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BT Policyholder Protection Blog
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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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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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28 Oct 2015 You Snooze; You Lose: When The Carrier’s “Investigation” (Read: Delay) Breaches The Duty To Defend

Earlier this month, a California federal court issued a stern warning to liability carriers: failing to provide an immediate defense forfeits your right to control the policyholder’s defense, including any right to select counsel, and, once forfeited, the right to control irrevocably vests with the policyholder. The carrier cannot regain control, even if it reimburses pre-acceptance defense fees. Travelers Indem. Co. v. Centex Homes, Case No. 11-CV-03638-SC (N.D. Cal. Oct. 7, 2015).   Carriers and policyholders have long been engulfed in the battle as to when a carrier’s delay (usually couched in terms of an “investigation”) leads to forfeiture of the right to control; and, when it does, whether the carrier may re-gain control by paying pre-acceptance defense fees. Policyholders are all too familiar with…

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15 Jul 2015 Five Tips: Insurance Fundamentals for In-House Counsel

Many of our posts address specific issues for risk managers and in-house attorneys with insurance coverage experience. Recognizing that some in-house lawyers are relatively new to the insurance world, we thought some may appreciate a summary of some of the fundamental issues in insurance coverage. Today, we offer five sets of distinctions between related concepts at the heart of many insurance matters:   First-Party vs. Third-Party Coverage   First-party coverage pays you for loss or damage to your own property. For example, if your plant suffers a fire, you may want to make a claim under the property policy for damage to the building, equipment and machinery. The same policy may include business interruption coverage that can replace some of the profits lost while the…

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18 Dec 2014 COVERAGE FOR “DISPARAGEMENT”: A POWERFUL TOOL FOR TRIGGERING THE DUTY TO DEFEND IN BUSINESS DISPUTES

By the time a business dispute has evolved into litigation, the relationship between the parties has often become acrimonious. In addition to a claim for breach of contract, interference with economic relations or unfair competition, the plaintiff may also allege that the defendant made false or disparaging statements to third parties—customers, competitors, financiers—that harmed the reputation or business of the plaintiff. The existence of even a single allegation of such disparagement within a complaint is often sufficient to trigger a duty to defend by the insurer of the defendant business. If your business is on the receiving end of a lawsuit, it is critical to examine the lawsuit for such allegations of disparagement and to consider tendering the lawsuit to your general liability insurer to…

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06 Aug 2014 Insurance Company Can’t Take Discovery Potentially Harmful to Its Policyholder’s Defense

In its effort to avoid coverage, an insurance company may want to dig into facts that might undermine its policyholder’s defense of an underlying lawsuit. That strategy recently met a strong rebuke from the Supreme Court of Washington, and policyholders can cite this decision whenever their insurers seek discovery that could be prejudicial in the underlying case.   In Expedia, Inc. v. Steadfast Ins. Co., Expedia sought coverage for dozens of lawsuits filed by local taxing authorities alleging that Expedia failed to collect the right amount of local occupancy taxes from hotel customers. Zurich refused to defend, on various grounds including that Expedia’s actions were potentially willfully dishonest. Expedia sued for coverage and took discovery from Zurich regarding the meaning of key policy terms, and…

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11 Jun 2014 Second Circuit Affirms The Broad Nature Of The Duty To Defend Under CGL Insurance Policies

  In a recent pro-policyholder insurance coverage decision, Euchner-USA, Inc. v. Hartford Casualty Insurance Company, 2014 WL 2576348 (2d Cir. June 10, 2014), the Second Circuit applied New York law and reminded insurance companies that the duty to defend is “exceedingly broad.” An insurance company has the duty to defend a claim even if there is only a possibility of coverage in light of how the underlying complaint against the insured has been pleaded.   Euchner sought coverage from its CGL insurer, Hartford Insurance, for an underlying action initiated by a former employee. In the underlying action, the former employee alleged that she was sexually harassed and then coerced into accepting an independent sales position disqualifying her from receiving “employee” benefits. She later added an…

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