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22 Mar 2017 Beyond the Basics: 10 Common Hurdles to Securing Coverage for Long-Tail Liabilities, Part 2

  This is the second part of a two-part article that explores 10 common issues that arise in pursuing coverage for long-tail liabilities. The first part, covering issues 1 through 5, can be found here. Today, we tackle issues 6 through 10.   6. The “Known Loss” Doctrine. The basic premise of insurance is that it protects against the risk that a policyholder may suffer an unknown loss in the future; it does not protect against losses the policyholder already knows about before purchasing the policy. The classic illustration is that you cannot purchase fire insurance for a building the day after it burns to the ground. (Of course, there are exceptions to every rule, with the most famous being the fact that owners of…

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21 Mar 2017 Beyond the Basics: 10 Common Hurdles to Securing Coverage for Long-Tail Liabilities, Part 1

  For companies pursuing insurance coverage for latent, slow-developing injuries such as toxic exposures or environmental contamination, the fundamental, big-picture questions are the same from case to case: Does a long-tail injury trigger historical general liability coverage? Do any exclusions preclude coverage? What conditions must the policyholder fulfill to secure coverage? These questions are likely to be top-of-mind for a company faced with toxic tort or environmental liabilities. However, long-tail insurance claims can raise a host of other issues that may trip up an unwary policyholder.   This two-part blog post explores 10 common hurdles to clear in securing coverage for long-tail liabilities. Today, we cover issues 1 through 5. Check in again tomorrow, when we will cover issues 6 through 10.   1. Choice…

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28 Nov 2016 Exercise Your Bargaining Power at Renewal Time

  Co-authored by Scott Godes and John Fischer.   As the end of the year approaches, many policyholders are facing Jan. 1 renewals of their insurance programs or are looking at replacing part or all of their programs with new policies or carriers. Some are considering augmenting their insurance programs with specialty coverages pertinent to their particular needs. This is a friendly reminder to those whose renewals are coming up (and an advance reminder to those with renewal dates throughout the year) that although insurance policies frequently are made up of boilerplate language on pre-printed forms, some carriers will amend their coverages with endorsements that can enhance the coverages offered. Also, not all carriers’ standard forms are the same.   The opportunity to obtain coverage enhancements is…

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06 Jun 2016 Can a Government Agency Information Demand Trigger a Liability Insurer’s Duty to Defend?

Can a demand from a state agency trigger insurance coverage? A recent decision by the U.S. Court of Appeals for the Ninth Circuit says “yes.” Many, if not most, jurisdictions now recognize that a demand from the Environmental Protection Agency (EPA) or a state agency to investigate and remediate contamination is the functional equivalent of a suit, which triggers a liability insurer’s duty to defend the recipient of the demand. The logic is that a communication from a governmental agency that includes a coercive remediation demand under an environmental statute, with the threat of fines or penalties for non-compliance, sufficiently bears the hallmarks of a traditional court lawsuit that there is no functional distinction between the two. Moreover, public policy dictates that a policyholder need…

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06 May 2016 When a “Pollutant by Any Other Name” Is Not a Pollutant

In most jurisdictions, determining whether a pollution exclusion in a commercial general liability (CGL) policy precludes coverage for a particular claim can be a thorny issue. Under some historical policies, coverage may depend on factual arguments over whether the pollution was “sudden and accidental” or gradual. Under others containing so-called “absolute” pollution exclusions, coverage may depend on whether or not the claim arises out of “traditional” environmental pollution (for example, cleanup of groundwater in response to a governmental demand vs. toxic tort claims based on workplace exposure).   Indiana has traditionally taken a different approach to the pollution exclusion than most other jurisdictions. Rather than become entangled in factual thickets over whether pollution is sudden or gradual, or arises in a “traditional” environmental context, Indiana…

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15 Dec 2015 Make Sure You Know Which State’s Law Applies to Your Coverage Claim

It is a situation we have seen time and again, including in several recent matters: a policyholder headquartered in State A is sued by a claimant alleging injury at a location the policyholder owns in State B. In the same circumstances and under the same policy language, the law of State A would require the carrier to cover the suit but the law of State B would not. This drastic difference in outcome is common due to the sometimes vast differences in coverage law from state to state. The threshold question of which state’s law applies often makes all the difference between coverage and no coverage.   So, if the policyholder wants the law of State A to apply, should it sue its carrier in…

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15 Sep 2015 Property Damage Coverage Covers More Than Property Damage

Carriers employ many time-tested strategies to eliminate, or at least limit, their liability for covered claims. Policyholders must know their rights, and understand that the law is often on their side, if they want to enforce the policy as written and obtain the benefits for which they paid premiums and to which they are entitled.   One coverage-avoidance tactic we have seen carriers employ time and again is to try to limit their obligations for claims that allege both property damage, and other types of consequential damage such as lost profits or loss of reputation flowing from the alleged property damage. Carriers will try to avoid paying for the consequential losses – which can be a significant part of the value of the claim –…

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15 Jun 2015 Indiana Supreme Court Sets Up Future Coverage Battles Over Allocation, Defense Costs

  The Indiana Supreme Court recently declined to accept jurisdiction over a major insurance coverage dispute, leaving intact an Indiana Court of Appeals opinion that may now become a landmark decision on a number of insurance coverage issues in Indiana. The Supreme Court’s declination of jurisdiction over Thomson, Inc. v. Ins. Co. of N. America, 11 N.E.3d 982 (Ind. Ct. App. 2014), on May 15, could have far-reaching effects that are helpful to policyholders in some respects, and potentially contrary to policyholders’ interests in others.   First, the good:   The Supreme Court left intact the Court of Appeals’ adoption of a policyholder-friendly test for determining whether defense costs are reasonable and necessary, and thus owed by the carrier as part of its duty to…

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13 Apr 2015 Indiana Court of Appeals Opinion Supports Recovery of Expenses Incurred by Policyholder in Assisting Carrier in Defending an Insured Lawsuit

Defending a lawsuit can be a costly and time-consuming affair for a company, even when its liability carrier is providing and paying for a complete defense. The company’s obligation to cooperate with its carrier in the defense of the suit may include devoting significant employee time and company resources to gathering documents, assisting in discovery responses and preparing and appearing for depositions and trial.   A recent Indiana Court of Appeals opinion suggests that under certain policy language and in certain circumstances, companies may be entitled to reimbursement from their carriers for the cost of cooperating with these defense-related requests.   In T.R. Bulger, Inc., et al. v. Indiana Ins. Co., Case No. 46A03-1405-PL-188 (Ind. Ct. App. Mar. 9, 2015), the policyholder, an HVAC company,…

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10 Apr 2015 Indiana Supreme Court Hears Oral Argument on Significant Allocation Issue

Does an insurance carrier have to pay 100 percent of a settlement or judgment resolving a latent injury claim, or can it get away with paying just a fraction of the total cost? That is the issue currently under consideration by the Indiana Supreme Court.   On April 2, 2015, in Thomson, Inc. v. Ins. Co. of N. Am., Case No. 49A05-1109-PL-470, the Indiana Supreme Court heard oral argument on an oft-disputed issue between carriers and policyholders over how indemnity costs are to be allocated in long-tail lawsuits alleging latent injuries incurred over numerous years or decades (for example, environmental or toxic tort suits). The outcome of this dispute could have a profound impact on the scope of the coverage available to policyholders for these…

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