Duty to Indemnify

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An oft-seen version of the insuring agreement in Commercial General Liability (CGL) policies provides that the insurance company will pay for “any and all sums” the policyholder is “legally obligated to pay” for liabilities “imposed by law” or “assumed under contract.”  In an effort to disclaim coverage for liabilities arising out of or related to contract, insurers have argued that the prong for liabilities “imposed by law” refers to tort-based liabilities only, thus seeking to avoid liability with a relationship to contract.  This argument, however, defies the plain insuring language defining how the CGL policies are triggered.  This post explains why, under a proper reading of the insuring language, contract-based liabilities should qualify under the “imposed by law” prong of a CGL insuring agreement.
Continue Reading “Imposed by Law”: Coverage for Contract-Based Liabilities

While total False Claims Act recoveries decreased in 2020, FCA litigation and investigations are expected to continue to rise under the Biden administration, driven in part by the DOJ opening 250 new FCA investigations and actions in 2020, which is the highest number of new matters since 1994. As recent decisions show, the good news is that companies incurring legal fees defending against government investigations or negotiating settlements with regulators to resolve FCA claims may be able to look to D&O coverage to mitigate those losses. One such company recently prevailed in its $10 million claim against an excess D&O insurer following the insurer’s improper refused to contribute its policy limits to an FCA settlement with the DOJ. The Illinois federal court decision, Astellas US Holdings, Inc. v. Starr Indemnity & Liability Co., No. 17-cv-08220 (E.D. Ill. Oct. 8, 2021), which focuses on whether $50 million of Astellas’s settlement payment to the DOJ was covered “Loss” under the D&O policy, provides useful guidance for companies facing potential FCA exposures.
Continue Reading Policyholder Win Highlights Key Issues to Maximize Coverage for False Claims Act Settlements

A D.C. federal judge recently held that an insurer could be responsible to a TV station for more than $25 million in an underlying malpractice suit where the insurer failed to send timely notice preserving its rights under the policy in violation of a Virginia statute.
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Continue Reading Insurer Can’t Mute TV Station’s Recovery for $25 Million Malpractice Claim

The Seventh Circuit affirmed a ruling from the Northern District of Illinois that a subcontractor’s insurer must defend the general contractor in a negligence suit brought by an employee of the subcontractor for injuries suffered on the job.
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Continue Reading Seventh Circuit Holds Insurer Must Defend General Contractor in Suit by Subcontractor’s Employee

A Massachusetts intermediate appellate court recently found no coverage for a general contractor listed as an additional insured under a subcontractor’s general liability insurance policy. The general contractor sought coverage for a negligence action brought by an employee of the subcontractor regarding workplace injuries.
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Continue Reading Massachusetts Appellate Court Reads Cross Liability Exclusion Broadly in Denying Additional Insured Coverage to General Contractor

In responding to a certified question from the Fifth Circuit in Richards v. State Farm Lloyds, the Texas Supreme Court held that the “policy-language exception” to the eight-corners rule articulated by the federal district court is not a permissible exception under Texas law.  See Richards v. State Farm Lloyds, 19-0802, 2020 WL 1313782, at *1 (Tex. Mar. 20, 2020).  The eight-corners rule generally provides that Texas courts may only consider the four corners of the petition and the four corners of the applicable insurance policy when determining whether a duty to defend exists.  State Farm argued that a “policy-language exception” prevents application of the eight-corners rule unless the insurance policy explicitly requires the insurer to defend “all actions against its insured no matter if the allegations of the suit are groundless, false or fraudulent,” relying on B. Hall Contracting Inc. v. Evanston Ins. Co., 447 F. Supp. 2d 634, 645 (N.D. Tex. 2006).  The Texas Supreme Court rejected the insurer’s argument, citing Texas’ long history of applying the eight-corners rule without regard for the presence or absence of a “groundless-claims” clause.
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Continue Reading Staying the Course, Texas Supreme Court Rejects Insurer’s Argument for Exception to Eight-Corners Rule in Determining Duty to Defend

Hunton Insurance partners Syed Ahmad and Michael Levine were interviewed by Law360 for its year-end article discussing the top insurance rulings in 2019, for their insights on two of the year’s biggest insurance decisions.
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Continue Reading Hunton Insurance Partners Ahmad and Levine Comment to Law360 on 2019’s Top Insurance Rulings

Few areas of New York law as complex and nuanced as the law regarding an insurer’s duties to defend and indemnify.  To help practitioners efficiently navigate this area of the law, Hunton Andrews Kurth insurance attorneys Michael S. Levine and Kevin V. Small authored a Q&A guide published by Practical Law.  The full article is…

On November 12, 2019, a federal court in Kentucky held that a vendor service agreement (VSA) between Live Nation Worldwide Inc. and its security vendor, ESG Security, extended coverage under an insurance policy issued by Secura Insurance to ESG, for Live Nation’s liability arising from a concert at a Live Nation facility.
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Continue Reading Vendor Service Agreement Extends Coverage to Live Nation for Event Liabilities