Connecticut Federal Court: No A.I. Coverage Simply Because Named Insured Employed Injured Plaintiffs

Northeast Utilities Serv. Co. v. St. Paul Fire & Marine Ins. Co.
(D. Conn. July 12, 2012)
A Connecticut federal judge recently ruled that a liability insurer was not obligated to provide additional insured coverage to a utility company absent allegations or evidence that the named insured subcontractor’s acts or omissions led to a fatal electrical explosion killing one of its employees.

Northeast Utilities (NU) entered into a Master Services Agreement with American Electrical Testing Co. (AET), under which AET agreed to furnish supervision, labor, …

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District Court Grants Summary Judgment To Insurer In Environmental Property Claims At Gas Station Based On Surface Water And Ground Water Exclusions In Policy

Ahluwalia v. Allied Property and Casualty Ins. Co.
(United States District Court, Eastern District of California, July 5, 2012)

This environmental coverage dispute arises out of a property damage claim in which the policyholder sought coverage for water damage to the underground fuel tanks and fuel pumps at a gas station/convenient mart.

The insurer disclaimed coverage in a written declination advising its investigation revealed that “the below ground wells that house the fuel pump mechanisms were partially filled with water” and that pursuant to the …

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Georgia Supreme Court: Insurers Waive Defenses Not Raised in Denial Letter

Hoover v. Maxum Indem. Co.
(Ga. June 18, 2012)

The Supreme Court of Georgia recently ruled that an insurer cannot both deny coverage for a claim outright and attempt to reserve the right to assert a different defense in the future. The ruling will undoubtedly pressure insurers into defending insureds where coverage defenses are not initially clear.

In Hoover, the plaintiff fell from a ladder while descending from a roof, causing a serious brain injury. Just before the accident, Hoover, an Emergency Water Extraction …

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EMC, a Division of Bear Stearns, May Have to Repurchase Loans Underlying $666 million in Mortgage-Backed Securities Due to its Material Misrepresentations and Warranties

In a dispute over $666 million in mortgage-backed securities, Syncora sought a ruling that would force EMC to repurchase the loans through a repurchase agreement based on material misrepresentations and breached warranties associated with the loans. Syncora was the insurer of mortgage backed securities which were sold by EMC, a division of Bear Sterns, which bought and sold loans pooled into mortgage backed securities. The US District Court for the Southern District of New York found that New York law requires that insurers be provided …

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Ninth Circuit Bad Faith Ruling is Bad News for Insurers

Du v. Allstate Ins. Co.
(9th Cir. (Cal.) June 11, 2012)
The Ninth Circuit ruled last week that an insurer’s covenant of good faith and fair dealing requires an insurer to effectuate settlement when liability is reasonably clear, even in the absence of a settlement demand.

The action arose when Joon Hak Kim’s vehicle collided with another vehicle, injuring all four passengers in the second vehicle, including Yan Fang Du. Kim was insured by Deerbrook Insurance Company, a subsidiary of Allstate Insurance Company, with …

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Florida Supreme Court’s Bad Faith Ruling is Bad News for Policyholders

QBE Ins. Corp. v. Chalfonte Condo. Apt. Ass’n, Inc.
(Fla. May 31, 2012)

The Florida Supreme Court ruled last week that there is no common law first-party bad faith cause of action against an insurer and, therefore, that a policyholder may only pursue a bad-faith action in accordance with Florida statutes.

The action arose from property damage caused by Hurricane Wilma in 2005. The policyholder, Chalfonte, sustained significant damage and filed a claim with its property insured, QBE. Dissatisfied with QBE’s handling of the claim, …

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Excess of Loss Facultative Reinsurance Certificate Covers Indemnity and Expenses

Ace Prop. & Cas. Ins. Co. v. R & Q Reinsurance Co.
(Pa. C.P. May 15, 2012)

The Pennsylvania Court of Common Pleas was asked to interpret the meaning of the terms “loss” and “expense” in multiple reinsurance certificates issued by defendant, a reinsurance company (hereinafter “reinsurer”), to plaintiff, a property and casualty insurance company (hereinafter “insurer”).  The reinsurer argued that the term “loss”, which is not defined in the reinsurance certificates, means indemnity only.  The insurer, on the other hand, argued that the meanings …

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Reinsurers on the Hook for Settlement That Arguably Included Bad Faith Claims

United States Fidelity & Guar. Co. v. American Re-Insurance Co.
N.Y. App. Div. 1st Dep’t, Jan. 24, 2012

The case arose out of litigation concerning the underlying asbestos claims spanning several decades. The Appellate Court reviewed and affirmed the lower courts Order granting the reinsured summary judgment and denying the reinsurer’s motion for summary judgment.   The reinsurance treaty involved was an excess of loss treaty with a $100,000 retention and a maximum $4.9 million payable by the reinsurers for any one loss subject to a …

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