National Insurance Law Forum

National Insurance Law Forum

Published By The Attorneys of the National Insurance Law Forum

New Publication Addresses Critical CGL Issues

Posted in News

I’m pleased to report that fellow bloggers, Mike Aylward and Shaun Baldwin, were contributing authors of Critical Issues in CGL, 3d Edition, published by National Underwriter. This edition has been fully revised and updated, and provides keen insights and practical guidance on a number of complex topics, including: additional insured and contractual liability, business risk exclusions, occurrences issues and cyber liability. National Underwriter is offering a 15% discount to our readers. You can take advantage of their offer by using this coupon code: Baldwin15.

Kudos, Shaun and Mike!

Erosion of the Attorney-Client Privilege in NY?

Posted in Practice and Procedure

In National Union Fire Ins. Co. of Pittsburgh, Pa. v. TransCanada Energy USA, Inc., a New York appellate court holds that documents prepared in the ordinary course of an insurer’s investigation of whether to pay or deny a claim—documents pre-dating an insurer’s rejection of the claim—are not protected from disclosure by the attorney client privilege, the work product doctrine, or as materials prepared in anticipation of litigation. The appellate court’s opinion appears to include among those non-privileged documents, documents prepared by counsel retained by an insurer to provide an opinion as to whether an insurance company should accept or deny the claim, i.e., coverage opinions. Does the decision represent an erosion of the attorney-client privilege in New York?

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Insured-Insurer Privilege Part II

Posted in Legislation, Liability Coverage

As you likely know from my last blog, I am an advocate of a codified “Insured-Insurer Privilege.” The need for such a privilege was also described in my last blog. Briefly, an insured who is seeking defense or indemnity from its insurer is contractually obligated to cooperate with his/her insurer in investigating and resolving the claim. That means providing meaningful information to the insurer so that the insurer can assess liability, damages, verdict potential and settlement value. The insurer needs timely information in order to set reserves and also to be prepared to participate in settlement opportunities. Continue Reading

Is It Time for a Codified Insured-Insurer Privilege?

Posted in Liability Coverage

There is no common law “Insured-Insurer privilege” that protects communications between them, such as the privilege that exists for spousal communications or attorney client communications. Did you know that in some jurisdictions an insured who is being provided a defense by an insurer under a reservation of rights could risk the waiver of attorney client privilege or work product protection if its counsel provides the insurer with an analysis of liability, damages or verdict potential? How can that be? Continue Reading

Policyholder’s Claim against Insurer for Consequential Damages Survives Motion for Summary Dismissal

Posted in Bad Faith/Extra Contractual

In Mutual Association Administrators, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, a New York appellate court affirmed a lower court order denying summary dismissal of a claim for consequential damages against an insurer arising from an alleged breach of the insurer’s obligation to defend and indemnify its policyholder in an underlying ERISA action. The insurer sought summary dismissal of the policyholder’s claim seeking consequential damages for “the demise of [the plaintiff] as an operating business” and “loss of income by [the plaintiff],” allegedly resulting from the breach. Acknowledging prior holdings that “consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting,” the appellate court found that the insurer had “failed to establish, prima facie, that it acted in good faith in recommending that the plaintiff accept a settlement offer, and then discontinuing the payment of defense costs once the plaintiff rejected the offer.” The court also held that an exclusion in the policy barring “loss of earnings,” which applied only to otherwise covered losses, did not apply to consequential damages for alleged breach of contract. The decision follows two New York high court decisions recognizing that consequential damages may be recoverable for breach of an insurance contract, Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200 (2008) and Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187 (2008) (discussed here).

CLIENT QUESTIONS REGARDING POLICY INTERPRETATIONS

Posted in Liability Coverage

One of the more common questions that clients ask coverage counsel is how a court will interpret a new policy provision. This is especially true of clients that make a point of using the latest endorsements which may not have been tested in a particular state’s courts. The issue is complicated by the different policy interpretation approaches taken by different states, which make it difficult to apply out of state law even when the particular policy provision at issue is identical to one interpreted in a case from another jurisdiction. In states like Oregon and Washington, where case law interpreting newer policy language may be scarce, insurers can put themselves at increased risk if they rely too heavily on their own interpretation of the policy’s “plain meaning” or their experience in other jurisdictions. Continue Reading

WASHINGTON COURT OF APPEALS DECIDES WHAT CONSTITUTES A “SUIT” TRIGGERING THE DUTY TO DEFEND IN THE ENVIRONMENTAL LIABILITY CLAIMS CONTEXT

Posted in Recent Cases

In Gull Industries, Inc. v. State Farm Fire and Casualty Company, et al., Court of Appeals of the State of Washington, Division I, No. 69569-0-I (June 2, 2014), a Washington Appellate Court, for the first time, addressed the question of “what constitutes a ‘suit’ for the purpose of triggering the insurer’s duty to defend environmental liability claims against the insured.” Id. at 10. In Gull, Gull undertook voluntary remediation of a gasoline service station site. Gull notified the Washington Department of Ecology (“DOE”) regarding a release of petroleum at the site, and DOE sent a letter to Gull acknowledging the notice. The letter from DOE acknowledged that “Gull’s report reveals the soil and groundwater are above the MTCA ‘Method A Cleanup levels’ and that DOE placed the property on the leaking underground storage tank list with an ‘Awaiting Cleanup’ status. The letter also advised Gull to be ‘aware that there are requirements in state law which must be adhered to’ but did not advise of any consequences that might attach to the failure to adhere to those requirements.” Id. at 14. Gull then continued with its voluntary investigation and remediation of the site. No Potentially Liable Party (PLP) letter was issued. Continue Reading

More Tripartite Trouble In Big Sky Country?

Posted in News

Fourteen years ago, the Montana Supreme Court heard a legal challenge that defense lawyers had brought against efforts by insurers to impose greater controls over case handling and billing.  The resulting decision in In Re Rules of Professional Conduct 2 P.3d 806 (Mont. 2000) put Montana at the forefront of the tripartite wars that were raging at the time between insurers and the insurance defense bar as the result of efforts by insurers to rein in the costs of litigation through aggressive audits and litigation management guidelines. 

In the wake of the Montana Supreme Court’s opinion, both sides pulled back from the brink and have enjoyed a reasonably peaceful if not always happy relationship since.  However, a new decision by the Montana Insurance Commissioner has brought auditing and guideline issues back into the news.

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