Sharon Angelino, Author at The Insurance & Reinsurance Report

October 28, 2013 Policy Conditions, Considerations, Construction, and Formation

That Sinking Feeling: Sinkhole Not Covered But Redesign Is

A lengthy rainstorm caused damage to three water basins designed to manage stormwater flow from buildings and parking lots near a shopping center. The increased flow of stormwater into the ground caused substantial sinkholes to form in two of the three basins. The insured repaired and filled the sinkholes but state officials issued an ordinance, requiring a redesign of the basins to prevent future sinkhole damage. The insured sought coverage for all damage arising out of the sinkholes. The insurer disclaimed coverage.

A New …

October 11, 2013 Policy Conditions, Considerations, Construction, and Formation

California Court of Appeals says Insurers Do Not Have a Duty to Initiate Settlement

The issue involved in this case was the duty of an insurer to settle a third party claim within the policy limits when liability was clear and there was a substantial likelihood of a recovery in excess of the policy limits. Specifically, the question decided was whether an insurer must initiate settlement negotiations or offer its policy limits where the third party claimant has not made a demand or settlement offer. The trial court found that the insurer was not liable to the insured for …

September 23, 2013 Directors and Officers

Insured vs. Insured Exclusion Bars Coverage for Bank Officers in FDIC Suit

St. Paul Mercury Ins. Co. v. Miller
(N.D. Ga. Aug. 19, 2013)

A Georgia court recently held that an insured-vs-insured exclusion in a directors and officers policy precluded coverage for two former officers of a failed bank sued by the FDIC.

The FDIC took over the failed Community Bank & Trust of Cornelia, Georgia and then sued two former officers in connection with their role in improperly approving loans. The bank’s D&O insurer agreed to defend the officers subject to a reservation of rights. In …

September 3, 2013 Emerging Issues

Insured Unable to Force Insurers to Pay for Its Selected Counsel

Federal Insurance Company et al., v. MLB, Inc.
(Case No. H036296) (Ca. App. Ct., August 26, 2013)

A California appellate court affirmed a lower court’s decision that insurers’ selection of counsel to defend its insured, under a reservation of rights, created no conflict of interest to the insured’s detriment.

Specifically, the insured was a supplier of dry cleaning chemicals and products and was sued in a third-party action concerning costs for monitoring and remediation of contamination. The insured tendered the defense and indemnity of the …

June 27, 2013 Emerging Issues

New Connecticut Law Allows Disaster Mediation Program for Property Insurance Claims

On June 21, Connecticut Governor Dannel Malloy signed into law Substitute House Bill No. 6549, Public Act No. 13-148, which allows the Connecticut State Insurance Department to set up a mediation program for insurance claims arising from a catastrophic event. The bill will allow for a program which permits policyholders to mediate property insurance claims which arise out of a catastrophic event, if the catastrophic event gives rise to a declared state of emergency.

The law follows was designed after to promote efficiencies in …

May 24, 2013 Policy Conditions, Considerations, Construction, and Formation

Second Circuit Confirms Standard That Insurer Not Obligated To Defend And Indemnify In $96 Million Defamation Claim

First Advantage Litigation Consulting LLC v. American International Specialty Lines Insurance Co. et al.,
U.S. Court of Appeals for the Second Circuit

First Advantage Litigation Consulting LLC, (First Advantage) brought a declaratory judgment action against its insurers, American International Specialty Lines Insurance Co., Federal Insurance Co. and Zurich American Insurance Co. (collectively, insurers), seeking defense and indemnification in connection with a defamation action commenced by NuWave Investment Corp (NuWave). In 2006, NuWave sued First Advantage for $96 million in claimed damages stemming from allegedly defamatory …

March 29, 2013 Reinsurance

No Prejudice, No Problem: Reinsurer Not Required to Show Prejudice in Late Notice Dispute

AIU Ins. Co. v. TIG Ins. Co. (S.D.N.Y. Mar. 25, 2013)

On March 25, Judge Sidney H. Stein, of the USDC for the Southern District of New York, agreed with a magistrate report and recommendation and granted summary judgment to a reinsurer, ruling that the reinsurer did not have to show prejudice when denying coverage because of an insurer’s late notice of a claim. Foster Wheeler, a company that used asbestos in its products, was insured by Liberty Mutual Insurance Co. AIU Insurance Co. issued …

March 4, 2013 Policy Conditions, Considerations, Construction, and Formation

Florida Widens Insurer’s Liability for Defense Costs

An intermediate appeals court in Florida held that an insurer’s decision to refuse separate independent counsel for an additional insured (AI) was wrong and awarded the AI indemnification for attorney’s fees and costs for independent counsel. In University of Miami v. Great American Assurance Company, etc., (No. 3D09-2010, Florida Third District Court of Appeal), the insured ran a summer swim camp on the AI’s campus. The claimant sued both entities for lack of supervision, claiming bodily injuries from being pulled unresponsive from the …

February 27, 2013 Uncategorized

NYS DFS Announces Sandy Mediation Program – New Requirements for Insurers

15th Amendment to Regulation 64, 11 NYCRR 216

The New York State Department of Financial Services has enacted an emergency amendment to Insurance Regulation 64, effective February 25, 2013, targeting claims resulting from Hurricane Sandy. The amendment applies to any claim for loss or damage, other than claims made under flood policies issued under the national flood insurance program, that occurred from October 26, 2012 through November 15, 2012, in the counties of Bronx, Kings, Nassau, New York, Orange, Queens, Richmond, Rockland, Suffolk, or Westchester. …

February 20, 2013 Policy Conditions, Considerations, Construction, and Formation

Insurer’s Reliance on (Overturned) Ruling in DJ Action Insulates against Further Claims of Breach of Contract

Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Seagate Tech. Inc.
U.S.Dist. Ct.,N.D.Cal.

A California federal judge recently held that an insurer did not breach its contract when it stopped defending a policyholder based on a trial court declaratory judgment ruling that was later overturned.

The court explained that in the ordinary case, the duty to defend terminates upon a judicial determination that the insured does not have a potentially-covered claim. The decision granting summary judgment became such a judicial determination when judgment was …