Clarifying Bad Faith Jurisprudence in Virginia, Federal Court Recognizes Bad Faith Claim Against First-Party Insurer by Michael S. Levine
In Great Am. Ins. Co. v. GRM Mgmt., LLC,[1] a federal district court denied an insurer’s motion to dismiss a bad-faith claim arising out of the insurer’s denial of its policyholder’s claim for property damage and loss of business income following the theft of rooftop air conditioning units from the policyholder’s hotel. The ruling is significant because it illustrates that Virginia law supports first-party bad-faith claims against insurers.
Life Insurer's Liability for Actions of Its Producer--Even before Producer's ...NationalUnderwriter
The Supreme Judicial Court of Maine has affirmed a lower court’s decision upholding the Maine Superintendent of
Insurance’s conclusion that Guarantee Trust Life Insurance Company (“GTL”) was accountable for violations of a number of Maine statutes by a company acting as GTL’s producer – even before the company’s formal appointment as GTL’s producer. As a result, the court upheld the Superintendent’s order that GTL pay a civil penalty of $150,000.
Using Unfair and Deceptive Acts and Practices Statutes to Challenge Reinsurer...NationalUnderwriter
Although the viability of a claim for violation of an unfair and deceptive acts and practices statute in the reinsurance
context is still in its infancy, the possibility of those claims must be considered by cedents and reinsurers alike in their claims activities, at least in jurisdictions where such claims are viable.
This slideshow is used for a continuing legal education program presented by Jon Starr, Oklahoma Bar Association Insurance Law Section Chairperson, who practice with the McGivern & Gilliard law firm with offices in Tulsa and Oklahoma City.
Broad Application of Medicare’s Mandatory Insurer Reporting Requirements to N...NationalUnderwriter
Broad Application of Medicare’s Mandatory Insurer Reporting Requirements to Non-U.S. Property & Casualty Carriers Flouts Supreme Court Limitations on Extraterritorial Reach of U.S. Law By Richard L. McConnell and Kathryn Bucher
This article attempts to demystify some of the issues regarding possible extraterritorial application of the
requirements under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, comments on
claim situations that frequently may confront non-U.S. insurers, and alerts readers to the need to evaluate the potential Section 111 ramifications of claim payments to Medicare beneficiaries.
Life Insurer's Liability for Actions of Its Producer--Even before Producer's ...NationalUnderwriter
The Supreme Judicial Court of Maine has affirmed a lower court’s decision upholding the Maine Superintendent of
Insurance’s conclusion that Guarantee Trust Life Insurance Company (“GTL”) was accountable for violations of a number of Maine statutes by a company acting as GTL’s producer – even before the company’s formal appointment as GTL’s producer. As a result, the court upheld the Superintendent’s order that GTL pay a civil penalty of $150,000.
Using Unfair and Deceptive Acts and Practices Statutes to Challenge Reinsurer...NationalUnderwriter
Although the viability of a claim for violation of an unfair and deceptive acts and practices statute in the reinsurance
context is still in its infancy, the possibility of those claims must be considered by cedents and reinsurers alike in their claims activities, at least in jurisdictions where such claims are viable.
This slideshow is used for a continuing legal education program presented by Jon Starr, Oklahoma Bar Association Insurance Law Section Chairperson, who practice with the McGivern & Gilliard law firm with offices in Tulsa and Oklahoma City.
Broad Application of Medicare’s Mandatory Insurer Reporting Requirements to N...NationalUnderwriter
Broad Application of Medicare’s Mandatory Insurer Reporting Requirements to Non-U.S. Property & Casualty Carriers Flouts Supreme Court Limitations on Extraterritorial Reach of U.S. Law By Richard L. McConnell and Kathryn Bucher
This article attempts to demystify some of the issues regarding possible extraterritorial application of the
requirements under Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007, comments on
claim situations that frequently may confront non-U.S. insurers, and alerts readers to the need to evaluate the potential Section 111 ramifications of claim payments to Medicare beneficiaries.
Under the Right Circumstances, an Insured Entitled to "Independent Counsel" i...NationalUnderwriter
Under the Right Circumstances, an Insured Entitled to "Independent Counsel" in California Can Retain More Than One Firm
by Carey B. Moorehead
In a case of first impression, a California district court has ruled that California law does not preclude an insured from
retaining multiple law firms as independent or Cumis counsel where the insurer is defending under reservation of
rights. The court’s ruling came in the case of Signal Products v. American Zurich Insurance Company, et al.
