Welcome to the Confusing World of Kidnap, Ransom and Extortion Insurance: An Overview

In light of recent world events, it comes as no surprise that the kidnap, ransom and extortion insurance policies are being discussed as a way to provide comfort to international businesspersons who travel in areas where kidnappings are common.  By way of background, kidnap, ransom and extortion provide compensation for ransom payments, loss of income, medical care and, possibly, interest derived from any bank loans needed for one’s release.


In considering the practical realities involved in these types of transactions, however, kidnap, ransom and

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UK Court Declares That Master Insurance Policy Does Not Drop Down Leaving Insured with A Multi-Million Dollar Gap in Coverage

Flexsys America L.P. and XL Insurance Company Ltd. (2009 EWHC 1115)


Flexsys America is an Ohio Corporation and subsidiary of a global company based in Belgium. Flexsys purchased a Public and Products Liability Policy from XL Capital Group, termed “Master Policy,” by the Court, and provided US$25 Million in coverage.  Flexsys was also insured under a XL Capital Group Commercial General Liability policy issued in Ohioand providing US$1 Million in coverage.

The plaintiff “KKPC” filed suit against Flexsys alleging that Flexsys engaged in

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District Court Holds Insurance Carrier Must Defend Workplace Shooting Notwithstanding Employer’s Liability Exclusion

Admiral Ins. Co. v. G4S Youth Service  (United States District Court, Eastern District of Virginia, June 9, 2009)

The insurer brought a declaratory judgment action seeking a determination of its obligation to defend and indemnify the policyholder in an underlying matter arising from the shooting death of one of its employees that occurred on the work premises, but prior to the employee beginning her work shift.  Specifically, the issue was whether the employee’s death on the policyholder’s premises “arises out of” and was “in the course

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Second Circuit Says Two Year Statute of Limitation Language in Policy Enforceable

O&E Growers, Inc. v. Selective Ins. Co. of America

U.S. Ct. of App. (2nd Circuit, June 1, 2009)


Insurance policy’s two year statute of limitation period barred claim brought six years after the loss, not from the date of jury verdict.


Click here for decision


By Sharon Angelino


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Seventh Circuit Rules Policyholder not Entitled to Coverage for Counsel Chosen Without Insurer Approval

National Cas. Co. v. Forge Industrial Staffing Inc.

(7th Cir. [ Ill.] June 3, 2009)

A policyholder declined to accept insurer-appointed counsel to defend it against claims before the Equal Opportunity Employment Commission because it was fearful that the insurer would control the defense in such a way that would preclude coverage.  The court held that the underlying claims were not mutually exclusive, one of which would be covered and one of which would not be covered.  As such, appointment of conflict counsel was

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CGL Does Not Cover Abu Ghraig Torture Claims

CACI International Inc. v. St. Paul Fire and Marine Ins. Co.

(11th Cir. ( Va.), May 14, 2009)

The policies at issue limited coverage to the United States and Canada, the policyholder argued that claims regarding negligent hiring happened in the United States.  The 11th Circuit held that the underlying complaints cannot be read to allege that the events happened within the coverage territory based on established principals of insurance law where the place of the injury, in this case Iraq, determines

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Claims Made During Extended Reporting Period Deemed Uncovered

James River Insurance Co. v. Alliance Children's Servs., Inc.

(D. Mass. May 8, 2009)

A CGL insurer sued its policyholder, seeking a declaration that it was not obligated to defend or indemnify it in an underlying wrongful death action because the claim was not made during the policy period. The court granted the insurer summary judgment, finding that the policy expressly required that, to be covered, a claim must be made during the policy period, not during the extended reporting period.


By Carrie Appler

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Policyholder’s Withholding Material Information Precludes Recovery

Southern Realty Mgmt, Inc. v. Aspen Specialty Ins. Co., et al.

(N.D. Ga, April 28, 2009)

The insurers contended that the policyholder violated the policy provisions when it concealed the sale of the subject damaged property on the proof of loss and refused to cooperate with insurers by turning over all sale documents. The court noted that under Georgia law, an insurer has a compelling interest in, and right to, an accurate proof of loss. Also, a policyholder may not unilaterally determine that some of

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Second Circuit Remands Lloyd’s Dispute on Policy Terms

Crucible Materials Corp v. Certain Underwiters at Lloyd's

(2d Circ. May 14, 2009 (New York))

The plaintiff insured alleged that defendant insurer breached an excess insurance contract insuring against property damage claims arising from the insured's manufacturing operations at 18 sites across the United States. Concluding that the insured failed to present evidence of the terms of the contract, the United States District Court  New York granted summary judgment to the insurer. The district court based its decision awarding summary judgment in favor of the insurer on

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Renewal Premium Check Cashed After Expiry of First Policy Did Not Reinstate Prior Policy, But Formed New One

Hartland v. Progressive County Mutual Insurance CompanyUT

( Ct. App. Texas, April 23, 2009)

The policyholder sent a renewal premium check after the policy expired.  The insurer accepted the check, and issued a revised renewal declarations page listing the date the check was received as the inception date of the renewed polcy. The policyholder argued that the acceptance of the check formed a contract under the terms of the original renewal policy, and coverage was uninterrupted.  Rejecting that argument, the court held

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