Reservation of Rights

News & Analysis as of

Cumis Counsel: An Insurer’s Right To Dispute Coverage Does Not Automatically Trigger A Right to Cumis Counsel

Recently, once again, a California appeals court weighed in on the scope of the right to Cumis counsel and the meaning of Cal. Civil Code §2860. St. Paul Mercury Insurance Company v. McMillin Homes Construction, Inc., No....more

Illinois Appellate Court Affirms a Declaratory Judgment in Favor of the Insurer Where the Underlying Suit Did Not Allege an...

In Westfield Ins. Co. v. West Van Buren, LLC, the Appellate Court of Illinois, affirmed the trial court’s decision holding that the developer, West Van Buren, LLC (“Van Buren”), was not entitled to defense and indemnification...more

Defense Lawyers Beware: Failure to Supplement Answers to Interrogatories Estopped Insurer from Relying on Coverage Limitation

How often do you hear defense attorneys say, “I’m not interested in anything related to coverage. That’s not my concern.” From a coverage lawyer’s perspective, this is a dangerous position, both ethically and legally....more

Don’t Let a Little Concealer Ruin Your Coverage Defenses

May an insurer in New York delay asserting (or conceal, according to Estee Lauder) a late notice defense without waiving it? According to the New York Court of Appeals a jury should decide whether the insurer manifested a...more

Tropical Storm Hermine | A Quick Reference Compliance Guide to Adjusting Storm Related Claims in Florida

..Once a wind storm is named as a hurricane by the National Weather Service, and a warning or watch for any part of Florida is issued, all wind losses in the state from that time until 72 hours after the last warning or watch...more

"Assuming" the Obvious: Exclusion for “Assumption of Liability in a Contract” Does Not Apply to Breach of Professional Services

In what it described as a case of first impression, the Northern District of California ruled that a professional liability policy that excluded the insured’s “assumption of liability obligations in a contract or agreement”...more

New Jersey Court Holds Suits Constitute Interrelated Wrongful Acts

In its recent decision in Old Bridge Municipal Authority v. Westchester Fire Ins. Co., 2016 U.S. Dist., LEXIS 99327 (D. N.J. July 29, 2016), the United States District Court for the District of New Jersey had occasion to...more

Indiana Court Concludes Broad Pollution Exclusion Is Ambiguous

In its recent decision in Old Republic Ins. Co. v. Gary/Chicago International Airport Authority, 2016 U.S. Dist. LEXIS 96361 (N.D. Ind. July 25, 2016), the United States District Court for the Northern District of Indiana had...more

Nevada Adopts Cumis Counsel Requirement – Who’s Next?

In September 2015, the Nevada Supreme Court issued a decision in State Farm Mut. Auto. Ins. Co. v. Hansen, 131 Nev. Adv. Op. 74, which held that Nevada law requires an insurer to provide independent Cumis counsel when there...more

The Lawyers' Lawyer Newsletter - Recent Developments in Risk Management - June 2016

Disqualification — Substantially Related Matters — Waiver of Conflict by Lack of Diligence in Seeking Disqualification - State of Minnesota, et al v. 3M Company, Hennepin County (Minn.), Court File No. 27-CV-10-28862...more

Third Circuit Holds No Estoppel In Light of Reservation of Rights Letters

In its recent decision in Nationwide Prop. & Cas. Ins. Co. v. Shearer, 2016 U.S. App. LEXIS 9635 (3d Cir. 2016), the United States Court of Appeals for the Third Circuit, applying Pennsylvania law, had occasion to consider...more

Should You Withdraw The Reservation of Rights To Avoid Entry of a Consent Judgment?

An insurer that defends its insured against a third party’s lawsuit, while reserving rights to deny coverage to its insured for any judgment, may face a decision point when underlying settlement discussions become ripe to...more

When is Rescission Based Upon Material Misrepresentations The Proper Course of Action?

Carriers rely on application representations regarding the existence of potential claims. Sometimes, the carrier learns after the fact that an applicant may not have reported all known potential claims. What can/should the...more

Eighth Circuit Holds Insureds’ Miller-Shugart Agreement Breached Policy’s Cooperation Clause

In its recent decision in American Family Mut. Ins. Co. v. Donaldson, 2016 U.S. App. LEXIS 7499 (8th Cir. Apr. 26, 2016), the United States Court of Appeals for the Eighth Circuit, applying Minnesota law, had occasion to...more

Settling Parties Beware: Failing to Provide Notice to Your Insurer Before Settling May Doom Your Chance of Recovery

On April 25, 2016, the Colorado Supreme Court issued a decision in Travelers Prop. Cas. Co. v. Stresscon Co. Stresscon, a subcontracting concrete company, entered into a settlement agreement – without providing notice to its...more

Reservations of Rights Around the World

Upon notification of a loss, and in order to avoid waiving its rights to rely on a defense to a claim for indemnity under the policy, the insurer may issue a reservation of rights. In the context of liability insurance, an...more

Reservation of Rights Letters Help Avoid Prejudice in the Third Party Context

When discussing bad faith in the third party context, most of the discussion properly centers on the duty to settle a claim. However, other actions taken by a policyholder and carrier can have an impact. The recent case of...more

Covenant Not to Sue Insufficient to Warrant Dismissal of Counterclaims Where Covenant Contained Reservation of Rights

The plaintiff filed a motion to dismiss the defendants' patent invalidity counterclaims for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. Rule 12(b)(1) because the plaintiff withdrew its patent infringement...more

Policyholder’s Bad Faith Claim Against Cyber-Insurer Survives Summary Judgment

In follow up on an older entry, the Court in Travelers Prop. Cas. Co. of Am. V. Fed. Recovery Servs., recently issued another order granting partial summary judgment in favor of a cyber-insurer, but also allowed the bad faith...more

For Excess Liability Insurers, Consent-to-Settle Clauses Still Count

When a liability insurer defends its insured under a reservation, recent decisions limit the insurer’s right to enforce a policy’s consent-to-settle clause. But can the reservation affect the rights of an excess carrier? And...more

Allocation Clause Held Enforceable in a Duty To Defend D&O Policy

In Housing. Auth. of New Orleans v. Landmark Ins. Co., 2016 U.S. Dist. LEXIS 24419 (E.D. La. Feb. 29, 2016), the court provided a rare analysis of the interplay between a duty to defend in a D&O policy and the allocation...more

Sixth Circuit Rules that Employer Can Terminate Retiree Health Benefits

The Sixth Circuit ruled that retirees of Moen Inc. were not entitled to lifetime health benefits upon finding that an underlying collective bargaining agreement (CBA) did not create vested rights to these benefits. Moen and...more

Ohio Court Gives Effect to a Different Kind of Reservation of Rights Letter

The importance of the ordinary reservation of rights letter – “we will defend you, but that doesn’t mean we’re going to pay a judgment” — is well known. A different kind of reservation of rights letter – “We will defend you...more

365 Days Later: Lessons Learned from the Pennsylvania Supreme Court

One year ago today, the Pennsylvania Supreme Court issued the first two of four important insurance-coverage law opinions that it would hand down in 2014 and 2015. Those four decisions – which address a number of topics...more

When The Government Comes Knocking: Maximizing Insurance Coverage for Government Investigations

As many readers will know, a government investigation can begin with something as seemingly innocuous as an email from a governmental agency to a company’s general counsel asking for information, or as attention-grabbing as a...more

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