Feb 7 2020

Insurance Law – 2/7/2020

CASES OF CONSEQUENCE

DELAWARE    "Accident"/Intended Injury Exclusion

The Delaware Supreme Court has ruled that a lower court erred in finding that the question of whether an assault was an "accident" should be judged from the viewpoint of the victim, rather than the insured. In any event, the court ruled in USAA Cas. Ins. Co. v. Carr, No. 273 (Del. Jan. 29, 2020) that coverage would have been excluded in light of language in the policy negating coverage for "bodily injury "which is reasonably expected or intended by any insured even if the resulting bodily injury . . . is of a different kind, quality[,] or degree than initially expected or intended."

FLORIDA   Guaranty Associations/Fee Awards

The Florida District Court of Appeal has ruled that a trial court erred in awarding fees to a homeowner in a first party dispute with the state Guaranty Association. In Florida Insurance Guaranty Assoc. v. Rubin, No. 4D18-3147 (Fla. DCA4 Jan, 29, 2020), the court ruled that FIGA was not liable for attorney’s fees because it had never denied coverage for the claim. The Fourth District ruled that mere delay in paying a claim was not the same as denying it and pointed to Section 631.70, Florida Statutes (2010), which limits the scope of section 627.428, Florida Statutes (2010), and provides that section 627.428 shall not be applicable to any claim presented . . . ." § 631.70, Fla. Stat. (2010). Instead, a prevailing party is entitled to recover attorney’s fees only "when the association denies by affirmative action, other than delay, a covered claim or a portion thereof."

ILLINOIS   Construction Defect/"Occurrence"/Contribution

The Appellate Court has ruled in Acuity Ins. Co. v. 950 West Herron Condominium Association, 2019 IL. App. (1st) 180743 (Ill. App. Ct. Jan. 27, 2020) a trial court errored in dismissing a contribution action brought by Cincinnati Insurance against Acuity for the cost of defending construction claims against the carpentry subcontractor that both insured. In remanding the case for further proceedings, the First District ruled that the allegations in this case involved damage to the personal property of condominium owners and other areas of damage beyond the insured's faulty workmanship and were not a "natural and ordinary consequence" of the insured's faulty workmanship. The Appellate Court declared that "from the eyes of the subcontractor, the 'project' is limited to the scope of its own work, and the precise nature of any damage that might occurred as something outside of that scope is as unknown or unforeseeable as damage is something entirely outside of the construction project." The court also declared that Cincinnati had a viable claim for equitable contribution, rejecting Acuity's argument that such rights only apply where two insurance policies provide concurrent coverage for the same time period.

ILLINOIS   Auto/"Insured"/Umbrella

The Appellate Court also ruled in State Farm Mutual Automobile Insurance Company v. Murphy, 2019 IL. App. (2nd) 180154 (Ill. App. Ct. Jan. 7, 2020) that an individual was not an insured under an umbrella liability policy notwithstanding the fact that he was concededly a "permissive user" of the named insured's vehicle. The Appellate Court declined to find coverage because there was no allegation in the suit that the named insured was legally responsible for the acts of the driver. As a result, the claims in question fell outside the scope of the umbrella policy's coverage for claims "brought against an insured for damages because of a loss for which the insured is legally liable …" The court declined to find ambiguity on the basis of the "last-antecedent rule", declaring that this was a grammatical canon of construction that is resorted to by courts only when there is pre-existing ambiguity and not a basis in and of itself for finding ambiguity.

MASSACHUSETTS   "Physical Abuse" Exclusion/Estoppel

The Supreme Judicial Court of Massachusetts will hear oral argument on March 5 in Dorchester Mut. Ins. Co. v. Krusell, SJC No. 12856. At issue is whether a homeowners policy’s exclusion for "physical abuse" applied to the insured’s assault and whether the insurer was estopped to assert this exclusion as it did not raise it at the outset and only did so after realizing that its "assault and battery" might not apply given Massachusetts law requiring proof of the insured’s intent.

NEBRASKA   "Professional Services" Exclusion

The Nebraska Supreme Court has declared that rape convictions that were wrongfully obtained by the County’s cold case squad triggered EMC’s "personal injury" coverage notwithstanding a policy exclusion for "professional services." In Gage County v. Employers Mut. Cas. Co., 304 Neb. 926 (Neb. Jan. 31, 2020), the court declined to follow the broad definition of "professional services" that it had adopted decades ago in Marx. Instead, it looked to the fact that the umbrella and "linebacker" policies that were issued to the County as part of a suite of coverages accompanying the CGL form listed various excluded professions, none of which included law enforcement activities. The case was therefore remanded for further findings with respect to the scope of coverage available under the EMC CGL and umbrella policies.

OTHER DEVELOPMENTS OF NOTE

Inside the Insurance Industry

Hartford Financial Services Group announced this week that its fourth quarter profit had doubled since 2018, earning net income of $548 million, up from $196 million. Overall 2019 net income was $2.1 billion, up 31% from 2018.

Chubb has announced plan to offer a "Non Damage Terrorism Solutions" product to provide coverage for business interruption and event cancellation losses resulting from non-damage terrorism events.

New Coverage Litigation

Old Shreveport, LLC has filed suit against the United National Insurance Company in federal court in Louisiana seeking coverage for a property loss involving its Wyndham Garden hotel in Shreveport.

Mark Your Calendars

ABA Insurance Section
Phoenix AZ
February 20-22, 2020

IADC Winter Meeting
Pebble Beach, 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

Massachusetts Insurance./Reinsurance Spring Symposium
Boston, MA
April 30, 2020

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

 

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