The Policyholder Report

The Policyholder Report

Advising Insureds. Litigating Coverage Disputes Against Insurers.

Florida Court of Appeals again holds that insureds may assign rights under a policy after a loss occurs.

Posted in Adjustment, assignment, Florida, Homeowner's policy

Last year, I wrote about a decision by Florida’s Fourth District Court of Appeal (link here) holding that an insured, post-loss, could assign its claim against its homeowner’s insurance policy. Recently, the same issue was before the Second District. Continue Reading

Oregon Supreme Court eases the path to hold insurers accountable for bad-faith practices

Posted in assignment, bad faith, Duty to defend, Oregon Supreme Court, settlement

Yesterday the Supreme Court of Oregon overruled Stubblefield v. St. Paul Fire & Marine (1973) and paved the way for a more commonsense approach to negotiating stipulated judgments. Stipulated judgments have been a well-worn, though somewhat perilous, mechanism for insureds to resolve liability claims against them when their insurers defend in bad faith. In doing so, however, the parties to the stipulated judgment were tasked with navigating needlessly technical steps along the way. In Brownstone Homes Condo. Ass’n. v. Capital Specialty Ins. Co., the court removed one of the insurer’s “gotcha” defenses to an otherwise valid stipulated judgment. Continue Reading

Nevada Joins States Protecting Insureds from Lawyers Serving Two Masters

Posted in CGL insurance, Duty to defend, ROR Letter

Nevada recently became the latest jurisdiction to protect the interests of policyholders by adopting the so-called Cumis counsel rule. In State Farm Mut. Auto. Ins. Co. v. Hansen (Sept. 24, 2015), the Nevada Supreme Court held that insurers are required to pay for independent counsel for insureds facing liability claims when there is a conflict of interest between the insured and insurer. In so holding, Nevada joined the list of states to ensure that policyholders have the benefit of being represented by counsel that has only the policyholders’ interests in mind—and not those of the insurer. Continue Reading

Federal court applies Oregon statute to approve “good faith” settlement in environmental insurance litigation

Posted in CGL insurance, Environmental Cleanup Assistance Act, equitable contribution, property damage, settlement

Coverage litigation stemming from continuous or progressive property damage or bodily injury claims typically involves multiple insurers that issued liability policies over a number of years. One or more of those insurers may want to settle early, and the policyholder may very well want to take that insurer’s money. Settlement may be complicated, however, by the potential equitable contribution rights of the other, non-settling insurers. The settling insurer wants to close its file without the risk of being dragged back into the litigation through a contribution claim. But the sophisticated policyholder is rightfully reluctant to agree to defend and indemnify the settling insurer, taking on the risk that a court could later conclude that the settlement was too low. Continue Reading

Insurer’s claim denial may violate state consumer-protection statutes even when the insurer has no duty to defend

Posted in assignment, bad-faith investigation, CGL insurance, construction-defect litigation, pollution exclusion

As I wrote in an earlier blog post (see my August 10, 2015 article here), insurers have a duty to defend their policyholders against any potentially covered loss, which means that insurers are required to defend and attempt to settle claims on behalf of their policyholders even when coverage for the underlying claim is uncertain or doubtful. But as a recent case from the Washington Court of Appeals illustrates, insurers may not be off the hook even if the duty to defend does not apply. Washington, like a number of other states, has enacted consumer-protection statutes that can provide powerful remedies to policyholders whose insurers failed to properly investigate claims before denial.

On August 24 2015, Division 1 of the Washington Court of Appeals issued a decision that is certain to make insurers tremble. In Xia v. ProBuilders Specialty Insurance, the court upheld a summary-judgment order holding that the insurer did not breach its duty to defend, but nonetheless left open the possibility that the insured could recover damages under Washington’s Insurance Fair Conduct Act (“IFCA”) and/or the state’s Consumer Protection Act (“CPA”). Continue Reading

Florida Court of Appeal case serves as a reminder to be mindful of how claims are pleaded

Posted in CGL insurance, Duty to defend, Florida, policy exclusions, settlement

A recent opinion out of the Fourth District Court of Appeal in Florida highlights the importance of properly pleading claims so that insurance coverage is triggered.

