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Top Developments – November 2022

SPOTLIGHT: Third Circuit Court of Appeals Affirms No Coverage for Sex Trafficking Claims - In Nautilus Insurance Co. v. Motel Management Services Inc., the Court of Appeals granted a motion for judgment on the pleadings...more

Federal Courts Reject Insurers’ Attempts to Recoup Defense Costs Expended Under Reservation of Rights

In situations where there is a dispute over a duty to defend, an insurer may provide a defense to its insured, subject to a reservation of rights, to not only deny coverage for a defense, but also to file a declaratory...more

Florida Court Holds Ignorance Is No Defense in Case of Late Notice to Insurer

It’s common knowledge that a lawsuit must be timely reported to an insurer. But what exactly constitutes timely notice? The United States Court for the Middle District of Florida recently examined this question in National...more

SDNY Holds Claims-Made-and-Reported Reporting Requirement Not Waivable

Under a claims-made-and-reported insurance policy, an insurer may disclaim coverage if the insured fails to report a claim made against it to its insurer during the policy period (or extended reporting period). What happens,...more

Delaware District Court Finds CGL Insurer Owes Condo Builder a Duty to Defend Faulty Workmanship Claims — Based on the...

On September 7, 2021, in one of the few decisions addressing the scope of coverage for faulty workmanship under Delaware law, the Delaware District Court denied an insurer’s motion seeking a declaration that it neither needed...more

Middle District of Florida Court Rejects Claim that Negligence is Sufficient to Support a Finding of Bad Faith

In Florida, an insurer is required to “settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so[.]” Harvey v. GEICO General Insurance Company, 259 So.3d 1 (Fla....more

Eleventh Circuit Finds No Bad Faith Where Insurer Failed to Provide “Mirror-Image” Response to Claimant’s Demand

In Florida, an insurer is required to work diligently on the insured’s behalf to avoid an excess judgment, with the “same haste and precision as if it were in the insured’s shoes”. Harvey v. GEICO General Insurance Company,...more

District of New Jersey Court Clarifies Primary Insurer’s Duty of Good Faith to Excess Insurer

A primary insurer has a duty of good faith to an excess insurer to attempt to negotiate a settlement with a third-party claimant within the primary insurer’s limits. However, determining whether that duty of good faith was...more

Case of First Impression Rules No Coverage for COVID Business Interruption Claim Because No Direct Physical Loss

Michigan Circuit Court Judge Joyce Draganchuk (Ingham County) granted the insurer’s motion for summary disposition in Gavrilides Management Company v. Michigan Insurance Company. At issue was coverage for restaurants that...more

Court Addresses When Duty to Defend Ends

There are certain generally held principles regarding an insurer’s duty to defend. One of these principles is that an insurer has a duty to defend its insured if the complaint states a claim that potentially falls within the...more

New York Court Confirms No Coverage for Resulting Water Damage to General Contractor’s Work Product

A homeowner’s insurer sought to recover amounts the homeowner insurer paid with respect to construction and renovation work performed on a home (two combined residential co-op units) from the CGL carrier of a general...more

New York Joins Growing Collection of States Considering Laws to Force Insurers to Pay COVID-19 Business Interruption Losses

On Friday, March 27, 2020, New York joined the growing chorus of states that have introduced legislation requiring first-party property policies to insure business interruption losses due to COVID-19 – notwithstanding policy...more

Massachusetts Joins the Fray, Introduces Bill Forcing Insurers to Pay for COVID-19-Related Business Interruption Losses

Before the ink could even dry on our latest alert, regarding Ohio's proposed bill, we learned that Massachusetts legislators had introduced their own COVID-19 bill — making it the third such bill in the span of about two...more

Ohio Follows NJ: Legislature Introduces Bill to Force Insurers to Pay for COVID-19-Related Business Interruption Losses

Yesterday, on March 24, 2020, following in New Jersey’s footsteps, the Ohio legislature introduced a bill, H.B. No. 589, “[t]o require insurers offering business interruption insurance to cover losses attributable to viruses...more

Insurer Owes Defense Despite "Extrinsic Evidence," New York Court Holds

An insurer’s duty to defend generally is based on a comparison of the complaint against the insured and the insurance policy language. However, in some jurisdictions, an insurer may consider "extrinsic" evidence — information...more

10th Circuit Allows Insurer to Avoid Bad Faith Claim By Settling with Claimant and Pursuing Recovery from Insured

The 10th Circuit endorsed a clever way for an insurer to avoid a bad faith claim where there were potential misrepresentations in the policy application. In Evanston Insurance Company v. Aminokit Labs, Inc., the court...more

New Jersey Legislature Considering Bill To Force Insurers To Pay COVID-19 Business Interruption Claims Expressly Excluded By ISO’s...

As economic losses from the COVID-19 pandemic continue to mount, there has been much discussion about the potential availability of insurance, especially under Business Interruption policies. In 2006, ISO adopted a mandatory...more

New Jersey Federal Court Provides Clarification/Limitation on the Application of the Continuous Trigger Theory in Construction...

The proper trigger of coverage in construction defect disputes has been addressed on several occasions by New Jersey courts. Most notably, in Air Master & Cooling, Inc. v. Selective Insurance Company of America, 452 N.J....more

PTSD May Be Covered As “Bodily Injury” If It Resulted From Physical Injuries, Pennsylvania Appeals Court Holds

It has long been the rule in Pennsylvania that a mental or psychological injury generally does not constitute “bodily injury,” as defined in most standard insurance policies, unless that mental or psychological injury results...more

Three-Year Delay Not “Prompt Notice,” But Insurer Not “Appreciably Prejudiced” Either, New Jersey Court Holds

In Harleysville Preferred Insurance Company v. East Coast Painting & Maintenance, LLC, 2019 U.S. Dist. LEXIS 135295 (D.N.J. Aug. 12, 2019) (East Coast Painting), the U.S. District Court for the District of New Jersey held...more

Indiana Federal Court Holds No Coverage for $50M Default Judgment for Lack of Timely Notice of Class Action

In Greene v. Kenneth R. Will, a CGL insurer recently prevailed in a declaratory judgment action arising from an underlying class action alleging pollution and nuisance claims against the insured, VIM Recycling LLC, an...more

Insureds Suing Individual Adjusters – What Will Change If The Washington Supreme Court Decides That Adjusters May Be Sued For Bad...

In Keodalah v. Allstate Insurance Company, the Washington Supreme Court is set to determine whether individual insurance adjusters (as distinguished from the insurers for which they work) may be sued for bad faith and...more

New York Appellate Court Holds Insurer’s Failure to Defend Does Not Constitute a “Reasonable Excuse” Required to Overturn Judgment

A recent opinion by the New York Supreme Court, Appellate Division (Second Department) highlights the potential risks for an insurer leaving an insured unrepresented while the insurer pursues other parties or insurers who may...more

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