Risk and Recovery

Legal Insights for the Insured

Imagine you hired a general contractor to renovate the master bathroom of your home. The general contractor hired a subcontractor to do the plumbing work, but the subcontractor botched the job, resulting in a massive leak causing extensive damage to other areas of your home and valuable personal property. You demand full compensation for the loss, but unfortunately the contractors you hired had no assets besides their comprehensive general liability insurance policies. Will those insurance…
With new headlines involving sexual harassment and other inappropriate sexual conduct continuing to emerge on a daily basis, insurance coverage for claims that might emerge is something every company should consider. Recently, media reports have discussed settlements of shareholder derivative claims against members of the boards of directors and other senior executives of public companies. These settlements illustrate both the type of corporate liability that can ensue from allegations that a company turned a blind eye to, or otherwise failed to prevent,…
The extraordinary images and reports of the devastation from Hurricane Harvey have filled the news outlets. While the focus remains on the human toll and concern for the well-being of friends, colleagues and business partners who may be personally affected by this disaster, its impact will extend far beyond those whose lives and businesses were immediately disrupted. In the coming days, we will begin to see assessments of the disaster’s impact on businesses from Texas,…
We recently wrote about the California Supreme Court’s decision in Fluor Corporation v. Superior Court to limit the enforceability of clauses in third party liability insurance policies that prohibit the policyholder from assigning its interests in the policy without the insurer’s prior consent. The court held that these so-called anti-assignment clauses are not enforceable after a third party has suffered personal injury or property damage covered under the policy and for which the insured may…
The first line of the Seventh Circuit’s opinion says it all: “This case provides a warning for insurance companies who refuse to defend their insureds.” As the court’s admonishment suggests, insurers that improperly refuse to defend an insured do so at their own risk and – if not done through a reservation of rights or a declaratory judgment action – may waive their coverage defenses in the process.…
In a unanimous decision handed down by the California Supreme Court yesterday afternoon in Fluor Corporation v. Superior Court, the court removed a significant obstacle facing companies that want to assign their interests in a third party insurance policy to a successor company as part of a corporate restructuring or sale. It held that an anti-assignment clause in liability policies prohibiting an insured from assigning its interests under the policy without the insurer’s consent is…
As we previously reported here, the U.S. Court of Appeals for the Eleventh Circuit asked the Georgia Supreme Court to weigh in on the coverage dispute in Piedmont Office Realty Trust, Inc. v. XL Specialty Insurance Co. concerning consent-to-settle and no-action provisions in an excess insurance policy. The state high court’s answer was a disappointing one for policyholders. According to the court, if a policyholder settles a claim brought against it without first obtaining…
As any company facing EPA administrative action under CERCLA knows, the financial risk and defense costs associated with those proceedings can be the same as the risk and costs of an EPA lawsuit under CERCLA. But insurers have argued that administrative actions are very different from suits under standard CGL policies. Those policies, insurers argue, provide defense coverage to costs related to “suits,” not administrative actions. Joining a clear majority of state courts, the Texas…
Many corporate executives may be under the impression that the defense costs they incur when sued for actions taken in their role as officers of the company would be covered by a “Management Protection” insurance policy. The name of the insurance policy even suggests this. However, executives are not always covered by such a policy. For example, in Redmond v. Ace American Insurance Company, No. 14-3864, 2015 U.S. App. LEXIS 9392 (3d Cir. June…
In Babcock & Wilcox Co. v. American Nuclear Insurers, a divided Supreme Court of Pennsylvania, deciding an issue of first impression under Pennsylvania law, recently held that when an insurer defends its insured subject to a reservation of rights, the insured may accept a settlement over the insurer’s refusal where the settlement is fair, reasonable, and non-collusive. This is a significant statement of policyholder rights in an area that regularly generates litigation.…