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BT Policyholder Protection Blog
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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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11 Sep 2015 LANDMARK CALIFORNIA SUPREME COURT DECISION EXPANDS CIRCUMSTANCES UNDER WHICH POLICYHOLDERS MAY ASSIGN POLICY RIGHTS UNDER THIRD PARTY LIABILITY POLICIES WITHOUT INSURER CONSENT

Third party liability insurance policies often contain “consent to assignment” clauses which purport to bar insureds from assigning policies without insurer consent. In the case of Henkel Corp. v. Hartford Accident & Indemnity Co., 29 Cal.4th 934 (2003), the California Supreme Court determined, under the specific facts of that case, that such clauses barred the insured from assigning policy rights without the insurer’s consent until there exists a “chose in action” against the insured, which occurs when the claims against the insured have “been reduced to a sum of money due or to become due under the policy.”   In Fluor Corporation v. Superior Court of Orange County, the California Supreme Court granted review to consider whether Section 520 of the California Insurance Code—an 1872…

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10 Sep 2015 Barnes & Thornburg Represents Simon Property Group in $204 Million Trial Victory

A Barnes & Thornburg team led by partners Andrew Detherage and Charles Edwards representing Simon Property Group, a global leader in retail real estate ownership, management and development, won a $204 million jury verdict after a six-week trial in Nashville, Tenn. The trial related to flood losses that occurred in May 2010 at the Opry Mills mall in Nashville. The verdict included both covered losses and consequential damages in excess of the coverage limits. The jury also awarded additional consequential damages in an amount to be determined by the trial judge.   The trial involved 17 insurers who refused to pay for losses above the first $50 million layer of coverage. The verdict follows a favorable summary judgment ruling in March 2015 in which the…

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10 Sep 2015 NEW JUSTICE DEPARTMENT MEMO HIGHLIGHTS NEED FOR REVIEW OF SIDE “A” D&O COVERAGE

Heightened Liability Concerns for Individuals   On Sept. 9, 2015, the U.S. Department of Justice (DOJ) issued a memo to all U.S. attorneys and other enforcement bureaus (such as the FBI) providing guidance on the pursuit of individuals responsible for corporate wrongdoing. In essence, the memo says that the government is no longer going after only corporations; it will now also be focusing on those individuals within corporations responsible for corporate wrongdoing. The memo provides specific guidance for taking on these individuals. For example, it states that in order to qualify for cooperation credit, corporations must now provide all relevant facts relating to the individuals responsible for the misconduct and it states that absent extraordinary circumstances or approved departmental policy, the DOJ will not release…

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08 Sep 2015 Now available for viewing – Insurance Law Webinar: You’re Covered, But…

Two weeks ago, attorneys from our Policyholder Insurance Recovery and Counseling practice group hosted a webinar which featured discussion on tips to help policyholders get all the coverage they bargained for. The webinar was recorded and is now available for viewing.   The speakers and topics in the webinar include:   Full Coverage – An Insurance Agent’s Duty to Advise? Robert G. Devetski, Partner, Barnes & Thornburg   Absent a “special relationship,” an agent generally owes no duty to advise a policyholder about the adequacy of coverage. Here we consider factors which can create that “special relationship” and a resulting duty to advise.     Your Liability Insurer Agreed to Defend? Don’t Relax Yet John Fischer, Partner, Barnes & Thornburg   Getting your liability carrier…

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28 Aug 2015 Louisiana Federal Court Finds in Favor of Coverage for Work Required by Clean Air Act Consent Decree

A federal court in Louisiana recently interpreted the coverage under a Pollution Legal Liability (PLL) policy and found that certain costs required by a Consent Decree under the Clean Air Act constituted “remediation costs” covered by the PLL policy. Louisiana Generating LLC v. The Illinois Union Insurance Company, et al. Case 3:10-cv-0056. On Aug. 5, 2015, the United States District Court for the Middle District of Louisiana granted Louisiana Generating LLC’s motion for summary judgment against its insurer, Illinois Union Insurance Company, finding in favor of coverage for the installation of pollution controls and performance of mitigation projects required under the Consent Decree.   The Consent Decree resolved a prior suit in which EPA and the Louisiana Department of Environmental Quality sued Louisiana Generating LLC…

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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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26 Aug 2015 PENNSYLVANIA HIGH COURT EXPANDS CIRCUMSTANCES UNDER WHICH INSUREDS MAY SETTLE UNDERLYING CLAIMS WITHOUT INSURER CONSENT

Liability policies often contain a “cooperation clause” pursuant to which an insurer who has agreed to defend an insured from an underlying lawsuit purports to have the right to approve any settlement to be entered into by the insured. A recent decision by the Pennsylvania Supreme Court, however, has expanded the circumstances under which an insured may settle underlying claims without insurer consent in situations where the insurer has reserved its rights and refuses to consent to a non-collusive, objectively reasonable settlement under policy limits.   In The Babcock & Wilcox Company et al. v. American Nuclear Insurers et al., the Pennsylvania Supreme Court granted review to determine whether “an insured forfeits insurance coverage by settling a tort claim without the consent of its insurer,…

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20 Aug 2015 What Insurance Should Cover Target’s Visa Settlement?

Two years later, and the Target data breach continues to make headlines.   Does anyone need to be reminded that Target suffered a data breach in 2013? Seeing that the breach continues to be litigated and settlements continue to be announced with payment card brands, it is difficult to forget the incident.   Most recently, Target announced that it had reached a settlement with Visa.[1] According to reports, Target could “pay as much as $67 million to banks that issue Visa cards.”[2] Target’s earlier $19 million settlement with MasterCard[3] ended up being scuttled; Target and MasterCard reportedly are working on another resolution.[4]   What is Target settling?   Target’s settlement with Visa likely is to resolve the alleged damages resulting from Target’s payment card breach….

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07 Aug 2015 MORE ON INSURERS’ FLOAT – AN ILLUSTRATION

My March 24, 2015, post discussed the “true value” of a property/casualty insurer’s float, which includes not only the return the insurer makes on the money borrowed from its policyholders to pay future claims (i.e., total premiums), but also the avoided cost of borrowing that money (i.e., the “use value”). A few years ago I illustrated this point to the Minnesota legislature by compiling the following data on several insurers during a 15-year period, showing that the true value of the insurers’ float during that period averaged 24.1 percent per year – substantially higher than their average reported return on investment of 13.8 percent per year, and far higher than the single-digit statutory rate of prejudgment interest in a number of states that promotes insurer…

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