West Virginia High Court: No Coverage For Innocent Co-Insureds
The Supreme Court of Appeals of West Virginia held in Am. Nat’l Prop. & Cas. Co. v. Clendenen, No. 16-0290 (W. Va. Nov. 17, 2016) that no coverage was owed to an “innocent co-insured,” for the acts of another insured who committed excluded conduct, when the exclusion at issue applied to “any insured.” In reaching this decision, the court was required – as is often the case in these types of claims -- to hold that a severability clause (or separation of insureds clause) did not prevail over an unambiguous “any insured” exclusion.

Arkansas Federal Court: Insurer’s Punitive Damages Exclusion Not Valid
The District Court of Arkansas held in Atl. Cas. Ins. Co. v. Paradise Club, 4:15-CV-04103 (W.D. Ark. Nov. 4, 2016) that an insurer’s punitive damages exclusion was not enforceable. An Arkansas statute provides that “[p]olicies containing an exclusion for punitive damages must include a definition of punitive damages substantially similar to the following: ‘Punitive damages’ are damages that may be imposed to punish a wrongdoer and to deter others from similar conduct.”

The punitive damages exclusion at issue provided as follows: “This insurance does not apply to any claim of or indemnification for punitive, exemplary and/or statutorily enhanced damages, including, but not limited to, multiple damages. If a ‘suit’ seeking compensatory and punitive, exemplary and/or statutorily enhanced damages, including, but not limited to, multiple damages has been brought against you for a claim covered by this policy, we will provide defense for such action. We will not have any obligation to pay for any costs, interests or damages attributable to punitive, exemplary and/or statutorily enhanced damages, including, but not limited to, multiple damages.”

The court held that “the language used in the Punitive Damages Exclusion found in the policy presently at issue does not convey to the average reader that ‘punitive damages’ are awarded as a means of punishment and deterrence. Therefore, the Punitive Damages Exclusion before the Court does not have language ‘substantially similar’ to the language found in Ark. Code Ann. § 23-79-307(8) and is void.”