The Policyholder Report

The Policyholder Report

Advising Insureds. Litigating Coverage Disputes Against Insurers.

Oregon Court of Appeals rejects bullying by auto insurer

Posted in Adjustment, auto insurance, Duty to cooperate, Oregon Court of Appeals

Insureds who have suffered a loss face the certain consequences of physical and financial healing, but they may also have to contend with a little salt poured into the wound by their own insurer. A frequent source of irritation for insureds can be zealous adjusters asking for information that seems irrelevant and needlessly burdensome. Some of these requests are necessary to ensure that the insurer is paying only for what it promised. But some seem designed to kill an insured’s claim by a thousand cuts. Kachan v. Country Preferred Ins. Co. (July 7, 2016) looks very much like the latter. Continue Reading

Update: Insurer asks for reconsideration of opinion affirming insured’s attorney-fee award

Posted in attorney fees, Ninth Circuit

Last week, I posted this article about the Ninth Circuit’s recent opinion affirming a $3.5 million attorney-fee award in favor of Schnitzer Steel against its insurer, Continental Casualty Co. Continental is unsatisfied with how it lost this battle, arguing in this petition for rehearing that the Ninth Circuit failed to adequately address Continental’s argument that Oregon’s fee-shifting statute in coverage cases doesn’t apply to losing insurers merely because the coverage lawsuit was filed in federal court.

It is Continental’s right to give this argument a shot. But what Oregon insureds should find troubling is Continental’s risibly misleading attempt to minimize what’s at stake here for insureds forced to spend many thousands (or even millions) of dollars forcing their insurers to pay what they promised. Continue Reading

Insureds cannot let sleeping dogs lie during policy periods

Posted in policy exclusions, property policy, vacancy, Washington Supreme Court

A recent opinion by the Washington Supreme Court serves as an important reminder to insureds that changes during a policy’s coverage ought to be carefully minded to avoid gaps in insurance coverage. As I’ve written about before here, one of these changes that insureds often miss is when an insured building becomes vacant — even for a short while. Continue Reading

Ninth Circuit rejects insurer’s attempt to avoid paying its insured’s attorneys’ fees

Posted in attorney fees, Ninth Circuit

As my colleague, Kevin Mapes, wrote in an article last year, an insurer had raised the hackles of policyholder-side lawyers in Oregon in arguing that insureds successfully suing their insurers for coverage could not recover their attorneys’ fees if the insurer had lost its fight in federal court in Oregon, rather than one of Oregon’s state courts. This argument was especially troubling in light of the tactical choice of many insurers to “jump” an insured by rushing into federal court for a declaration about coverage rather than waiting for the insured to sue the insurer for coverage in state court.

This malicious trap, however, will not be available for insurers under the Ninth Circuit’s recent holding in Schnitzer Steel Indus., Inc. v. Continental Casualty Co. Continue Reading

Courts continue to struggle with specialty cyber-insurance products

Posted in CGL insurance, cyber security, policy exclusions

Following a significant victory for policyholders earlier this year for cyber security losses under CGL (Commercial General Liability) policies, in PF Chang’s China Bistro, Inv. v. Federal Ins. Co. a federal judge in Arizona recently found no coverage for PF Chang’s credit card fraud assessments under a specialty cyber insurance policy. After a 2014 breach, hackers posted PF Chang’s customers’ credit card numbers online. It then incurred almost $1.7 million in claims from its customers and associated mitigation and other expenses. Federal Insurance Company reimbursed PF Chang’s for those expenses. But what it failed to do—and which was the subject of coverage litigation—was pay for the additional $1.9 million in fraud recovery charges from various credit card companies. Continue Reading

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