,” according … Continue Reading
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