Hunton Insurance Recovery Blog

In a decision of import to employers and contractors in particular, the First Circuit Court of Appeals has limited the scope of a commercial general liability policy’s “employer liability” exclusionary endorsement, finding that in the case of contractors and subcontractors, the exclusion applies only to bodily injury claims brought by persons who have contracted directly with the policyholder. United States Liab. Ins. Co. v. Benchmark Constr. Servs., Inc., No. 14-1832 (1st Cir. August 12, 2015) (“Benchmark”).

Retaining Insurance Coverage in the Face of Late Notice and Misconduct Exclusions, Risk Management
August 24, 2015

Retaining Insurance Coverage in the Face of Late Notice and Misconduct Exclusions – A Texas federal court recently ordered an insurer to reimburse an oil and gas company for costs and expenses incurred while defending against environmental claims.  See Tow v. Water Quality Ins. Syndicate (In re ATP Oil & Gas Corp.), No. 14-3280, 2015 WL 3545091 (Bankr. S.D. Tex. June 5, 2015). The court found that a duty to defend existed even though the insured failed to immediately ...

In a landmark decision, the California Supreme Court on August 20, 2015, held that enforcing an anti-assignment clause in an insurance policy as a bar to coverage – where the assignment occurred post-loss – was contrary to California Insurance Code Section 520, which provides that consent-to-assignment clauses are invalid if invoked after a loss has happened.  See Fluor Corp. v. Superior Court (Hartford Accident & Indemnity Co.), Case No. S205889 (Cal. Aug. 20, 2015).  The opinion overruled the California Supreme Court’s prior decision in Henkel Corp. v. Hartford Accident & Indemnity Co., 29 Cal. 4th 934 (2003). Henkel had held that corporate successors were not entitled to recovery under an insurance policy assigned without the insurer’s consent, even if the assignment was post-loss and therefore imposed no additional obligations on the insurer. The California Supreme Court’s overruling of Henkel stands to facilitate corporate transactions by making it easier for companies to rely on insurance policies issued to their corporate predecessors.

A federal court in New York recently found that litigation concerning damages related to a third party’s product recall required a defense under a commercial general liability policy. Thruway Produce, Inc. v. Mass. Bay Ins. Co., 2015 U.S. Dist. LEXIS 94846 (S.D.N.Y. July 20, 2015).

On July 28, 2015, the New York Supreme Court in Navigators Insurance Company v. Sterling Infosystems, Inc., Index No. 653024/2013, (N.Y. Sup. Ct. July 28, 2015), held that Navigators Insurance Company must defend and indemnify its policyholder for claims seeking statutory damages under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., despite a policy exclusion for claims involving “[f]ines, penalties, forfeitures or sanctions.”  The decision may have broad implications for policyholders pursuing coverage for the defense of lawsuits seeking statutory damages under privacy and consumer credit statutes, as well as other statutes that have traditionally been viewed to be punitive in nature.

On July 28, 2015, the New York Supreme Court in Navigators Insurance Company v. Sterling Infosystems, Inc., Index No. 653024/2013, (N.Y. Sup. Ct. July 28, 2015), held that Navigators Insurance Company must defend and indemnify its policyholder for claims seeking statutory damages under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., despite a policy exclusion for claims involving “[f]ines, penalties, forfeitures or sanctions.”  The decision may have broad implications for policyholders pursuing coverage for the defense of lawsuits seeking statutory damages under privacy and consumer credit statutes, as well as other statutes that have traditionally been viewed to be punitive in nature.

On July 27, 2015, the United States Court of Appeals for the Fifth Circuit held in Kinsale Insurance Company v. Georgia-Pacific, LLC, No. 14-60770 (5th Cir. July 27, 2015), that a claim brought by one insured against another insured is not barred by an “insured versus insured” exclusion where the claim is not for “property damage,” but for indemnity arising from a third party’s claim for “property damage.”