Insurance Coverage Lawyer Blog

Texas Supreme Court Rules on Late Notice in Claims Made Policy

Alan.Rutkin@rivkin.com (Alan Rutkin) — Thu, 02 Apr 2009 18:16:43 -0500

If you’re interested in claims made policies and notice, see yesterday’s decision from the Texas Supreme Court, Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance Co., NO. 06-0598 (Apr. 1, 2009). The court held that: “In a claims-made policy, when an insured notifies its insurer of a claim within the policy term or other reporting period that the policy specifies, the insured's failure to provide notice ‘as soon as practicable’ will not defeat coverage in the absence of prejudice to the insurer.” Disappointing decision.

Late Notice Lives in New York

Alan.Rutkin@rivkin.com (Alan Rutkin) — Sat, 07 Mar 2009 17:31:19 -0500

Sorry I haven't written much lately. Note that a recent case shows that late notice lives on as a viable defense in New York. Wells Fargo Bank, N.A. v. Zurich American Insurance Co., 2009 NY Slip Op 1396; 2009 N.Y. App. Div. LEXIS 1390 (App. Div. First Dep't Feb. 26, 2009).

Ontario Bar Association

Alan.Rutkin@rivkin.com (Alan Rutkin) — Tue, 03 Feb 2009 12:09:22 -0500

I spoke at the Ontario Bar Association's annual meeting yesterday. It's interesting to hear the Canadian point of view concerning insurance coverage.

Kansas Supreme Court Bars Coverage Based on Insured's Failure to Disclose

Alan.Rutkin@rivkin.com (Alan Rutkin) — Fri, 30 Jan 2009 12:18:41 -0500

Political pundits ask “what’s the matter with Kansas,” but on the duty to disclose information in a policy application, there is nothing the matter with Kansas. The Supreme Court held that “an insurance company may invoke a policy exclusion for undisclosed risks if, in completing the application, the applicant failed to disclose known information which would reasonably be perceived as a potential risk.” American Special Risk Management Corp. v. Progressive Cas. Ins. Co., 286 Kan. 1134 (2008).

How Can Shootings be Insurable

Alan.Rutkin@rivkin.com (Alan Rutkin) — Mon, 19 Jan 2009 16:27:28 -0500

I don’t know whether it is my long term affiliation with insurance companies or my living in the anti-gun northeast, but I just can’t believe that policyholders can credibly claim coverage for shootings. Year after year, I read insureds’ coverage arguments for shootings and think that no one can take the cases seriously. Yet, another such case is working its way through a court system. Alfa Mutual Insurance Co. v. Bone, 2009 Ala. LEXIS 4 (Jan. 9, 2009). Trial court entered summary judgment for the policyholder on the expected or intended issue, and found an issue of fact concerning whether the shooting was a “willful or malicious” act. It’s true that the policyholder had a long convoluted explanation. But at the end of the day, if two guys have a fight and one fighter shoots the second fighter, how can that be insured?

Madoff Mess and Insurance

Alan.Rutkin@rivkin.com (Alan Rutkin) — Fri, 19 Dec 2008 18:36:55 -0500

The Madoff Mess will eventually raise interesting insurance issues; not so much with Madoff as with the middlemen. The entities that fed clients to Madoff will surely be sued. Their due diligence will be questioned. But, will the middlemen's problems be considered insured?

Subprime Crisis Creating Interesting Suits

Alan.Rutkin@rivkin.com (Alan Rutkin) — Mon, 03 Nov 2008 15:36:43 -0500

If you have any doubt that the financial crisis will lead to D&O claims from banks and other similar entities, read Gretchen Morgenson's article in yesterday's (11/2/08) New York Times. http://www.nytimes.com/2008/11/02/business/02gret.html?scp=1&sq=morgenson%20loan%20didnt%20like&st=cse
Very interesting!

