Jan 17 2020

Insurance Law – 1/17/2020

CASES OF CONSEQUENCE

IDAHO    First Party/Water Damage/Anti-Concurrent Causation

The Idaho Supreme Court has ruled that a trial court did not err in ruling that a property insurer did not owe coverage for damage to the insured’s underground fuel tanks as the damage resulted from an excluded peril (water). In ABK, LLC v. Century Surety Ins. Co., No. 46430 (Idaho Dec. 23, 2019), the court ruled that the loss resulted from surface water that had melted from snow on the ground and that this excluded cause applied in light of the policy’s anti-concurrent causation clause. Additionally, the Supreme Court held that a "weather conditions" clause applied because heavy snow had caused the snow melt that puddled on the grounds and melted into the ground, infiltrating the insured’s storage tanks. Having ruled that the underlying loss was not covered, the Supreme Court also sustained the lower court’s dismissal of the insured’s bad faith claims against Mid-Century.

ILLINOIS   Auto/Insureds

The Appellate Court has ruled in State Farm Mut. Automobile Ins. Co. v. Murphy, 2020 IL App (2d) 180154 (Ill App. Ct. Jan. 1, 2020) that the Estate of a passenger who was killed in a fatal accident could not obtain coverage under an umbrella policy issued to the vehicle’s owner since the owner was not operated the vehicle at the time. In rejecting the claimant’s argument that the vehicle operator was an insured because the owner was liable for their operation of the car, the Second District emphasized that the underlying complaint had not asserted that the named insured was vicariously liable for the driver’s use of the car. The Appellate Court also refused to find coverage on the basis of the "last antecedent" rule, declaring that this was merely a tool of grammatical construction that only applied where policy wordings were otherwise ambiguous.

NEW HAMPSHIRE   First Party/Limitations Periods/Estoppel

The New Hampshire Supreme Court has ruled that the one year limitations period in a homeowner’s policy for suits against the insured was not against public policy, nor was Phenix Mutual estopped from raising this defense based on its handling of this claim. The court ruled court ruled in Zannini v. Phenix Mutual Fire Ins. Co., No. 2018-702 (N.H. Dec. 16, 2019),that communications from the insurer requesting information and expressing a hope that the claim could be resolved did not constitute an admission of liability to support tolling. The court declared that "merely requesting more information or expressing a desire to resolve a claim is insufficient to establish a waiver of a time-limitation provision."

WASHINGTON   Insurance Certificates

On a certified question from the Ninth Circuit, a divided Washington Supreme Court ruled in T-Mobile USA, Inc. v. Selective Ins. Co. of America, No. 96500-5 (Wash. Oct. 6, 2019) that a third party may claim additional insured status by virtue of language in a certificate of insurance, even if that coverage is not supported by the actual terms of the policy, so long as an insurance agent acted with the apparent authority of the insurer in issuing the certificate. Further, although the certificate contains a disclaimer that it was creating coverage, the majority found that this pre-printed boilerplate was not effective against the very specific language added by the agent confirming additional insured status for T-Mobile. Two dissenting justices argued that the certificate could not create coverage where none was provided by the policy.

OTHER DEVELOPMENTS OF NOTE

Inside the Insurance Industry

The head of Zurich’s commercial insurance group predicts that shrinking capacity and increases cat losses will dramatically improve insurance premium rates this year.

Insurance Journal reported last week that more than a dozen Florida insurers are facing a downgrade in their financial stability ratings.

Business Insurance reports that the State of Vermont recognized 22 new captive insurers in 2019, while 17 closed, leaving a total of 559 in the Green Mountain State.

New Coverage Litigation

Nationwide Mutual has brought suit last week in federal court in Arkansas, seeking a declaration in Nationwide Mut. Ins. Co. v. Ozark Mountain Poultry, No. 20-504 (W.D. Ark.) that a general liability policy issued by its predecessor Farmland Mutual did not owe coverage for a $8.6 million judgment recovered against its insured by the Somma Food Group for selling it chicken drumsticks that contained bone chips and other contaminants.

Lionbridge Technologies has sued the Valley Forge Insurance Company in the federal district court in Boston, claiming that

IBNR Dept.

The Michigan Department of Environmental Protection reported last week that a 2019 incident in which hazardous materials were spilled into the Detroit River from the Detroit Bulk Storage facility included uranium and lead.

Upcoming Events of Interest

ABA Insurance Section
Phoenix, AZ
February 20-22, 2020

IADC Winter Meeting
Monterey, CA
February 24-27, 2020

FDCC Winter Meeting
Phoenix, AZ
March 4-8, 2020

DRI Insurance Coverage and Claims Institute
Chicago, IL
April 1-3, 2020

EECMA Annual Claims Conference
Orlando, FL
May 6-8, 2020

 

Back to Newsletters