It May Be Junk, But It’s Not Covered

Posted on June 18, 2013 by Harvey Nosowitz
insurance case concerning bill of lading contract

Even when the contract reads like classic kid lit, it might not work out in the end.
photo: David Masters

These days, when insurers and policyholders debate whether or not there has been “direct physical loss or damage,” they are often talking about electronic information.  Far from Silicon Valley in both distance and subject matter, a Maine federal District Court recently considered that language and concluded that dry goods are not physically damaged merely because they are of inferior quality.

A Maine importer ordered towels from a Pakistani manufacturer.  When the shipping container arrived, the towels did not conform to what had been ordered.  To put it bluntly, as the importer did in its complaint, they were junk.  The importer sued for coverage under its Open Marine Cargo policy. Continue reading →

Posted in Property Coverage | Tagged , , , , | Leave a comment

An Elegant Duty-to-Defend Decision

Posted on June 12, 2013 by Anne Robbins
Duty to Defend - Outside the Complaint

Do we have to fight,
or can we turn this thing around?
Photo credit: Official U.S. Navy Imagery

In a divided area of duty-to-defend law, a Vermont trial court just handed down a well-reasoned decision that provides a useful model for future cases.  The key question in the coverage dispute was whether the insurer could look to information outside the complaint in determining that it had no duty to defend its insured against a third-party complaint.  States have taken a variety of approaches on this question.

(Full disclosure: I argued this case for Anderson & Kreiger on behalf of the insurer.) Continue reading →

Posted in Duty to Defend | Tagged , , | Leave a comment

Wading into a Maelstrom: Defense Allocation for Long-Tail Claims Under Boston Gas?

Posted on June 6, 2013 by Harvey Nosowitz

And If Insureds Share Costs, Who Controls Defense and Settlement? 

Graphic Arts Mutual Ins. v. Lukens

Insured-insurer relations
now look like this, post-Boston Gas
CC by barekim

For the most part, appellate courts addressing insurance allocation for claims of progressive injury under Massachusetts law have taken a fifty thousand foot view (see my previous posts on this subject here and here).  A recent federal District Court decision grapples with allocation in the trenches.  Its ruling on the issue of defense allocation is at odds with an earlier District Court decision.  It’s messy on the ground, and likely to get messier.

Does Boston Gas require pro rata, time-on-the-risk allocation of defense costs, as well as indemnity payments, making the insured responsible for defense costs for any period for which it did not have insurance?  No, said Judge Gertner in 2010, in the case of Peabody Essex Museum, Inc. v. United States Fire Ins. Co., District of Massachusetts Civil Action No. 06cv11209 (Sept. 30, 2010). Continue reading →

Posted in Environmental, Toxic Torts | Tagged , , , , , | Leave a comment

Pro Rata Time-on-the-Risk Allocation Applies to Asbestos as well as Environmental Claims

Posted on May 31, 2013 by Harvey Nosowitz
Boston Gas applies to asbestos injuries

Yes, Virginia, pro rata allocation does apply to asbestos injury claims.
CC by lancefisher

The Massachusetts Appeals Court determined in a recent case that, for purposes of allocation, differences in policy language did not require asbestos bodily injury claims to be treated differently from environmental property damage claims.

The facts of this case between Liberty Mutual and insured New England Insulation Company (NEIC) began with the Supreme Judicial Court’s decision in Boston Gas Co. v. Century Indem. Co., 454 Mass. 337 (2009). Continue reading →

Posted in Toxic Torts | Tagged , , , | Leave a comment

The Future of Liability Insurance Law?

Posted on May 22, 2013 by Harvey Nosowitz
ALI Liability Insurance Vote

Democracy is great and all,
but a lot’s at stake in liability insurance.
CC by Cain and Todd Benson

The American Law Institute met this week.  Among other business, it voted on Monday to adopt portions of Tentative Draft No. 1 of its Principles of the Law of Liability Insurance.  The Principles have the potential to affect the future development of the law governing the interpretation of and performance under liability insurance policies.

