Courts scrutinize a complaint’s factual allegations to decide whether the allegations trigger a duty to defend. [1] If the facts unambiguously exclude coverage, there is no duty to defend. [2] But what if the factual allegations fall within a policy exclusion, but the allegations are untrue or questionable? What if the true facts would mean the exclusion doesn’t apply? In that case, many courts have found that the insurer should base its decision on the policyholder’s version of the “true facts.” [3] An insurer can’t rely on the complaint’s allegations to deny coverage when the facts that the insurer knows or can ascertain show that the claim is covered. [4]Continue Reading Allegations Versus “True Facts”: Which Govern the Duty to Defend? Bonus! A Georgia Court Clears Up What the Meaning of “Is” Is

Whether an insurer has a right to reimburse defense costs after a finding that it has no duty to defend remains an open question in Georgia. However, in Continental Casualty Co., et al. v. Winder Laboratories, LLC, et al., Case No. 21-11758 (11th Cir. Jul. 13, 2023), the Eleventh Circuit Court of Appeals has weighed in with its prediction on the likely answer. Persuaded by the logic of other jurisdictions that, “wide-ranging reimbursement is necessarily inappropriate in a system—like Georgia’s—that is predicated on a broad duty to defend and a more limited duty to indemnify,” the Eleventh Circuit predicted that, “the Supreme Court of Georgia would follow that logic to adopt a ‘no recoupment’ rule to protect its insurance system.”  Continue Reading Eleventh Circuit Rejects Implicit Right to Reimbursement of Defense Costs Under Georgia Law

When is a catch-all provision too broad? When “a plain-text reading of that provision would swallow a substantial portion of the coverage that the policy otherwise explicitly purports to provide,” according to the Seventh Circuit Court of Appeals. Citizens Insurance Co. of America v. Wynndalco Enterprises LLC, Case No. 22-2313.
Continue Reading “Catch-All” Can’t Catch ‘Em All: Seventh Circuit Finds Coverage for a BIPA Claim Despite Catch-All Provision in Policy’s Statutory Violation Exclusion

This insurance coverage story begins like any other: an insurance company (Ironshore Specialty) issued a business insurance policy to a North Carolina hotel (RPG Hospitality). The policy provided coverage for wind-driven rain, but the most Ironshore would pay for such a claim was “the Wind Driven Rain Sub-Limit of Liability shown in the Sub-Limit Provision Endorsement.” However, the Ironshore policy contained no Sub-Limit Provision Endorsement. Ironshore testified that it left the endorsement out of the policy by mistake; RPG contended that it was intentionally omitted. After Hurricane Florence struck the insured hotel, causing severe damage, RPG tendered a claim and enlisted the assistance of an Ironshore adjuster in coordinating the demolition and repair work. The Ironshore adjuster, aware that the policy did not contain the relevant sub-limit endorsement, approved the work, which exceeded the purported sub-limit by millions of dollars. When Ironshore refused to pay, a lawsuit followed.Continue Reading Lost in the Wind: Missing Endorsement Yields Policy Ambiguity

Insurers generally have a right to conduct a full, fair, and thorough investigation of a claim. Depending on policy language, one investigative tool available to insurers is the examination under oath, or an “EUO.” In an EUO, a representative of the policyholder is sworn-in, and an employee of or attorney for the insurer asks questions related to the claim. EUOs may be a condition precedent to coverage, meaning failure to appear and comply with a reasonable EUO request may void coverage for the claim. See, e.g., Quality Health Supply Corp. v. Nationwide Ins., No. 2021-06955, 2023 WL 3486573 (N.Y. App. Div. May 17, 2023); Raymond v. State Farm Fire & Cas. Co., 614 F. Supp. 3d 1303 (N.D. Ga. 2022).Continue Reading The ABCs of EUOs

On June 27, 2017, the skies over New Jersey were clear and the ground steady. But Merck & Co., a New Jersey-based pharmaceutical company, was under attack. Malware ripped through its computers, damaging 40,000 of them and causing over $1.4 billion in losses.
Merck was not the sole target. Dubbed “NotPetya,” the virus tore through the US economy, and did an estimated $10 billion in damage. (This post describes losses experienced by other companies.) The US Department of Justice charged six Russian nationals, alleged officers of Russia’s Intelligence Directorate (the GRU), for their roles in the NotPetya attack, among others.
Continue Reading Boots on the Ground or Hands on a Keyboard: Merck and Insurers Battle Out the War Exclusion

Like other policyholders, hard insurance market trends, aggravated by cybersecurity risks, climate change, and COVID-19, have hit higher education policyholders, yielding reduced or limited coverages for increased premiums. These conditions – reduced coverages and higher premiums – are symptoms of a “hard” insurance market. (A hard market is caused by a mismatch between policyholders’ waxing demand for coverage and insurers’ waning risk appetite.) But higher education policyholders face unique risks that exacerbate existing market conditions, including:Continue Reading Back to School Blues: Risk Exposures Affecting Higher Education

In 1938, a DuPont chemist’s experiment yielded not—as he first thought—a lumpen, waxy mistake, but a new chemical with remarkable properties: heat-resistance, chemical stability, and low surface friction. Decades of continuing experimentation yielded a class of chemicals with the capacity to make non-stick, water-resistant coatings. In time, these chemicals, per- and polyfluoroalkyl substances (PFASs), would become a major component in thousands of consumer goods: food packaging, non-stick cookware, waterproof clothing, paint, stain-resistant carpets and furniture, and firefighting foams. The discovery of the toxicity of these remarkable chemicals lagged behind the widespread adoption, but eventually yielded a moniker that reflected PFAS’s stability and longevity: “Forever Chemicals.”
Continue Reading PFAS: From Happy Mistake to Ubiquity to Toxic Liability (But is there coverage?)

In this final post in the Blog’s Landmark Montana Supreme Court Decision Series, we discuss the court’s ruling on the known loss doctrine and its interpretation of “occurrence” in National Indemnity Co. v. State, 499 P.3d 516 (Mont. 2021).
Continue Reading Landmark Montana Supreme Court Decision Series: Known Loss Doctrine & Interpretation of “Occurrence”