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BT Policyholder Protection Blog
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30 Nov 2016 Sixth Circuit Opinion Serves as Reminder of Potential Pitfalls in Excess Coverage

  In previous posts, we’ve discussed the propensity of excess liability insurers to try to avoid coverage by challenging policyholder actions that occurred before the underlying defense costs or liability payments even reached the excess layer. In an opinion released earlier this month, the U.S. Court of Appeals for the Sixth Circuit addressed yet another such challenge and determined that actions a policyholder took years before its underlying policy limits were exhausted precluded coverage under its excess policy. For policyholders, the case serves as a useful reminder of how excess carriers might raise terms and conditions purportedly within their policies late in the claims process.   Stryker Corporation v. National Union Fire Insurance Company of Pittsburgh, Pa, Nos. 15-1657/1664 (6th Cir. Nov. 18, 2016) involved…

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12 Jul 2016 In Determining Duty to Defend, Wisconsin Supreme Court Clarifies Four-Corners Rule

  In coverage actions, policyholders (and their attorneys) frequently rely on the well-accepted principle that an insurer’s duty to defend is broader than its duty to indemnify. Indeed, given the ever-escalating costs of litigation, obtaining coverage for a policyholder’s defense can be just as, if not more, important than obtaining coverage for the resulting settlement or judgment.   Recently, however, the Wisconsin Supreme Court issued two opinions that serve as reminders that an insurer’s duty to defend, while broad, is not unlimited. The cases provide insight into how courts evaluate an insurer’s duty to defend and reveal some factors policyholders should consider when confronted with an insurer that denies such coverage.   Marks v. Houston Casualty Company   In Marks v. Houston Casualty Company, No….

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26 Aug 2015 Barnes & Thornburg’s Insurance Recovery Team Helps Secure Federal Appellate Victory for Construction Company in Sunken Barge Case Eighth Circuit Clarifies Standard for Breach of “Utmost Good Faith” Doctrine in Marine Insurance Policies and Rejects Insurer’s Proposed Rule as Creating a “Moral Hazard”

On Aug. 20, 2015, the U.S. Court of Appeals for the Eighth Circuit issued an important favorable decision for marine insurance policyholders. The court reversed a summary judgment order that had been granted in favor of insurer St. Paul Fire & Marine Insurance Company (SPF&M) on a claim for wreck removal coverage for a construction barge that sank in Narragansett Bay, Rhode Island, in 2011. In doing so, the court confirmed that, to void a marine insurance policy under the federal maritime doctrine of uberrimae fidei (“utmost good faith”), an insurer must do more than show that the policyholder omitted information from the policy application that would have been objectively material to a hypothetical prudent and intelligent underwriter. In one of the clearest articulations of…

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24 Jul 2015 Quality Egg Appeal Serves as a Reminder to Look for Cracks in D&O Coverage for Responsible Corporate Officers

Earlier this week, Peter and Austin DeCoster submitted their opening briefs in their appeal of the three-month prison sentence they each received for pleading guilty to misdemeanor violations of the federal Food Drug and Cosmetic Act (FDCA). You may recall that the DeCosters owned Quality Egg, LLC, the Iowa-based egg production company that had a salmonella outbreak in 2010 that resulted in a recall of millions of eggs and, according to the court’s order on the DeCosters’ sentencing motions, sickened thousands of consumers. In connection with that outbreak, the DeCosters pled guilty to a charge of introducing adulterated food into interstate commerce in violation of the FDCA.   Although there was a dispute as to whether and how much the DeCosters actually knew about the…

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18 May 2015 Settlement Means Policyholders Will Have to Wait for Clarification of Proper Exhaustion Issue

It looks like policyholders will have to wait for any further answers to the question of whether and when a policyholder must show “proper” exhaustion of underlying policy limits in order to access its excess coverage.   That question was teed up for consideration by the Eighth Circuit Court of Appeals in H.B. Fuller Company v. United States Fire Insurance Company. But in a letter filed with the 8th Circuit last week, the parties informed the court that they had agreed to settle the case, pending execution of the settlement by all of the parties. According to that letter, once the settlement agreement is signed, the parties will dismiss their respective appeals.   The settlement means the 8th Circuit won’t address whether, and under what…

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16 Apr 2015 Minnesota Courts Address Statutory Procedures for Claims Against Insurance Companies – Part 2 of 2

Last week, the Minnesota Supreme Court and the Minnesota Court of Appeals issued opinions concerning separate statutory requirements for maintaining actions against insurance companies. In the first, the Court of Appeals addressed whether a defendant’s liability insurer could be added as a garnishee to the underlying lawsuit under Minnesota’s garnishment statute. Here, we discuss the second, in which the Supreme Court clarified when service of process on a nonresident insurer served under Minnesota’s alternative service of process statute is deemed to be “made” for purposes of applying a limitations period. Click here to read Part 1 of this post.   Meeker v. IDS Property Casualty Ins. Co., No. A13-1302, 2015 WL 1545281 (Minn. April 8, 2015) For limitations purposes, an action against a nonresident insurer…

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26 Feb 2015 Five Tips for Building a Better Insurance Coverage Tower

Insurance coverage cases from 2014 have illustrated a disturbing trend: excess insurers are continuing to take aggressive coverage positions and are increasingly unwilling to let the scope of their coverage be dictated by the terms of the primary policy or the coverage decisions of the primary insurer. Thus, if there was ever a time when policyholders could afford to simply assume their primary and excess policies would operate together to provide an uninterrupted tower of coverage, that time has passed. Today more than ever, policyholders would be well advised to work with their brokers or experienced coverage counsel to carefully review the coverage forms of their excess policies to try to identify and eliminate potential gaps between layers and shortcomings in the excess coverage.  …

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01 Aug 2014 FIFTH CIRCUIT DECISION PUTS EXCESS INSURER BACK IN LINE. BUT WILL IT CURB THE “REVERSE FOLLOW FORM” PHENOMENON?

  In recent years, excess insurers have been challenging the constraints of their traditional “follow form” status by trying to influence how the underlying insurance must be paid out. After a string of judicial decisions favoring excess insurers, a decision issued by the Fifth Circuit Court of Appeals in June marks a victory for policyholders hoping to stem the “reverse-follow-form” phenomenon. But as traditional concepts of follow form excess coverage continue to erode, policyholders should remain vigilant when evaluating their excess coverage.   The Evolution of “Follow Form” Excess Coverage   Policyholders purchase “follow form” excess insurance to gain piece of mind. Indeed, the very words “follow form” convey an image of a coverage tower in which each successive layer sits atop and follows the…

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