Oct 10 2019

Insurance Law – 10/11/2019

CASES OF CONSEQUENCE

CALIFORNIA    Business Pursuits Exclusion

The California Court of Appeal has ruled in Terrell v. State Farm General Ins. Co ., A152541 (Cal. App. Sept. 26, 2019) that a trial court did not err in granting summary judgment to a homeowner's insurer on the basis of a "business pursuits" exclusion. In a case arising out of an incident in which the insured's tenants were injured when their front porch collapsed, the First District declined to rule that the claims fell within an exception to the business pursuits exclusion for activities that are "ordinarily incident to non-business pursuits." The Court of Appeal ruled that renting property was clearly a regular business activity that generated substantial income even if the insureds believed at the time that their rental of the property would only be temporary. The court rejected the insureds' argument that any homeowner would have been responsible for maintaining a front porch and that this accident therefore involved acts that were "ordinarily incident to non-business pursuits" within the exception to the exclusion. Rather, the Court ruled that "any maintenance activities undertaken by appellants with respect to the Property were directly related to their rental of the premises and would have contributed to, and furthered, the interests of their rental business or enhanced the value of the rental property."

CONNECTICUT   Long-Tail Claims/Allocation/Exclusions

In a surprisingly incomplete opinion, the Connecticut Supreme Court has ruled in R.T. Vanderbilt Company v. Hartford Accident and Indemnity Company, No. SC 20000 (Con. October 8, 2019 that the Court of Appeals did not err in adopting a "continuous trigger" for his asbestos/talc bodily injury claims or in declaring that the insured was not required to pay a "pro rata" share of defense costs or indemnity for years after 1993 when it could not purchase insurance for asbestos claims. The Supreme Court declared, without any analysis, that it agreed with the intermediate court's analysis. As a result, the court’s opinion was solely devoted to the issue of whether the Court of Appeals had erred in declaring that there was no coverage for these under certain policies containing an "occupational disease" exclusion. In affirming the lower court's opinion that the "occupational disease" exclusion was not limited solely to claims by Vanderbilt's own employees but clearly unambiguously excluded from coverage claims brought by non-employees who developed asbestos-related diseases while using Vanderbilt's talc in the course of working for other employers, the Supreme Court held that "occupational disease" is a term of art that exists independently of workers' compensation statutes as applying to illnesses caused by conditions arising out of the claimant's employment.

FLORIDA   Coverage B/Defamation

A federal district court has ruled in AIX Specialty Ins. Co. v. Dginguerian, No. 18-24099 (S.D. Fla. Sept. 20, 2019) that the insured’s unauthorized use of pictures on its web site to advertise a "back to school" party potentially set forth a covered claim for defamation. Despite the insurer’s argument that the model’s claim were for an infringement of her right of publicity and for unauthorized use of her likeness and therefore subject to an IP exclusion in the policy, Judge ruled that the claims set forth the elements of claim for defamation under Florida law.

WASHINGTON   Bad Faith/Adjuster Liability

The Washington Supreme Court has overturned an intermediate court's ruling that alleged misconduct on the part of a claims adjuster could form the basis for a bad faith claim pursuant to the state's Consumer Protection Act. In Keodalah v. Allstate Insurance Company, No. 95867-0 (Wash. Oct. 3, 2019), a narrowly-divided Supreme Court ruled that misstatements by the adjuster in responding to a UIM claim, could not form the basis for allegations of individual liability. Whereas the state's Court of Appeals had found liability in light of language in RCW 4800010030 requiring "all persons" in the business of insurance to preserve the integrity of insurance claims practices, the Supreme Court declared that the application of Bennett factors confirmed that the statute was not intended to create an implied cause of action for insurance bad faith. The majority opinion concluded, therefore, that although the insured was free to sue Allstate, it could not also sue its adjuster. Four of the nine justices dissented, arguing that whether or not there was an implied statutory cause of action under RCW 48.01.030, in this case, the adjuster had committed per se violations of the Consumer Protection Act for which he might be held individually liable.

OTHER DEVELOPMENTS OF NOTE

Inside the Insurance Industry

Tokio Marine has announced plans to purchase Pure Group for $3.1 billion.

Lloyd’s has rolled out its "Future at Lloyd’s Blueprint One" setting forth six ideas of improved ways of working, underpinned by a heightened focus on digital, data and technology to deliver greater benefits to customers.

Guy Carpenter has named Frank Guerriero to replace Paul Summers as the head of its international facultative reinsurance operations.

IBNR Update

North Carolina public health authorities now report that over 100 cases of Legionnaire’s disease have been identified since an outbreak was identified last month.

The Next Big Thing

The federal Centers for Disease Control reported last week that vaping related injuries not include 18 deaths and over 1000 respiratory illness injuries.

Cyber Update

The FBI issued a public service announcement last week, warning U.S. businesses of emerging trends in ransomware claims. In this announcement, the FBI has softened its stance on not paying such claims, stating "Paying ransoms emboldens criminals to target other organizations and provides an alluring and lucrative enterprise to other criminals. However, the FBI understands that when businesses are faced with an inability to function, executives will evaluate all options to protect their shareholders, employees, and customers."

Must See CLE

DRI Annual Meeting
New Orleans
October 16-19, 2019

American College of Coverage Counsel
Fort Lauderdale
November 1, 2019

DRI Complex Insurance Coverage Forum
Hartford, CT
November 6, 2019

FDCC I-3 Symposium
November 6-8, 2019
New York City

DRI Insurance Coverage and Practice Symposium
New York City
December 5-7, 2019

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