Worrying About Waiver

Alan.Rutkin@rivkin.com (Alan Rutkin) — Fri, 24 Oct 2008 09:49:01 -0500

Interesting new waiver decision from New York. Adames v. Nationwide Mutual Fire Ins. Co., 2008 Slip Op 7597 (2d Dep't App. Div. Oct. 7, 2008): "A notice of disclaimer 'must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated' and '[a]n insurer's justification for denying coverage is strictly limited to the ground stated in the notice of disclaimer.' Thus, an insurer waives any ground for denying coverage that is not specifically asserted in its notice of disclaimer, even if that ground would otherwise have merit." (Citations omitted.)

Alabama Enforces "Ambiguous" Pollution Exclusion

Alan.Rutkin@rivkin.com (Alan Rutkin) — Sun, 19 Oct 2008 17:43:03 -0500

I just read an interesting pollution exclusion decision from the Supreme Court of Alabama. State Auto Property & Casualty Insurance Co. v. Arkansas Department of Environmental Quality, 370 Ark. 251; 258 S.W.3d 736; 2007 Ark. Lexis 378 (Ark. 2007). While the court declined to overrule past decisions finding the definition of "pollutant" ambiguous in the context of pollution exclusions, the court accepted extrinsic evidence to cure the ambiguity and hold that gasoline is a "pollutant." I note this case because it is so unusual to see a court maintaining the view that a provision is ambiguous, yet curing the ambiguity and finding for the insurer. Undoubtedly, the court was reluctant to overrule its earlier decision, but the court was looking to move away from that decision.

Credit Crunch Makes Its Most Direct Hit on Insurance To Date

Alan.Rutkin@rivkin.com (Alan Rutkin) — Mon, 15 Sep 2008 08:54:36 -0500

It is interesting and frankly scary to read about AIG's crisis. It will also be interesting to see how this crisis changes the way other insurers do business. As AIG's problems will be attributed to many causes, other insurers are likely to make many different corrections. To me, one correction seems most likely. As noted in this morning's Wall St. Journal (9/15/08 C1), AIG had pushed into "new businesses beyond the world of traditional insurance." AIG was involved in businesses ranging from plane leasing to skiing. Many other insurers have acted similarly, though perhaps not to the same extent as AIG. I expect insurers now to heed the advice from Jim Collins's book "Built to Last": they will "stick to their knitting"; focus their energies on what they know best. Insurers are likely to back off from fields distant from their core businesses. Though I disagree with many aspects of Mr. Collins's advice, this advice might well be prudent.

NYS Insurance 3420 is Limited

Alan.Rutkin@rivkin.com (Alan Rutkin) — Thu, 11 Sep 2008 15:00:10 -0500

Insurers in New York must worry about Insurance Law sec. 3420(d) , a provision that requires denials "as soon as possible" for accidents involving bodily injury or death. But, a recent appellated decision found that the statute did not apply where the incident was not an "occurrence." State Farm Fire and Casualty Co. v. Whiting, 53 A.D.3d 1033 (4th Dep't 2008). The court held that the statute does not apply "[w]here, as here, 'the insurance policy does not contemplate coverage in the first instance, ... requiring payment of a claim upon failure to timely discalim would [impermissibly] create coverage whre it never existed." (bracketed word in court's text) This decision suggests a line of argument that insurers might regularly consider when facing charges of violating this statute.

What Constitutes a "Claim" Under A Claims Made Policy

Alan.Rutkin@rivkin.com (Alan Rutkin) — Tue, 09 Sep 2008 15:34:09 -0500

For an interesting discussion of what constitutes a claim letter in the absence of a definition of "claim," read In re Ancillary Receivership of Reliance Insurance Co., 2008 NY Slip Op 6690 (1st Dep't App. Div. Sept. 2, 2008). I believe that the correct view was presented in the dissent by Judge Catterson (though in my one appearance before him he was brutal to my approach). Judge Catterson focused on the language of the letter-- particularly the use of the word "claim"-- to find that the letter was a claim.

