Iowa High Court Holds Damage Caused By Subcontractor’s Faulty Workmanship May Constitute Accidental Occurrence. The Iowa Supreme Court, applying Iowa law, held that property damage resulting from defective workmanship by a policyholder’s subcontractor may constitute an “occurrence” triggering coverage for water damage. The policyholder, Westlake Investments LLC (“Westlake”), purchased a 300 unit apartment complex in West Des Moines, Iowa.  Shortly thereafter,... Read More

Bars Coverage Even If Policyholder Would Have Been Liable Absent Contractual Indemnity. A federal district court in Arizona granted a motion for summary judgment filed by Federal Insurance Co. (“Chubb”) in a coverage case filed by P.F. Chang Bistro, Inc.  In 2014, P.F. Chang discovered that approximately 60,000 customer credit card numbers had been stolen from 33 of its restaurants... Read More

Ninth Circuit affirms $15M award after insurer refuses to pay for counsel hired by policyholder The Ninth Circuit Court of Appeals affirmed a $15 million award for defense expenses to Schnitzer Steel Industries Inc. from Continental Casualty Co. and Transportation Insurance Co. (“Continental”) for breach of contract in refusing to pay the reasonable and necessary defense costs related to litigation... Read More

District Court directs verdict against Horace Mann and in favor of professional liability insurer An Illinois federal court, applying Illinois law, issued a directed verdict that the insured, Horace Mann Insurance Company (“Horace Mann”), an automobile insurance provider, did not satisfy the notice requirement under its professional liability insurance policy issued by Lexington Insurance Company (“Lexington”).    Because the notice requirement... Read More

CA District Court also finds defense costs in addition to limits, and applies a Total Pollution Exclusion A California federal court, applying California law, addressed the following three coverage issues in connection with alleged PCE contamination at a property where a dry cleaning company operated:  (1) whether Zurich America and American Guarantee had a duty to defend under their Business... Read More

NY Bankruptcy Court holds nothing short of actual payment of underlying limits triggers excess coverage.  A New York bankruptcy court, applying New York law, addressed the issue of whether underlying insurance limits must be exhausted by actual payment before excess liability coverage attaches.  The insured, Rapid-American Corporation (“Rapid”), argued that having accrued (but unpaid) liabilities reach the level of the... Read More

Court of Appeals rejects Pro Rata allocation and applies “Vertical Exhaustion” to excess coverage for asbestos claims. In response to certified questions from the Delaware Supreme Court, the New York Court of Appeals held that the “all sums” methodology applied to the asbestos coverage dispute, whereby each excess policy can be held liable for an entire loss.  The court rejected... Read More

Appellate Court permits broad discovery of Allstate regarding its bad faith and improper claims practice history and “other insured” information. The plaintiffs, Valentine and Christina Zagorski, sued Allstate Insurance Co. in St. Clair County, Illinois, alleging vexatious bad faith, breach of contract and common law fraud in the handling of their homeowners’ fire insurance claim.  Allstate had denied the claim... Read More

EPA PRP letter is a “suit” triggering duty to defend; umbrella insurer without pollution exclusions must “drop down” and defend when the claim constitutes an “occurrence” not covered by underlying insurance. In two separate opinions, the 9th Circuit, applying Oregon law, held that a 104(e) letter from the EPA constitutes a “suit” triggering an insurer’s duty to defend, and an... Read More

Policyholder settlement without consent of insurer is barred, even if the insurer cannot show prejudice. The Colorado Supreme Court, applying Colorado law, refused to extend the “notice-prejudice” rule, which requires insurers to demonstrate that they suffered prejudice from late notice of a claim before they can deny coverage on that basis, to a policyholder’s settlement without insurer consent where the... Read More