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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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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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18 Feb 2015 RECENT CASE LAW ILLUSTRATES IMPORTANCE OF WORDING FOR “FINAL ADJUDICATION” REQUIREMENT IN D&O EXCLUSIONS

Directors and officers and management and professional liability policies generally contain so-called “conduct exclusions,” which exclude coverage for deliberate fraud, willful violation of a statute, the gaining of a profit to which the insured was not entitled and similar conduct. Most policies today, however, require a “final adjudication” for these exclusions to apply. Disputes frequently arise between insureds and insurance companies about what constitutes a final adjudication and what that adjudication must contain to exclude coverage.   Several courts have held that a settlement does not constitute a final adjudication within the meaning of these exclusions. For example, in U.S. Bank N.A. v. Indian Harbor Ins. Co. (D. Minn. Dec. 16, 2014), a federal court in Minnesota applying Delaware law held that coverage was not…

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04 Feb 2015 Insurance Company Favorite: The “Loss Adjustment Expense”

As you’re evaluating your company’s liability insurance program for 2015, consider closely the application of the policy’s deductible.  Specifically, take a look for any endorsement that defines “Allocated Loss Adjustment Expense,” or “ALAE,” to make sure the language matches up with what you think you are purchasing.   Liability policies are usually sold with some form of deductible, which remains the policyholder’s obligation in the event a claim is asserted against the policyholder. In assessing its risk tolerance, an insurance purchaser may buy policies with higher or lower deductibles. The deductible applies to the insurance company’s obligation to indemnify for claims asserted against the policyholder.  But most often, it does not apply to the costs of defense. In other words, the defense obligation purchased by…

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