The Signal Products court was called upon to interpret California Civil Code §2860 in the context of cross-motions for summary judgment between American Zurich Insurance Company and its insured Signal Products, Inc., the defendant in a trademark infringement action. Zurich had agreed to defend Signal under reservation of rights and consented to Signal’s retention of independent counsel.
Pennsylvania Supreme Court Holds Policyholders May Assign Their Statutory Rig...NationalUnderwriter
Pennsylvania Supreme Court Holds Policyholders May Assign Their Statutory Right to Recover Punitive Damages Arising from Insurer¹s Bad Faith by Sara N. Brown and Roberta D. Anderson
In an issue of first impression, the Pennsylvania Supreme Court recently held in Allstate Prop. & Cas. Ins. Co. v. Wolfe[1] that a policyholder may assign statutory bad faith claims under Pennsylvania’s bad faith statute, Section 8371,[2] to a third party claimant.
Importantly, Wolfe resolves the conflict among Pennsylvania and federal decisions regarding the assignability of the right to recover statutory bad faith damages, and allows assignees to seek punitive damages under the statute against an insurer who acts in bad faith.
Malpractice Suit Against Trustee Who Failed to Inform Beneficiaries of Potent...theBurgessGroup
The successor trustees and beneficiaries of the Vitello family trust sued Kathleen King O'Brien, a Michigan lawyer, for malpractice in her handling of a policy owned by the trust when she was the trustee. O'Brien sought coverage from her malpractice insurer, Hartford Casualty. But it denies her claim because she had failed to timely notify it of the reasonably foreseeable possibility that the Vitello trust would pursue a malpractice claim against her.
This White Paper is written by Paul J. Smith, AIF and Gary Sutherland, CIC, MLIS from NAPLIA.
The paper discusses E&O Coverages basic procedures and how the industry has arrived at this point.
Don¹t Take Any Wooden Nickels: Lawyers as Targets of Lucrative ScamsNationalUnderwriter
It may come as somewhat of a surprise to some to learn that one kind of business that appears to be particularly susceptible to electronically-induced scams is the legal profession. Yes, lawyers. In the fairly typical scam, lawyers are contacted by foreigners who are in need of legal assistance in collecting debts. The law firms eventually receive checks for large sums from the debtors, and are instructed to deposit them for further instructions. What these law firms do, so as not to comingle with the firms’ accounts, is to establish special accounts at the firms’ financial institutions. Before these checks are cleared by the banks on which the funds were drawn, the clients request that the money representing the checks sent to the law firms, be wired to foreign accounts, less the law firms’ retainer. After the money is received by the foreigners, the law firms are notified that the checks, drawn on foreign or domestic banks, originally sent to the law firms, are bogus.
The article discusses a number of court decisions where lawyers were duped by thieves and sought coverage for
their losses under their commercial insurance policies.
California Climate Insurance Working Group Sizes Up Parametric SolutionsJasonSchupp1
California’s Commissioner of Insurance convened a Working Group to explore the role innovative insurance solutions may be able to play in helping communities and families manage the risk of climate change. One of the Working Group’s recommendations is to promote parametric insurance. While traditional insurance indemnifies the policyholder for actual loss, parametric insurance pays out a pre-set amount if a disaster such as a flood, wildfire or heat wave exceeds specified parameters.
There is just one hitch: Parametric insurance is not insurance. After the 2008 financial crisis, Congress enacted Dodd-Frank to, among other things, sweep parametric and other event contracts under the jurisdiction of the Commodities Futures Exchange Commission (CFTC). The Working Group is right to highlight the potential for parametric solutions to become an effective risk management tool, but it must invite the CFTC to join in the discussion if it hopes to move its recommendations toward reality.
Migrating Sand Triggers Separate Policy Limits for CGL Policy¹s Personal Inju...NationalUnderwriter
Migrating Sand Triggers Separate Policy Limits for CGL Policy¹s Personal Injury and Property Damage Coverages by Michael S. Levine and Matthew T. McLellan
Washington Court Holds Stipulated Covenant Judgment Sets Minimum Amount of Da...NationalUnderwriter
Washington Court Holds Stipulated Covenant Judgment Sets Minimum Amount of Damages in Bad Faith Case. (from FC&S Legal: The Insurance Coverage Law Information Center)
Recently, Division One of the Court of Appeals of Washington State affirmed a jury verdict awarding $13 million in damages to a passenger injured in a car accident, finding that the $4.15 million agreed amount of the covenant
judgment in the insurance bad faith case sets a floor, not a ceiling, on the damages a jury can award.
