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Insurance Law Archives

Failure to Read Insurance Policy Not Required in Deceptive Business Practice Action Against Agent

Generally, insureds are required to read their insurance policies in Texas. However, where the nature of the lawsuit brought against the agent or broker involves affirmative misrepresentations under Texas' Deceptive Business Practices statute, the insured's failure to read the insurance policy is not fatal to proceeding with that type of claim under Texas law.

Can Issuing a Supplemental ROR Letter Cure the Insurer's Failure to Seek Reimbursement in the Original ROR Letter?

In James River Insurance Co. v. Medolac Laboratories, 290 F.Supp.3d 956 (C.D. Cal. 2018) the court held that a liability insurance company's failure to seek reimbursement of defense costs in an initial reservation of rights letter did not preclude the insurance company from later reserving the right to do so from the date of a supplemental reservation of rights letter. In so holding, the court rejected the insured's contention that the insurance company had waived its right to reimbursement or was estopped from asserting the right to reimbursement of attorney's fees which were incurred after the date of the supplemental reservation of rights letter (where the insurer first reserved its right to seek reimbursement). Regarding waiver, the court held there was no evidence that the insurer's failure to assert the right in its first ROR was a voluntary relinquishment of a known right. Regarding the estoppel claim, the court found that the insured's admission that she had acted more proactively in monitoring her insurer-appointed attorney after receiving the supplemental ROR precluded a finding of detrimental reliance and therefore the necessary element of the estoppel claim was missing. 

Florida Requires UIM Coverage Limits to Mirror the Policy's Liability Coverage

In Amica Mutual Insurance Co. v. Willis, 235 So.3d 1041 (Fl. App. 2d Dist. 2018) the Florida Court of Appeals held that the scope of UIM coverage must mirror the policy's liability coverage. In so finding, the Court of Appeals struck down a golf cart exclusion in the automobile policy's UIM section because there was no reciprocal exclusion in the policy's liability coverage.

An Insurance Company's Refusal To Authorize Settlement While Defending Under Ror May Breach The Insurer's Duty To Defend And Settle Under Illinois Law According To Illinois Court Of Appeals

In this case, the insurance company authorized the retention of independent counsel chosen by the insured due to the insurer's reservation of rights. As the case was being defended, independent counsel advised the insurer that the demand made by the claimant for settlement was reasonable in light of the likelihood that an excess judgment would be entered. Notwithstanding this advice from independent counsel, the insurer threatened to withdraw coverage if the insured continued to negotiate a settlement with the claimant. The court in Rogers Cartage Co. v. Travelers Indemnity Co., _____ N.E.3d _____ 2018 Ill. App. (5th) 160098 (Ill. App. 5th Dist. April 5, 2018) held that under those case facts, the insurance company was estopped from asserting its coverage defenses.

CALIFORNIA COURT OF APPEALS WEIGHS IN ON STATUTE OF LIMITATION FOR FAILURE TO PROCURE INSURANCE By Steven Plitt

In Lederer v. Gursey Schneider, 22 Cal. App. 5th, 508, 231 Cal.Rptr.3d 508 (2nd Dist. 2018) the issue before the court was when the statute of limitations began to run against an accounting firm that handled the client's insurance needs. It was alleged that the accounting firm failed to procure the requested UIM coverage. The court held that the statute of limitations began to run when the insurance company paid the UIM limit rather than when the insured was injured and discovered the inadequate amount of coverage.

New York Appellate Court Determines Who Bears Responsibility for Orphan Share in Long Latency Continuous Trigger Cases

New York has adopted a pro-rata allocation methodology for continuous and progressive losses where coverage for all triggered policies is determined on a time-on-the-risk basis. Recently, the New York Court of Appeals in Keyspan Gas East Corp. v. Munich Reinsurance America, Inc., 143 A.D.3d 86 (Appellate Division, September 1, 2016), found that insurance companies were not required to indemnify the insured for those periods in the allocative schedule where liability insurance was unavailable in the marketplace. The question before the court was the following: When the reason for the period of no insurance is that the insured could not have obtained insurance even if it had wanted to, is the risk attendant to the unavailability of insurance in the marketplace allocable to the existing, triggered insurance policies or to the insured?" The court found that because the insurance policies did not provide coverage for injury or damage during periods of no insurance, the court would have to rewrite the insurance policies to require insurers to assume the risk for uninsured periods simply because the insured was not to blame for the lack of insurance. The court chose not to rewrite the terms of the policy for equitable reasons. Therefore, allocation of uninsured periods was assessed to the insured in continuous and progressive loss cases.

Allocating Defense Costs in Long Latency Cases in Louisiana

Louisiana has recognized a pro rata allocation method for determining indemnification in long latency exposures. However, the Louisiana courts have not resolved the issue of whether defense costs should also be allocated in those type of cases. The Louisiana Supreme Court recently resolved that issue in Arceneaux, et al. v. Amstar Corp., et al., 2016 WL 4699163 (La. September 7, 2016). In Arceneaux the court applied a pro rata method of allocation of defense costs. In doing so, the court found that a pro rata allocative method did not violate the reasonable expectations of the insurers or the insured because neither party could reasonably expect the insurer was liable for losses that occurred outside the policy coverage periods. The court noted that a pro rata allocation scheme was an equitable system for resolving long latency disease cases. Under the court's ruling, insureds are required to pay for its defense costs during years in which it did not acquire any insurance coverage, i.e., the orphan period.

Indiana Supreme Court Finds That UIM Suit Limitation Clause Was Ambiguous

In State Farm Mutual Auto. Ins. Co. v. Jakubowicz, 56 N.E.3d 617 (Ind. 2016) the Supreme Court of Indiana struck down State Farm's suit limitation clause in its UIM policy which imposed a three-year deadline for pursuing UIM benefits because it conflicted with the policy's requirement to exhaust the tortfeasor's liability coverage which created an ambiguity.

The 11th Circuit Court Of Appeals, Interpreting Georgia Law, Recently Enforced A UIM Excess Policy Exhaustion Requirement In Disallowing A UIM Claim

The 11th Circuit held in Coker v. American Guarantee and Liability Insurance Co., 825 F.3d 1287 (11th Cir. 2016), interpreting Georgia law, that Georgia's UIM statute did not transform excess UIM policies into primary UIM policies.

Wisconsin Supreme Court Weighs In On The "Made Whole" Doctrine In Subrogation Cases

The Wisconsin Supreme Court in Dufour v. Progressive Classic Insurance Co., 881 N.W.2d 678 (Wis. 2016) held that insurance companies may retain funds obtained as subrogation for payments that the insurer had previously made, even though the insured may not have been fully compensated for the loss. The court found that it would look to the specific facts and equities in dictating whether the "made whole" doctrine would apply. Under the "made whole" doctrine, insurers are typically prevented from retaining funds received for its subrogation claims in cases where the insured has not been made whole. The court found that the "made whole" doctrine is an equitable doctrine and only applied when the equities favor the policyholder. In cases where there were reasonable reasons why the equities favored the insurance company, the doctrine would not be applied.

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