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BT Policyholder Protection Blog
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27 Mar 2017 Bad Faith Isn’t the Only Remedy Court Sanctions Insurance Company for Factually Incorrect Declaratory Judgment Complaint

  State laws vary considerably in the standards and remedies for bad faith by an insurance company and also on whether a policyholder can recover attorneys’ fees for an insurance coverage dispute in the absence of bad faith. A recent Illinois case is a reminder that court sanctions can be another remedy for an insurer’s misconduct in coverage litigation.   In American Access Cas. Co. v. Alcauter, 2017 IL App (1st) 160775, the insurance company filed a declaratory judgment complaint against its policyholder, Alcauter, seeking to avoid coverage for a $10,000 judgment in an auto accident case because Alcauter breached his duty of cooperation by failing to attend the hearing in the accident case against him. In Illinois, the underlying plaintiff is often considered a…

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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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06 Mar 2017 Overcoming That Sinking Feeling Beating Earth Movement Exclusions in CGL Policies

  Co-authored by John Corbett and Andy Detherage.   The recent rainstorms in California rightly have been hailed as the end of a lengthy drought.  The inches of rain which fell in the span of a week have filled reservoirs and raised the water table in the parched ground.  Such a large volume of water, however, increases the danger of landslides in California’s notoriously unconsolidated hillsides and bluffs, and with it, the possibility of disputes over whether particular ground movement claims are covered by their liability policies.   Let’s look at a hypothetical example.  XYZ Construction is laying pipes under an existing street at the top of a bluff.  In the course of digging trenches to hold the pipes, one of XYZ’s diggers accidentally breaks…

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23 Feb 2017 Insurance Coverage Basics for Cloud Computing: 3 Cs to Remember

  Authored by Scott Godes and Kara Cleary   The privacy and security of data continues to be a hot button issue for companies, with privacy and security events frequently in the news. What about for businesses that have moved to the cloud? Whether you are a cloud provider or a cloud user, data breaches and denial of service attacks are real risks. Have you considered whether and how your insurance program will respond to those risks? Here are three terms to remember that may help simplify some of the coverage issues:   Computer System: Some insurance policies, which provide coverage for cybersecurity and privacy risks, have coverage that could turn on whether there was an impact to your “computer system.” A best practice is…

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08 Feb 2017 Coverage for Commotion: Insurance for Businesses Affected By Rioting and Vandalism

  Businesses can endure substantial property damage and, perhaps more importantly, lost revenue from civil disruptions caused by rioting and vandalism. Fortunately, business owners have a multitude of coverage options for these disruptions and should firmly resist an insurer’s attempt to deny or limit coverage.   Assume you own the fictional pub “Paddy’s Pub” on Sunny Lane in South Philadelphia. One evening, South Philadelphia residents peacefully march down Sunny Lane in protest of the latest government budgeting decision. At some point, rioting and vandalism ensue and a few residents begin vandalizing businesses on Sunny Lane—including Paddy’s Pub. To contain the situation, the police department shuts down Sunny Lane for the remainder of the day. What coverage may be triggered?   Commercial Property Coverage: Upon first…

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07 Feb 2017 California Supreme Court Denies Insurance Industry’s Attempt to Deregulate Insurance in California

  On January 23, in Association of California Insurance Companies v. Dave Jones, the California Supreme Court rejected carriers’ attempt to deregulate the insurance industry in the state by stripping from the insurance commissioner much of the broad power to supervise insurer conduct. This case is a big win for policyholders.   The issue before the court was whether the California Department of Insurance can regulate the representations insurers make to their customers about the cost to replace a policyholder’s home. In 2010, the insurance commissioner promulgated a regulation — C.C.R. sec. 2695.183 — governing what an insurance underwriter must do in setting the replacement cost of a home when selling homeowners coverage. This was expressed as a series of tasks the carrier must perform…

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30 Jan 2017 Recent Trial Win Raises Interesting Issues on Relationship Between Insurance Agent and Policyholder

Disclaimer: Barnes & Thornburg represented the policyholder in this case and the policyholder has provided their consent for this case summary. NOTE THAT ANY CASE DECISIONS, COURT OPINIONS, RULINGS, AND/OR RESULTS DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH CASE.   CASE RESULTS DO NOT GUARANTEE OR PREDICT A SIMILAR RESULT IN ANY FUTURE CASE UNDERTAKEN BY THE LAWYER OR THE LAW FIRM.   Can an insurance agent’s statement and representations bind an insurance company? A recent Minnesota court said, “yes.”   In January 2015, Barnes & Thornburg client Prospect Foundry, LLC, was sued in Hennepin County District Court for breach of contract by its workers’ compensation insurer, Western National Mutual Insurance Company. Western National sought $245,000 in unpaid premiums. Prospect disputed the amount…

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27 Jan 2017 Franchisors: Don’t Forget About Insurance for Joint Employer Liability Claims

  By Matthew B. Gruenberg and Matthew B. O’Hanlon   Separate and apart from creating a brand and an offering that consumers enjoy, franchisors face everyday issues such as complex schemes that restrict the terms and conditions under which they may sell franchises and conduct business.  In addition, under expanding concepts of joint employer liability, issues exist as to whether franchisors may potentially be sued for, among other things, employment-related claims brought by employees of franchisees.   To protect against such claims, a best practice for franchisors is to take reasonable precautions by not exerting authority or control over the franchisee’s employment practices. These precautions include taking care not to retain or assume a general right of control over factors such as hiring, direction, supervision,…

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23 Jan 2017 Where There is No Meeting of the Minds About the Scope of Coverage, Must the Insurer Pay the Claim?

  Authored by David E. Wood and John L. Corbett   When a consumer buys an insurance policy and an important limitation on coverage is not expressed clearly and conspicuously, many courts will not enforce that limitation. Some courts hold that provisions in a preprinted policy offered to the consumer on a take-it-or-leave-it basis – that is, a contract of adhesion – are unenforceable to the extent they contradict laws governing insurance or public policies established by the courts. Other courts conclude that where a policy excludes a certain risk by way of small print or technical language, the policy is considered ambiguous and construed against the drafter (the insurance company). Those rules of construction rest on the assumption that the parties to the insurance…

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