One of the most misunderstood provisions in a Commercial General Liability policy is the first sentence, which provides that the insurance company promises to provide coverage for damages “because of” bodily injury or property damage. Many people, including seasoned insurance professionals, believe CGL policies merely provide coverage “for” bodily injury or property damage. We see this every day, including in motions filed by insurance companies. Continue Reading Court finds plaintiff’s attorney fees covered by liability policy

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Photo by JOH_4595 is licensed under CC BY 2.0.

In a recent case, Oregon Shakespeare Festival Ass’n v. Great American Ins. Co., the federal District Court for the District of Oregon adopted a liberal interpretation of “property damage.” The Oregon Shakespeare Festival Association (OSF) suffered a loss during its season: nearby wildfires caused smoke to infiltrate a partially outdoor theater where performances were being held, necessitating cancellations.

OSF’s insurance policy covered “direct physical loss or damage” to its property and the “actual loss of Business Income” caused by such loss or damage. To get coverage for the business losses it sustained by cancelling performances, OSF had to show that the smoke infiltration, the undisputed reason for the cancellations, was “direct physical loss or damage” to property. Continue Reading Oregon federal court endorses broad definition of “property damage”

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

The Oregon Court of Appeals yesterday issued an opinion confirming that Oregon law remains faithful to the bedrock principle in coverage disputes that ambiguities in a policy must be resolved in favor of the insured.

In Patton v. Mutual of Enumclaw Ins. Co. (Oct. 8, 2014), an insured seeking coverage under his homeowner’s policy found himself between a rock and hard place, at least under the insurer’s erroneous attempt to link two unconnected policy provisions to deny coverage. Lowell Patton’s house burned down on November 8, 2001 and he sought the full value to rebuild under the “replacement cost” coverage written by Enumclaw.

Continue Reading Oregon Court of Appeals Rejects Insurer’s Heads-I-Win, Tails-I-Win Policy Interpretation