NY TIMES REPORT ON SETTLEMENT STUDY

Alan.Rutkin@rivkin.com (Alan Rutkin) — Thu, 21 Aug 2008 10:02:16 -0500

Much has been said about a study recently reported in the NY Times concluding that from the client's perspective, settlement is often more favorable than trial. I was surprised that there was no mention of what I often see as the biggest benefit to settling: salvaging a commercial relationship. I have seen many settlement not only end acrimony, but restore commercial activity and related good will. That benefit can be huge.

Supreme Court of Wisconsin Rejects Intentional Act Exclusion

Alan.Rutkin@rivkin.com (Alan Rutkin) — Thu, 24 Jul 2008 10:35:48 -0500

Life can be tough for an insurer, particularly in Wisconsin. In a July 1, 2008 decision, the Supreme Court of Wisconsin refused to enforce an intentional ACTS exclusion where the insured intentionally built a home in violation of a setback restriction. Liebovich v. Minnesota Insurance Co., 2008 WI 75. What could be a more intentional act?

Criminal and Civil Overlap May Bar Coverage in Subprimes

Alan.Rutkin@rivkin.com (Alan Rutkin) — Thu, 19 Jun 2008 10:08:02 -0500

Interesting to see a criminal suit being brought against people named in subprime civil suits. http://www.nytimes.com/2008/06/20/business/20bear.html?_r=1&hp&oref=slogin
Dishonest conduct exclusions will surely be asserted in some of these subprime cases.

Consent to Settle Clause Enforced

Alan.Rutkin@rivkin.com (Alan Rutkin) — Mon, 16 Jun 2008 19:15:17 -0500

Settling without the insurer's consent really can forfeit coverage. See the recent case from New York's highest court, Vigilant Ins. Co. v. Bear Stearns Cos., 10 NY3d 170 NY Mar. 13, 2008).

Pollution Exlcusion Applies to the Natural

Alan.Rutkin@rivkin.com (Alan Rutkin) — Fri, 23 May 2008 14:10:52 -0500

My father the chemist taught me that "natural doesn't always mean good." The Minnesota Court of Appeals took a similar view to hold that the pollution exclusion applied to composting, even though composting is natural. It's an interesting decision. Larson v. Composting Concepts, Inc., 2008 Minn. App. Unpub. LEXIS 551 (May 13, 2008).

Differences in Time and Space Create Multiple Occurrences

Alan.Rutkin@rivkin.com (Alan Rutkin) — Mon, 07 Apr 2008 11:04:30 -0500

Add Kansas to the list of states recognizing that distances in time and space distinguish circumstances into multiple occurrences. American Family Mutual Ins. Co. v. Wilkins, No. 98, 2008 Kan. Sup. LEXIS 73 (Mar. 28, 2008).

Another Bear Stearns Suit

Alan.Rutkin@rivkin.com (Alan Rutkin) — Tue, 25 Mar 2008 10:44:52 -0500

A very short class action complaint was filed in New York State Court, Kurtz v. Cayne. Defendants, Bear Stearns and a group of its directors, are alleged to have violated duties of "Candor" and "loyalty." See para. 34. It will be interesting to see how the coverage questions are resolved.

Bear Stearns Claims Implicate Fraud Exclusions

Alan.Rutkin@rivkin.com (Alan Rutkin) — Mon, 24 Mar 2008 11:36:14 -0500

If you predicted that Bear Stearns officers and directors would be sued within “days” of the announced sale to J.P. Morgan you wildly underestimated this conflict. A suit was filed on March 17, 2008, the same day that the J.P. Morgan deal was announced. See Eastside Holdings Inc. v. Bear Stearns Cos., SDNY. Plaintiffs allege that “defendants disseminated or approved … false statements… which they knew … were misleading in that they contained misrepresentations and failed to disclose material facts…. Defendants … employed devices, schemes and artifices to defraud …[and] engaged in acts, practices and a course of business that operated as a fraud or deceit…. See paras. 61-62. You can surely expect the defendants to make D&O claims, and insurers will need to consider their fraud exclusions.