Introducing Timely Notice: What’s New and Exciting in Insurance Law

Timely Notice is your on-the-go source for sharp takes and expert analysis of the latest trends, breaking news, and sea-changes in global insurance law and the insurance marketplace.

With episodes hosted by Goldberg Segalla partners, including Jonathan Schwartz and Sharon Angelino, Timely Notice offers intelligent insights, frequently delivered, and in easy-to-digest episodes you can access any time. The podcast will feature discussions with outside and in-house counsel, claims professionals, underwriters, brokers, and other insurance industry professionals. Whether you listen on your work-week commute, while …

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Anticipated Decision in Heinz Rescission Litigation Upholds Ruling Voiding $25 Million Insurance Policy Due to Misrepresentations in the Application

In a much anticipated decision, the Third Circuit Court of Appeals upheld the rescission of H.J. Heinz Company’s $25 million production contamination insurance policy because Heinz made material misrepresentations concerning previous product contamination claims when it applied for the policy. H.J. Heinz Company v. Starr Surplus Lines Insurance Company, No. 16-1447 (3d Cir. Jan. 11, 2017).

The fact that Heinz’s application misrepresented its history of prior contaminations losses was clear. The insurer’s application asked Heinz to disclose past complaints, recommendations, fines or penalties by …

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Court Finds Ambiguity Over When Property Damage Commenced

Ambiguity surrounding the term “commencing” led a court to deny an insurer’s motion seeking to dismiss an insured’s property damage claim, despite the insured’s inability to state when the property damage at issue first occurred. In a question of first impression, a federal district court in Illinois denied an insurer’s motion for summary judgment earlier this month, ruling that the term “commencing” during the policy period was ambiguous when applied to the circumstances of the case. Temperature Serv. Co. v. Acuity, 2016 U.S. Dist. …

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Insurers Beware: The Illinois Department of Insurance Issued a Notice of Proposed Rule Regarding Knowledge of Misrepresentations and False Warranties

In August, the Illinois Department of Insurance (DOI) proposed its second rule on misrepresentations and false warranties in less than two years. Citing various concerns, the DOI withdrew its December 2014 proposed rule nearly a year ago, in October 2015. The impetus for the new proposed rule appears to be the DOI’s perception that insurers are not considering “readily available information” before seeking to rescind insurance policies.

The new proposed rule on misrepresentations would be promulgated as Ill. Admin. Code tit. 50, § 941.20. Section …

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Wildfire Smoke Constitutes “Direct Physical Loss”

An Oregon federal court decision deemed “air” physical property covered by a property insurance policy, in holding that wildfire smoke infiltration of an outdoor theater caused a physical loss of property.

The policyholder, an outdoor theater, claimed it suffered a property loss because it had to cancel several shows when smoke from nearby wildfires filled its audience seating and stage areas. Although the wildfires caused ash and soot to accumulate on outdoor seating and flooring, and in ventilation, lighting and electronic systems in the interior …

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Where Throwing in the Kitchen Sink Doesn’t Help — Orient Overseas Assocs. v. XL Ins. Am., Inc.

In its recent decision, the Appellate Division (1st Dept.) of the New York Supreme Court may have provided insurers with another basis to dismiss arguably duplicative claims arising from Super Storm Sandy. In Orient Overseas Associates v. XL Insurance America, Inc., the Appellate Division considered whether, in a case in which a breach of contract claim was already plead against an insurer based on its alleged failure to pay for damages covered under its policy, this same conduct may provide the basis …

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Supreme Court of Texas Declines to Adopt Incorporation Theory: But Destructive Repairs are Covered

Ruling on certified questions from the Fifth Circuit Court of Appeals, the Supreme Court of Texas has positioned the state as another jurisdiction to refuse to characterize mere incorporation of a defective component into a product or system as “physical injury” to property that would trigger coverage under a standard form CGL policy. The court also refused to narrowly apply the “impaired property” exclusion by rejecting the insured’s argument that the exclusion should be limited to those situations where the property is restored to use …

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Rental Property Fire Presents a Review of Residential Insurance Policies in Michigan

On September 29, 2015, the Michigan Court of Appeals  affirmed a directed verdict granted to an insurance agent, Jervis-Fehtke (Jervis), on a professional negligence claim brought by a property owner, Williams, as a result of damage to Williams’ rental property caused by fire.

After a gas explosion destroyed Williams rental property, Williams submitted a claim to her insurer, Auto-Owners Insurance Company (Auto Owner). Auto-Owners denied the claim because Williams’ policy did not cover losses caused by  explosions originating from outside of the property. Williams, appearing …

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Insurer Does Not Waive Right to Rescind Policy After Cancellation Due to Misrepresentation – If the Rescission is Based on Different Misrepresentations

The recent case of Auto-Owners Ins. Co. v. Yahia Motan & Motan Yahia reminds all practitioners of the importance of accurate responses in insurance applications. Auto-Owners addressed the issue of misrepresentations made in commercial insurance policies. 2015 Mich. App. LEXIS 1659 (MI App. 1st Dist. 2015). Decided on September 8, 2015, the Michigan Appellate Court found in favor of the insurer, finding that it relied on the insured’s misrepresentations made in the application to justify cancellation and rescission.

Najieb Jabbar, an agent of Motan …

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Rhode Island Supreme Court Takes Broad Approach to Household Residency

In Peerless Insurance Company v. Luppe, 2015 R.I. LEXIS 87 (R.I. June 17, 2015), the Rhode Island Supreme Court held that a minor child of divorced parents can be a resident of a non-custodial parent’s household.

The relevant facts are as follows: Maya Henderson’s parents were divorced. Maya’s mother had physical custody. Maya’s father had visitation rights. At some point after the divorce, Maya began staying overnight with her father two nights per week. Maya kept some of her clothing and toiletries at her father’s …

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