In Mid-Continent Cas. Co. v. Royal Crane, LLC, Cloutier Brothers, Inc. leased a crane and crane operator from Royal Crane, LLC. During construction, a truss fell from the crane and injured a construction worker. The worker sued Royal Crane, asserting claims for negligence, strict liability, and gross negligence. Royal Crane tendered its defense of the lawsuit to Cloutier under an indemnity clause in the parties’ rental agreement. Cloutier declined the tender “at the behest” of its insurer, Mid-Continent.

So Royal Crane sued, bringing a third-party action against Cloutier for contractual indemnification and breach of the rental agreement. Cloutier tendered the defense of these claims to Mid-Continent, which denied the duty to defend under the exclusion for Cloutier’s potential obligation to pay “by reason of the assumption of liability in a contract or agreement.” The poison pill for coverage turned on Royal Crane’s failure to plead around this exclusion. Continue Reading

Interpreting “vandalism” shows how ambiguity works in insurance-coverage disputes

Posted in Ambiguity in policies, policy exclusions, policy interpretation, property policy, vacancy

Intention can be a tricky concept in many areas of the law, from criminal prosecutions to insurance-coverage cases, as illustrated in a recent California case, Hung Van Ong v. Fire Ins. Exchange (Apr. 3, 2015). The Ong court had to choose between two views of what “vandalism” means in an insurance policy — one from a “legal” point of view that would destroy coverage, and one from an “ordinary” point of view that would create it. Honoring the keystone principle in these kinds of cases that a tie in a close case goes to the insured, the coverage-friendly interpretation won the day. Continue Reading

Oregon’s broad duty to defend extends to “additional insureds”

Posted in additional insured, CGL insurance, construction defect, Duty to defend, Oregon Court of Appeals

On August 19, 2015, the Oregon Court of Appeals issued its opinion in West Hills Development Co. v. Chartis Claims, Inc., reaffirming the broad nature of an insurer’s duty to defend, even when that duty is owed to an “additional insured.”

Contracting parties rely on indemnity agreements and additional insured status to protect against liability arising from the other party’s negligence. Insurers, however, frequently ignore or summarily deny tenders from parties who qualify as additional insureds under the policies they issued. That is exactly what happened in West Hills. Continue Reading

California court confirms that any “potentially covered” loss triggers the duty to defend

Posted in CGL insurance, Duty to defend, equitable contribution

When threatened with a lawsuit, an insured’s first call is often to his or her insurer, asking the insurer to hire lawyers to defend the lawsuit. All too often the insurer’s initial response is that the claim is not covered for one reason or another. At this stage, it is critically important that the policyholder not simply give up, but consult with coverage counsel who can analyze the policy, or multiple policies, and negotiate with the insurer or insurers. Often, coverage counsel can persuade (or force) the insurers to pay for the insured’s defense, even if it is unclear or even doubtful whether the policy will ultimately cover the loss. This is because the insurer has a duty to defend its insured against even a potentially covered loss. Continue Reading

Insureds should be careful not to release an entire policy

Posted in claims, property damage, property policy, settlement

Rather than litigating the amount of coverage, an insured may — and often does — settle the claim. The insured may do this for a variety of reasons, including wanting to avoid the time and expense of protracted litigation, avoiding the burden and disruption of discovery during that litigation, or the real and unfortunate need to have cash in his or her pocket to make needed repairs. But as a recent case from U.S. District Court for the District of New Jersey illustrates, an insured should carefully review the insurer’s proposed settlement agreement to ensure that he or she is releasing the insurer only from liability for the claim submitted. Continue Reading