Professional Services Exclusion

The Superior Court of Delaware held that a directors and officers liability insurer must advance defense costs to a mortgage broker targeted in a federal government investigation of alleged False Claims Act violations. In Guaranteed Rate, Inc. v. ACE American Insurance Company, No. N20C-04-268 MMJ CCLD (Del. Sup. Ct. Aug. 18, 2021), Guaranteed Rate received a Civil Investigative Demand from federal authorities in June 2019 regarding the company’s underwriting and issuance of federally-insured mortgage loans. Eleven days later, Guaranteed Rate provided notice of the CID under a private company management liability policy issued by ACE American Insurance Company.
Continue Reading D&O Insurer Must Fund $18 Million Defense of Mortgage Broker in Fed’s Investigation of False Claims Act Violations

On January 9, 2018, the Northern District of California held that the Nonprofits Insurance Alliance of California owed defense coverage to a pair of Scientology-based drug and alcohol rehabilitation centers for two lawsuits filed in Georgia and Oklahoma alleging that staff members had provided drugs and alcohol to patients, which resulted in injury and death. In Western World Ins. Co. v. Nonprofits Ins. Alliance of California, No. 14-cv-04466-EJD (N.D. Cal. Jan. 9, 2018), the court confirmed the broad scope of an insurer’s duty to defend under California law and rejected the insurer’s attempt to unreasonably expand the application of a “professional services” exclusion to avoid coverage.

Continue Reading California Court Holds that Drug- and Alcohol-related Injuries Are Not Barred by Professional Services Exclusion

A US District Court has ruled that a Professional Services Exclusion in a D&O policy does not bar coverage for suits alleging that a network of for-profit career colleges engaged in false marketing regarding the quality of education and job prospects that enrollees would receive. The decision in Education Affiliates Inc., et al. v. Federal Insurance Company, et al., stems from a series of lawsuits filed against the owner of the career colleges by former students and a subpoena and draft complaint served by the Florida Attorney General alleging that the colleges were deceptive in marketing their services to prospective students.

Continue Reading Professional Services Exclusion Limited To The Actual Rendering Of Professional Services; Other Aspects Of Business Not Barred

A federal appeals court ruled on Wednesday that the absence of a duty to defend does not foreclose the potential for indemnity coverage under primary and umbrella liability policies. The decision in Hartford Casualty Insurance Co. et al. v. DP Engineering LLC, stems from a March 31, 2013, incident where an industrial crane collapsed at a nuclear generating facility near Russellville, Arkansas, causing significant damage and injuries, including one death.

Continue Reading Fifth Circuit: Indemnity Possible Even Where No Defense Owed