NL Industries recently prevailed against its commercial general liability insurers in the New York Appellate Division in a noteworthy case regarding the meaning of “expected or intended” injury and the meaning of “damages” in a liability insurance policy. In Certain Underwriters at Lloyd’s, London v. NL Industries, Inc., No. 2021-00241, 2022 WL 867910 (N.Y. App. Div. Mar. 24, 2022) (“NL Indus. II”), the Appellate Division held that exclusions for expected or intended injury required a finding that NL actually expected or intended the resulting harm; not merely have knowledge of an increased risk of harm. In addition, the court held that the funding of an abatement fund designed to prevent future harm amounted to “damages” in the context of a liability policy because the fund has a compensatory effect. NL Industries II is a reminder to insurers and policyholders alike that coverage is construed liberally and exclusions are construed narrowly towards maximizing coverage. 
Continue Reading New York Court Narrowly Interprets “Expected or Intended Injury” Exclusion in Win for Policyholder

Law360 recently published a roundup of the biggest general liability rulings in the first quarter of 2022. As part of that roundup, it discussed Omega Protein, Inc. v. Evanston Insurance Company, which the Mississippi Supreme Court decided in January 2021. And it quoted Hunton Partner and practice group leader Syed Ahmad’s analysis of the opinion.
Continue Reading If Courts Have Said it Once They Have Said it a Million Times: Exclusions Susceptible to Multiple Reasonable Interpretations Are Ambiguous

Hunton Andrews Kurth’s insurance coverage team recently published a client alert discussing a D&O coverage dispute arising from a contractual liability exclusion.

The Eighth Circuit Court of Appeals held that a D&O liability insurer could not rely on ambiguous endorsements as a basis to deny coverage for claims brought by investors against its insured company and its CEO. Reversing the Eastern District of Missouri, the appellate court in Verto Medical Solutions LLC, et al. v. Allied World Specialty Insurance Co., No.19-3511 (8th Cir.), found the policy ambiguous as to whether a contractual liability exclusion had been deleted by endorsement and thus, the insurer must provide coverage for the underlying claims.
Continue Reading D&O Insurer Muted by “Uncertainty” in Contract Exclusion, and “Complicated” Endorsements, in Headphone Manufacturer’s Liability Claim

The First Circuit recently held that a “Special Hazard and Fluids Limitation Endorsement” was ambiguous and therefore there was excess coverage for a fuel spill that occurred after a tanker-truck overturned.

In Performance Trans. Inc. v. General Star Indem. Co., the First Circuit reversed the District Court’s grant of summary judgment in favor of General Star Indemnity Company. The District Court held that the excess policy General Star issued to Performance Trans. Inc. precluded coverage for a spill that resulted in the leaking of thousands of gallons of fuel. The District Court relied on the existence of a total pollution exclusion to bar coverage and held that the policy’s Special Hazards and Fluids Limitation Endorsement could not create an ambiguity that would afford coverage.
Continue Reading First Circuit Rules Excess Insurer Must Provide Coverage for Fuel Spill

The Fourth Circuit recently held that an insurance company was obligated to cover millions in legal fees incurred in defending an employment suit against the owners of DARCARS, a DC-area based car dealership. The court ruled that the relevant policy exclusion was ambiguous and, as a result, construed the exclusion narrowly against the insurer and in favor of coverage.
Continue Reading Fourth Circuit Affirms Ruling That Insurer Must Pay Millions For Breaching Duty to Defend

The Seventh Circuit recently withdrew its controversial opinion that broadly interpreted an exclusion in Emmis Communications Corporation’s D&O policy, thereby barring coverage for losses in connection with claims of circumstances “as reported” under Emmis’ other insurance policy. The reversal, while very rare, was the correct result that alleviated concerns about the chilling effect the court’s broad reading of the exclusion may have on policyholders’ decisions to provide notice under all potentially applicable insurance policies.
Continue Reading Seventh Circuit Withdraws Decision, Affirms Coverage for Emmis Shareholder Lawsuit Despite Notices to Multiple Insurers

A federal appeals court reversed an auto parts manufacturer’s summary judgment win, construing a policy limitation on flood hazards to apply broadly to all types of losses, even though the limit “does not expressly say what losses it limits.” In Federal-Mogul LLC v. Insurance Company of the State of Pennsylvania, manufacturer Federal-Mogul suffered more than $60 million in property and time-element losses following a 2011 flood in one of its factories in Thailand. Federal-Mogul submitted a claim to its insurer, but the insurer refused to pay more than $30 million because the flood occurred in a high hazard flood zone, to which the insurer argued a sublimit in the policy applied.
Continue Reading Sixth Circuit Broadly Construes Policy Sublimit, Limits Recovery for Thai Factory Flood

The Scott Fetzer Co. v. Zurich American Insurance Co. matter involved a dispute over coverage for sexual assault claims against Fetzer. Three women filed suit against Fetzer, claiming that John Fields, an independent dealer of vacuums manufactured by Fetzer, verbally and sexually assaulted them. Fetzer’s alleged liability was premised on, among other things, its negligence in supervising its independent contractor’s hiring process. Fetzer settled with each of the three women.
Continue Reading Ambiguous “Occurrence” Language Results In Payment Of Single Deductible Despite Multiple Assaults

The Tennessee Supreme Court has refused to construe an ambiguous definition of actual cash value to allow for deduction of labor costs as part of depreciation calculations where that subset of repair costs are not clearly addressed in the policy. Despite the split of authority nationwide, the Tennessee case presents a straightforward application of policy interpretation principles to a common valuation issue in first-party property claims.
Continue Reading Tennessee High Court Excludes Labor Costs from Insurer’s Actual Cash Value Depreciation Calculations

In January we wrote about Rosen Millennium Inc.’s (“Millennium”) appeal to the Eleventh Circuit, whereby Millennium took the position that a Florida federal court ignored well established Florida insurance law when it ruled that St. Paul Fire & Marine Insurance Co. had no duty to defend it against a multimillion dollar claim arising out of a 2016 cybersecurity breach.
Continue Reading Insurance Groups Support Travelers In 11th Circuit Breach Row