In Miller v. Kenny and Safeco Ins. Co.,[1] the Court of Appeals ruled on several additional issues on appeal including whether evidence of an insurance company’s loss reserves is properly admissible at trial.
"Consumer Arbitration: A Report From The Future" a keynote address by George Friedman - member, Board of Directors, Arbitration Resolution Services. Presented June 2013. For more information, visit https://arbresolutions.com or Follow us on Twitter @ARS_ARBS.
Jon Ostroff, Esquire, is well known for his expertise and success as a Pennsylvania limited tort lawyer. In this book, Jon will provide you with the tools to understand:
• The limited tort option and its effect on your claim for compensation if you are injured in a motor vehicle accident in Pennsylvania.
• The differences between full tort and limited tort insurance coverage.
• Who is covered by your limited tort insurance policy.
• The exceptions to limited tort.
• Whether to select and purchase limited tort or full tort insurance when you obtain or renew your insurance policy.
• The minimum insurance that all Pennsylvania motorists are required to maintain.
Defining Terms in an Insurance Policy Exclusion: What the "Eight Corners" Ru...NationalUnderwriter
Defining Terms in an Insurance Policy Exclusion: What the "Eight Corners" Rule Does Not Require by Kelly M. Lippincott and Katherine C. Ondeck (from FC&S Legal: The Insurance Coverage Law Information Center)
In Carlyle Investment Management, LLC v. Ace American Ins. Co.,[1] the District of Columbia Superior Court held that when an insurance contract’s definitions of relevant terms brings a claim within the scope of an exclusion within the
policies, it does not matter whether those same terms might mean something else in the context of a different case or a different contract. The contract definitions of the terms control.
Under the Right Circumstances, an Insured Entitled to "Independent Counsel" i...NationalUnderwriter
Under the Right Circumstances, an Insured Entitled to "Independent Counsel" in California Can Retain More Than One Firm
by Carey B. Moorehead
In a case of first impression, a California district court has ruled that California law does not preclude an insured from
retaining multiple law firms as independent or Cumis counsel where the insurer is defending under reservation of
rights. The court’s ruling came in the case of Signal Products v. American Zurich Insurance Company, et al.
The Signal Products court was called upon to interpret California Civil Code §2860 in the context of cross-motions for summary judgment between American Zurich Insurance Company and its insured Signal Products, Inc., the defendant in a trademark infringement action. Zurich had agreed to defend Signal under reservation of rights and consented to Signal’s retention of independent counsel.
Pennsylvania Supreme Court Holds Policyholders May Assign Their Statutory Rig...NationalUnderwriter
Pennsylvania Supreme Court Holds Policyholders May Assign Their Statutory Right to Recover Punitive Damages Arising from Insurer¹s Bad Faith by Sara N. Brown and Roberta D. Anderson
In an issue of first impression, the Pennsylvania Supreme Court recently held in Allstate Prop. & Cas. Ins. Co. v. Wolfe[1] that a policyholder may assign statutory bad faith claims under Pennsylvania’s bad faith statute, Section 8371,[2] to a third party claimant.
Importantly, Wolfe resolves the conflict among Pennsylvania and federal decisions regarding the assignability of the right to recover statutory bad faith damages, and allows assignees to seek punitive damages under the statute against an insurer who acts in bad faith.
Malpractice Suit Against Trustee Who Failed to Inform Beneficiaries of Potent...theBurgessGroup
The successor trustees and beneficiaries of the Vitello family trust sued Kathleen King O'Brien, a Michigan lawyer, for malpractice in her handling of a policy owned by the trust when she was the trustee. O'Brien sought coverage from her malpractice insurer, Hartford Casualty. But it denies her claim because she had failed to timely notify it of the reasonably foreseeable possibility that the Vitello trust would pursue a malpractice claim against her.
This White Paper is written by Paul J. Smith, AIF and Gary Sutherland, CIC, MLIS from NAPLIA.
The paper discusses E&O Coverages basic procedures and how the industry has arrived at this point.
Don¹t Take Any Wooden Nickels: Lawyers as Targets of Lucrative ScamsNationalUnderwriter
It may come as somewhat of a surprise to some to learn that one kind of business that appears to be particularly susceptible to electronically-induced scams is the legal profession. Yes, lawyers. In the fairly typical scam, lawyers are contacted by foreigners who are in need of legal assistance in collecting debts. The law firms eventually receive checks for large sums from the debtors, and are instructed to deposit them for further instructions. What these law firms do, so as not to comingle with the firms’ accounts, is to establish special accounts at the firms’ financial institutions. Before these checks are cleared by the banks on which the funds were drawn, the clients request that the money representing the checks sent to the law firms, be wired to foreign accounts, less the law firms’ retainer. After the money is received by the foreigners, the law firms are notified that the checks, drawn on foreign or domestic banks, originally sent to the law firms, are bogus.
