Home Page The Publication The Editor Contact Information Insurance Key issues Book Subscribe
Vol.11 - Issue 4

August 15, 2022

Federal Appeals Court: 10 Day Stub Period = Extra $10 Million Limit
If you are involved in a “stub” period case, you will want to read the Second Circuit’s decision in First State Ins. Co. v. Columbia Cas. Co., No. 21-30 (2nd Cir. June 16, 2022).  The court addressed the limit of liability available for “stub” periods, i.e., an extension of a policy period – usually by a relatively short amount of time.  In each case, the court held that the stub period was subject to a new limit of liability. In one, a ten-day stub period led to an additional $10 million limit of liability.  In another, a 26 day “stub” period resulted in multi-millions in additional coverage.

Montana High Court Addresses Its Table of Contents Rule
I’ve always found it interesting that Montana has a law calling for the inclusion, in liability policies, of a table of contents and notice section of important provisions.  Ironically, the name of the law is a mouthful: Montana’s Property and Casualty Insurance Policy Language Simplification Act.  Anyway, the Montana Supreme Court, in High Country Paving v. United Fire & Cas. Co., No. OP 21-0487 (April 12, 2022), addressed what happens when the insurer fails to follow the PSA.  Answer -- not much: “Read as a whole, the PSA expressly limits policies subject to its requirements from increased risk.  The establishment of language and formatting standards to make insurance policies easier to read remains the PSA’s underlying purpose and guides the requirements set forth in § 33-15-337(2), MCA. However, this purpose, and the requirements enacted to effectuate it, operate in tandem with the limiting language of § 33-15-334(2), MCA, and cannot be construed so as ‘to increase the risk assumed’ under policies subject to the PSA. Thus, invalidating an unambiguous policy exclusion, as here, based on a technical violation of the PSA’s requirements cannot result in increased risk being assumed by the insurer without undermining one of the PSA’s express limitations. We decline to read the PSA in such a manner. Notwithstanding a technical violation of the PSA’s requirements, invalidating unambiguous policy exclusions may not result in an increase of the risk assumed.”

Website by Balderrama Design Copyright Randy Maniloff All Rights Reserved