Principles are different from Restatements, another form of guidance produced by the ALI.  Restatements codify the law as it exists.  Principles declare what the law should be.  As a result, the Principles propose rules that resolve some issues on which current law varies widely from jurisdiction to jurisdiction.  For the most part, the Principles have adopted a policyholder-friendly position in these areas. Continue reading →

Posted in Policy Construction | Tagged , , , , , , | Leave a comment

Who Does a Wholesale Broker Represent?

Posted on May 9, 2013 by Harvey Nosowitz

That age old question:
Is the broker’s heart with the fisherman or the sushi chef?
CC by slettvet

The Answer:  It Depends.

A recent federal District Court case provides a useful review of how courts answer the question whether an insurance intermediary is acting for the insurer or for the policyholder. As the court observed, the terms “broker” and “agent” as used in the insurance industry are confusing.  The answer turns on the facts and the function the intermediary performs.

Although you might expect a wholesale broker to be more closely aligned with the insurer, in this case, where the broker did not have authority to bind the insurer or issue policies, the court held that it acted on behalf of the policyholder for purposes of accepting delivery of the policy. Continue reading →

Posted in Agents | Tagged , , , | Leave a comment

Make a Mistake? Better Tell Your Professional Liability Insurer

Posted on April 30, 2013 by Harvey Nosowitz

Never Ignore Error Messages
in the 7th Circuit
CC by abraham.williams

A recent Seventh Circuit case is a vivid reminder of the danger of not reporting to your professional liability insurer an incident that may result in a claim. The Court held that if a professional has reason to know an error may result in a claim, it has knowledge sufficient to require immediate notice to its insurer. Prejudice is not relevant to notice under a claims-made policy. Continue reading →

Posted in Malpractice | Tagged , , , , , , , | Leave a comment

How to Void a Policy: Misrepresent the Extent of your Lost Income

Posted on April 5, 2013 by Harvey Nosowitz
Espedito Realty v. Fire Insurance

Insurance Nightmare:
Water Displays
in the Wrong Setting
CC by m.bjerke

An insured who plays fast and loose with an element of loss that is fixed and knowable risks losing coverage for its legitimate losses. That’s what happened in the latest iteration of a federal District Court case that Between the Lines first covered last May.

The court’s first summary judgment decision had been a win for the insured. The judge ruled that the sinking of the insured’s warehouse floor due to seepage from a burst pipe was not excluded “earth movement.”  But the judge also allowed the insurer to pursue a defense based on misrepresentations in the insured’s claim for loss of rental income from a warehouse tenant.  Now, the judge has granted summary judgment for the insurer, declaring the policy void. Continue reading →

Posted in Property Coverage | Tagged , , , | Leave a comment

Come On In, The Water’s Fine – Faulty Work May Be A Covered Occurrence

Posted on March 28, 2013 by Tamara Wolfson
Faulty Work as Covered Occurance

Insurance Whether or Not
It Works Out This Well
CC by KassandraBay

The Second Circuit recently weighed in on the frequently disputed issue of coverage for claims arising from defects in the insured’s work.  In Scottsdale Insurance Company v. R.I. Pools, (2nd Cir. March 21, 2013) (applying Connecticut law), the court concluded that such claims may allege a covered “occurrence,” at least where a subcontractor performed the work. In so doing, the Court took the somewhat unusual step of relying on an exclusion to define a covered “occurrence.” Continue reading →

Posted in Uncategorized | Comments Off

Can an Insurer Make a Payment But Then Seek Reimbursement from its Insured?

Posted on March 28, 2013 by Steve Schreckinger

Not Getting that Money Back
CC by purpleslog

In Massachusetts, the answer would appear to be “no.”  In the recent Metropolitan Life Ins. Co. v. Cotter, the SJC held against an insurer seeking reimbursement for benefits it had paid out, even though it agreed with the insurer that it had had no obligation to provide continuing benefits.  Although the insurer had reserved the right to reimbursement when making the payments – alerting the insured that it was seeking a judicial determination of its obligation to pay – the court held that those actions were insufficient for two reasons: the policy did not provide for it, and the insured did not agree to it. Continue reading →

Posted in Policy Construction, Practice and Procedure | Tagged , , | Leave a comment