Introduction: Ten Most Significant Insurance Coverage Decisions Of 2013
It was a bonanza for policyholders in 2013. They cleaned-up in wins in significant insurance coverage decisions. The score resembled the outcome of a Harlem Globetrotters – Washington Generals game. But insurers need not worry that this represents some sort of general judicial shift in favor of policyholders.
Washington Supreme Court: Policy Arbitration Clauses Are Unenforceable
Insurers See Red – Insureds See Delicious
Washington Department of Transportation v. James River Ins. Co. (Wash.)
Insurance policies sometimes contain clauses requiring that any dispute under the policy be resolved by arbitration. But some states have statutes that purport to prevent insurers from requiring that a dispute under a policy be resolved by arbitration. Did a state statute make an arbitration provision in an insurance policy unenforceable?
It is the proverbial “damned if you do and damned if you don’t” situation for insurers. An insurer is presented with a policy limits demand to settle for one insured – and it should be accepted based on liability and damages considerations -- but the settlement offered will not secure a release for all insureds. What is an insurer to do?
Idaho Supreme Court: No Covered Damages – But Coverage Still Owed For Plaintiffs’ Attorney Fees
Employers Mutual Casualty Co. v. Donnelly (Idaho)
If the compensatory damages awarded against the insured are not covered, are the associated attorney’s fees, incurred by the plaintiff, to recover such damages, also not covered?
American Law Institute Begins Adoption Of Its Principles Of Liability Insurance
Academic Mumbo Jumbo That You Don’t Need To Know About? Not So Fast.
The American Law Institute adopted some of the initial sections of its Principles of Liability Insurance. The ALI’s Principles Project – essentially a rule book for liability coverage issues -- sounds like the stuff of law professors, academic mumbo jumbo, and nothing you needed to know about. That’s what I used to think.
Illinois Supreme Court: Statutory Liquidated Damages Are Not Penal And Not Uninsurable Under Public Policy
Standard Mutual Insurance Company v. Lay (Ill.)
Are liquidated damages, that are more than the amount of harm actually sustained by the aggrieved party, penal, and, therefore, uninsurable in a state where punitive damages are considered uninsurable?
Almost Heaven For Policyholders: West Virginia High Court Overrules Four Prior Decisions And Holds That Faulty Workmanship Is An “Occurrence” [And Two Others Do The Same]
Cherrington v. Erie Insurance (W.Va.)
The West Virginia high court held that defective workmanship constituted an “occurrence.” That’s a dog bites man story. The significance of the case is not the decision, but what it took for the court to get there -- overruling four prior decisions (including a recent one). Two other state supreme courts used their power to overrule to find coverage for policyholders in CD cases.
Missouri Supreme Court: Policy Limits “Do Not Matter”
Trend: Harsh Consequences For Breach Of The Duty To Defend
Columbia Casualty Company v. Hiar Holdings, LLC (Mo.)
An insurer breached the duty to defend, but not in bad faith, and was obligated to indemnify the insured by paying the settlement amount. Did the insurer’s obligation to indemnify the insured include the portion of the settlement amount that exceeds the policy’s limits of liability?
Texas Supreme Court: Insured’s Settlement Without Insurer’s Consent Covered
Insured’s Texas 1-Step: Settle And Skip Insurer’s Consent
Lennar Corp. v. Markel American Insurance Company (Tex.)
Is an insurer obligated to provide coverage for an insured’s settlement, without insurer consent, when the insured actively solicited claims which might otherwise never have been brought?.
Eleventh Circuit Limits Construction Site Bodily Injury Exposure (Without Using An Endorsement)
Amerisure Insurance Co. v. Orange and Blue Construction, Inc. (11th Cir.)
Insurers have been taking various steps to attempt to limit their exposure for bodily injury claims on construction sites. One way has been to amend the employer’s liability exclusion. Here is a method for insurers to do so that requires no changes to standard policy language.
California Appeals Court: No Bad Faith For Insurer’s Failure To Attempt To Settle When There Is No Demand
Reid v. Mercury Insurance Company (Cal. Ct. App.)
Is an insurer liable for an excess verdict, after it did not settle a case, but there was no demand that it do so?