The U.S. Court of Appeals for the 5th Circuit recently held, interpreting Mississippi law, that a policy's excess other insurance clause in a policy issued to an alumni association was mutually repugnant with the other insurance clause in the University's policy.
In Poulsen v. Farmers Insurance Exchange, 26 UT App. 170 (2016) the court found that Farmers' homeowners policy did not provide coverage for water intrusion from a wind storm when the water entered into the house through a partially completed roof. The roof contained only roofing components that were in place at the time of the storm and was not a roof.
In Steel v. Philadelphia Indemnity Co., 381 P.3d 111 (2016), a daycare center employee was convicted of child rape and child molestation while working at a daycare center. The parents brought a negligence action against the center. The daycare center had $1 million in coverage. Plaintiffs offered to settle for $4 million, which was rejected by Philadelphia. As trial approached, the insureds entered into a $25 million covenant judgment settlement with the plaintiffs. As part of the settlement the insureds received a covenant not to execute and the plaintiffs received an assignment of the insured's bad faith claims.
In Landmark American Insurance Co. v. Hilger, 838 F.3d 821 (7th Cir. 2016) the U.S. Circuit Court of Appeals for the 7th Circuit found that the insurance company was allowed to offer evidence outside the underlying court complaints and that the defendant did not render the professional services in question as an independent contractor. In this case the insured was sued by two credit unions in two different states (Michigan and Tennessee) for allegedly joining with a life insurance agent and a life insurance broker to persuade the credit unions to fund loans based upon life insurance policies with an overstated value that was used as collateral. When the insured and the insurance agent were sued, they tendered their defense to Landmark American under the agent's and the broker's liability policy. The policy provided coverage for claims arising out of any negligent act, error, or omission committed in the agent's rendering of professional services as an agent or broker. However, the tenders were denied.
The California Court of Appeals (2nd District) in Stein v. Axis Insurance Co., 10 Cal. App. 5th, 673, 216 Cal.Rptr.3d 804 (2nd Dist. 2017) held that a provision in a D&O policy requiring the insured to repay defense expenses unless there was a "final adjudication" determining that the insured committed willful misconduct did not eliminate coverage for defense expenses incurred during the insured's appeal of the criminal fraud conviction.
Recently, the Rhode Island Supreme Court in Faber v. McVay, 155 A.3d 153 (R.I. 2017), the court held that Rhode Island's three-year statute of limitations against an insurance agent began to run when the insured received an update of the changes made to his policy after the insured changed carriers and also began to run when the insured received notice of renewal of the policies after the agent or agency informed him that his policies would be reviewed.
The Colorado Court of Appeals in Nybert v. GEICO Casualty Co., 2017 WL 710504 (Colo. Ct. App. February 23, 2017) issued two significant rulings regarding Colorado's Unreasonable Delay Statute, Section 10-3-1116. In the first ruling, the Court held that the trial court was permitted under the statute to award the insured twice the amount of the delayed benefit in addition to the actual policy benefit that was delayed. In the second opinion, the Court found that an award of statutory attorney's fees to the insured could be made without regard to the period from when the benefit was first delayed to the date when it was actually paid and without regard to whether the fee award concerned a contractual claim.
Under ORS §742.061 insurance companies are required to pay their insured's attorneys fees if, in the insured's lawsuit against the insurer, the insured obtains a "recovery" that exceeds the amount of any tender made by the insured within six months from the date that the insured first filed a proof of loss. In Long v. Farmers Insurance Company of Oregon, 360 Or. 791, 388 P.3d 312 (2017), the Oregon Supreme Court held that when an insured files an action against an insurer to recover sums owing on the insurance policy and the insurer subsequently pays the insured more than the amount of any tender made within six months from the insured's proof of loss, the insured obtains a "recovery" that entitles the insured to an award of reasonable attorney's fees notwithstanding the voluntary nature of the insurance company's payment. In essence, the court found that the term "recovery" included any kind of restoration of the loss, including a voluntary payment of a claim made after an action on the insurance policy had been filed. In determining whether a qualifying "recovery" has taken place for purposes of ORS §742.061, all that matters is that, after filing an action on an insurance policy, the insured obtains more from the insurer-irrespective of whether through judgment, settlement, voluntary payment or some other means-than the insurer tendered in the first six months after proof of loss, an award of attorney's fees is appropriate under the statute. The Court found that in the context of the statute, "recovery" was not limited to a money judgment rendered in the action in which attorney's fees were sought. The insured was not required to obtain a money judgment that exceeded any tender within the first six months after the insured submitted the proof of loss.
The Maine Supreme Court in Harlor v. Amica Mutual Ins. Co., 2016 WL 6518589 (ME November 3, 2016) held that when an insurance company refuses to defend its insured on a mixed complaint containing allegations of both potentially covered and uncovered claims the insurer would be liable only for that portion of the settlement between its insured and the claimants representing payment for covered claims.
Under Illinois statutory and common law an insurance broker owes a duty only to the named insured who has purchased insurance from the broker. Recently, the question arose under Illinois law regarding whether a sub broker, who played an administrative role in the placement of a large and complex risk involving a chain of brokers and subcontractors, but did not place any insurance on the behalf of the named insured or received commissions from the placement owed any type of duty to warn the named insured of potential "red flags" suggesting that the insurance company under which the program was placed was untrustworthy and that its polices issued might be worthless.