A California appellate court has affirmed a finding that a property insurer acted in bad faith when it searched for a reason to deny coverage for a fire loss and conducted an incomplete and non-objective investigation, even though the carrier subsequently paid the claim. The decision in Saddleback Inn, LLC v. Certain Underwriters at Lloyd’s London, No. G051121 (Cal. App. 4th, Mar. 30, 2017, which can be found here, illustrates the principle that an insurer’s conduct should be determined based on what the carrier knows when it refuses to pay the claim, and that subsequent developments cannot be used to salvage prior bad faith conduct.

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The Ninth Circuit in Teleflex Medical Incorporated v. National Union Fire Insurance Company of Pittsburgh PA, No. 14-56366 (9th Cir. Mar. 21, 2017) affirmed a jury verdict finding that AIG must pay $3.75 million in damages plus attorneys’ fees to cover LMA North America, Inc.’s (“LMA’s”) settlement with its competitor over allegedly disparaging advertisements that characterized a competitor’s products as unsafe.

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On November 2, 2016, a federal judge in California ruled that a Real Estate Property Managed endorsement in policies issued to a real estate manager negated a standard policy exclusion, but also rendered the policies excess to other available insurance. The case involved a dispute over coverage for a bodily injury claim involving “Pigeon Breeders Disease,” allegedly contracted due to the insured’s failure to keep pigeons away from a condo complex’s rooftop HVAC units. The plaintiff sued the property owners, Jerry and Betty Lee, and the property manager, Sierra Pacific Management Co. Inc. (Sierra Pacific).

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With hurricane season in full swing, policyholders should keep an eye on the Texas Supreme Court for a decision that may impact future recovery efforts. On Tuesday, October 11, 2016, the Texas Supreme Court heard oral argument in USAA Texas Lloyds Co. v. Gail Menchaca, Case No. 14-0721, regarding whether a jury’s award of damages for the insurer’s failure to conduct a reasonable investigation (in violation of the Texas Insurance Code) could stand despite the jury’s finding that the insurer did not breach the insurance policy.

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Hunton & Williams LLP attorneys Mike Levine and Matt McLellan, along with Tim Monahan of Lockton Companies, LLC., presented to a group of risk managers and insurance professionals on Wednesday evening, February 17th, about strategies and pitfalls in the claim presentation process. The event was well-attended and the audience was lively with questions for the presenters. A copy of the PowerPoint can be downloaded here. Key points discussed with the group include:

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Florida’s Third District Court of Appeals held on Wednesday that a general liability policy’s absolute employer’s liability provision did not preclude coverage for injuries sustained by an employee at a work event located on the property of an additional insured because of the policy’s separation of insureds provision. In Taylor v. Admiral Insurance Co., No. 3D14-720 (Fla. 3d DCA Feb. 10, 2016), Taylor, as assignee of Vizcaya Museum & Gardens, Villa Vizcaya and Miami-Dade County (collectively “Assignors”), appealed an award of summary judgment in favor of Admiral Insurance Co. (“Admiral”) on her claims of breach of contract and common law and statutory bad faith. Admiral cross-appealed the trial court’s finding that the Assignors are additional insureds under the policy.

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