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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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”

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

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 Insureds should be careful not to release an entire policy

In Kaady v. Mid-Continent Casualty Co. (June 25, 2015), the Ninth Circuit recently spurned an insurer’s attempt to conflate two separate losses in an attempt to deny coverage on the grounds that the insured’s pre-policy knowledge of the first loss made the second one a “known loss” that fell outside of coverage. Continue Reading Ninth Circuit clarifies that one “known loss” doesn’t mean you know them all

Today, the Washington Supreme Court provided much needed relief for policyholders faced with buildings that are structurally impaired, but have not yet actually fallen down. In Queen Anne Park Homeowners Ass’n v. State Farm Fire & Cas. Co., the Court resolved a long dispute in Washington (and in other states) concerning the appropriate definition of “collapse” in a property-insurance policy, holding that “collapse” means “substantial impairment of structural integrity of a building or part of a building.”

For a long time, insurers have argued that “collapse” (when undefined) means that a building or part of a building must actually have fallen down. The Washington Supreme Court flatly rejected that construction. Continue Reading Washington Supreme Court adopts pro-policyholder interpretation of “collapse” in a property policy

It is common practice in Florida for companies offering emergency-restoration services to
take an assignment of the insured’s property-damage claim against the insured’s property policy in lieu of the insured paying the restoration company directly and then seeking reimbursement from an insurer.

For instance, imagine that a pipe bursts in your home, flooding a bedroom. The restoration company will come out, remove the water and damaged property, take an assignment of your claim against your insurer (and, depending on your deductible, you paying the deductible), and then seek payment directly from the insurer. Usually this goes off without a hitch. But recently Security First Insurance Company (“Security”) wanted to test this method, and it failed. Continue Reading Florida Court of Appeals: Yes, you can assign your claim after a loss

Last week, a federal district court in Florida reaffirmed the black-letter law in Florida that claims against a general contractor for damage to the completed project resulting from the defective work of a subcontractor constitutes “property damage” under a Commercial General Liability, or “CGL,” policy. The order also clarifies how “other insurance” clauses are construed when insurers offer competing arguments about who has to pay first — a common dispute in multiparty, multipolicy cases.

In Pavarini Construction Co. v. ACE American Ins. Co. (Feb. 25, 2015), Pavarini, the insured, was the general contractor for a 63-floor, mixed-use condominium tower. As is customary in projects of this size, Pavarini hired several subcontractors to perform the work. The steel subcontractor’s deficient work at issue in this case involved missing and misplaced reinforcing steel in the concrete masonry unit. This deficient work caused excess movement in the building, resulting in damage to exterior stucco, water intrusion in the penthouse enclosure, and cracking in the concrete columns, beams, and shear walls. Continue Reading Federal Court in Florida Refuses to Let Excess Insurer Escape $23M Claim Where Deficient Work Caused Damage to Project Itself