While insurers have been successful in dismissing most COVID-19 property damage claims, especially in federal court, many of the coverage issues that arise in federal court actions are resolved based on state law. When a federal court finds that resolution of a dispute is governed by state law and that there is no controlling state law precedent, the court may certify the state law question to that state’s supreme court for resolution.Continue reading “Ninth Circuit Court of Appeals Certifies COVID-19 Question to the California Supreme Court”
Courts are tough on exclusions but when an exclusion is clear it will preclude coverage. In a recent case, an exclusion for bodily injury arising out of weapons resulted in a coverage case being dismissedContinue reading “Weapons Exclusion Precludes Coverage”
There is no question that the COVID-19 restrictions imposed by local and state governments have had an unintentional but devastating effect on businesses both large, medium and especially small. Restaurants, movie theaters, live entertainment, sports. gyms, salons and many other businesses have closed because of the lack of business. While many of these businesses purchased insurance with coverages for business income and extra expense, the lack of direct physical loss of or damage to property has meant that these policies, for the most part, do not cover the loss of business caused by the government shut-down orders.Continue reading “Brokers and Insurers Prevail in COVID-19 Coverage Action”
Decades ago, professional liability policies, like most liability policies, were written on an occurrence basis. If a claim was incurred during the insurance policy period, the policy would respond to the claim regardless of when the claim was made against the defendant and noticed to the insurance company. As we know from environmental and asbestos claims, that can take decades.
Then along came claims-made polices. Under a typical claims-made policy, if a claim is made against the defendant and reported to the insurance company during the policy period, that insurance policy will respond to the claim regardless of when the occurrence took place (as long as the claim occurred after the policy’s retroactive date). If the claim was made after the policy period and , that policy would
In New York, legislative and regulatory efforts to keep medical professionals practicing in New York led to a quirky medical malpractice insurance system where most primary medical malpractice policies were claims-made policies, but New York medical professionals were provided with excess policies written on an occurrence basis.
This leads to a recent case that explored the issues that arise when occurrence-based excess policies sit on top of claims-made primary policies.Continue reading “When Claims-Made Primary and Occurrence Excess Policies Clash”
Primary and excess insurers periodically clash over whether the underlying claim should have been paid by the primary insurer. But it is pretty unusual for an excess insurer to argue that the underlying claim payment made by other insurers improperly eroded the excess insurer’s attachment point and prematurely triggered the excess coverage for a subsequent claim. The Ninth Circuit Court of Appeals recently addressed the question of whether an excess insurer challenge an underlying insurer’s payment decision.Continue reading “Objectively Reasonable Expectations of the Insured Prevails – Improper Erosion Theory Rejected”
As the COVID-19 business interruption cases are decided, many are keeping score. So far, the tally is in favor of the insurance industry, with a number of cases being dismissed for lack of direct physical loss of or damage to covered property by a covered peril.
Most of the cases filed seeking coverage have been met with motions to dismiss by the insurance company. As many of you know, a motion dismiss seeks to throw the case out of court because, on its face, the complaint does not state a cause or action. Basically, the court is saying that the allegations of the complaint, even if true, cannot as a matter of law, lead to coverage. Some courts allow the policyholder to file an amended complaint and some do not. It depends on the specific facts and allegations.
But not all courts have granted the insurance companies’ motions to dismiss. In a recent case, a Missouri federal court denied the motion. In this blog post I examine why.Continue reading “When the Court Denies a Motion to Dismiss – COVID-19”
COVID-19 business interruption claims have caused a groundswell of litigation, but courts continue to address business interruption claims in other contexts. The “direct physical loss” requirement remains at the heart of coverage disputes over whether business property policies are required to respond to claims.
Recently, the Eleventh Circuit addressed a business interruption coverage dispute that involved both an alleged downturn in revenue and expenses for cleaning up construction dust and debris.Continue reading “No Direct Physical Loss, No Coverage”
It happens ever so often. A policyholder will sue for coverage and will join its insurer’s reinsurer in the lawsuit. The majority rule in most US jurisdictions is that unless there is contractual privity between the policyholder and the reinsurer, a direct action is not allowed and the reinsurer will be dismissed from the case. While there are a few states that allow for direct actions against reinsurers, those typically are under special circumstances.
In most insurance arrangements, the policyholder is not aware of whatever reinsurance relationships have been entered into by its insurance company. In most reinsurance arrangements, the policyholder is not a party and the reinsurance contract typically has a provision that makes it clear that there are no third-party beneficiaries. There are, of course, exceptions to the rule, but not in a recent Florida case.Continue reading “Without Contractual Privity, Claim Against Reinsurer Fails”
In yet another COVID-19 decision finding in favor of the insurance company, a Washington, D.C. Superior Court has denied summary judgment to a policyholder and granted summary judgment to the insurer on the issue of direct physical loss.Continue reading “Direct Physical Loss Bars Coverage for COVID-19”
While there is a prevailing sentiment out there that insurance policies are filled with ambiguities, the truth is quite the opposite. Where a relevant insurance provision is unambiguous, courts will construe it as such. That’s just what happened in a recent case before the Second Circuit Court of Appeals.Continue reading “Unambiguous Intellectual Property Exclusion Means No Coverage”