The article discusses a number of court decisions where lawyers were duped by thieves and sought coverage for
their losses under their commercial insurance policies.
California Climate Insurance Working Group Sizes Up Parametric SolutionsJasonSchupp1
California’s Commissioner of Insurance convened a Working Group to explore the role innovative insurance solutions may be able to play in helping communities and families manage the risk of climate change. One of the Working Group’s recommendations is to promote parametric insurance. While traditional insurance indemnifies the policyholder for actual loss, parametric insurance pays out a pre-set amount if a disaster such as a flood, wildfire or heat wave exceeds specified parameters.
There is just one hitch: Parametric insurance is not insurance. After the 2008 financial crisis, Congress enacted Dodd-Frank to, among other things, sweep parametric and other event contracts under the jurisdiction of the Commodities Futures Exchange Commission (CFTC). The Working Group is right to highlight the potential for parametric solutions to become an effective risk management tool, but it must invite the CFTC to join in the discussion if it hopes to move its recommendations toward reality.
Migrating Sand Triggers Separate Policy Limits for CGL Policy¹s Personal Inju...NationalUnderwriter
Migrating Sand Triggers Separate Policy Limits for CGL Policy¹s Personal Injury and Property Damage Coverages by Michael S. Levine and Matthew T. McLellan
Washington Court Holds Stipulated Covenant Judgment Sets Minimum Amount of Da...NationalUnderwriter
Washington Court Holds Stipulated Covenant Judgment Sets Minimum Amount of Damages in Bad Faith Case. (from FC&S Legal: The Insurance Coverage Law Information Center)
Recently, Division One of the Court of Appeals of Washington State affirmed a jury verdict awarding $13 million in damages to a passenger injured in a car accident, finding that the $4.15 million agreed amount of the covenant
judgment in the insurance bad faith case sets a floor, not a ceiling, on the damages a jury can award.
In Miller v. Kenny and Safeco Ins. Co.,[1] the Court of Appeals ruled on several additional issues on appeal including whether evidence of an insurance company’s loss reserves is properly admissible at trial.
"Consumer Arbitration: A Report From The Future" a keynote address by George Friedman - member, Board of Directors, Arbitration Resolution Services. Presented June 2013. For more information, visit https://arbresolutions.com or Follow us on Twitter @ARS_ARBS.
Jon Ostroff, Esquire, is well known for his expertise and success as a Pennsylvania limited tort lawyer. In this book, Jon will provide you with the tools to understand:
• The limited tort option and its effect on your claim for compensation if you are injured in a motor vehicle accident in Pennsylvania.
• The differences between full tort and limited tort insurance coverage.
• Who is covered by your limited tort insurance policy.
• The exceptions to limited tort.
• Whether to select and purchase limited tort or full tort insurance when you obtain or renew your insurance policy.
• The minimum insurance that all Pennsylvania motorists are required to maintain.
Defining Terms in an Insurance Policy Exclusion: What the "Eight Corners" Ru...NationalUnderwriter
Defining Terms in an Insurance Policy Exclusion: What the "Eight Corners" Rule Does Not Require by Kelly M. Lippincott and Katherine C. Ondeck (from FC&S Legal: The Insurance Coverage Law Information Center)
In Carlyle Investment Management, LLC v. Ace American Ins. Co.,[1] the District of Columbia Superior Court held that when an insurance contract’s definitions of relevant terms brings a claim within the scope of an exclusion within the
policies, it does not matter whether those same terms might mean something else in the context of a different case or a different contract. The contract definitions of the terms control.
Em setembro de 2014 foi atualizado o Manifesto Reativo que foca em alguns aspectos necessários para as arquiteturas suportarem os requerimentos das aplicações que estão mudando constantemente no últimos anos. Esse manifesto foca nas soluções: Responsive, Resilient, Elastic e Message Driven. A palestra irá detalhar cada solução e demonstrar como são aplicados em cenários reais, além de ferramentas que podem ser utilizadas.
A Study on Design Optimization of Roller Conveyor Chain Link Plate by Using T...IJSRD
According to the relevance towards the state priorities the economy of Maharashtra state is dominated by agricultural as well as industrial sector. Sugar factories play an important role in economy of Maharashtra state. About 60 percent processes in these factories are based on roller chain conveyors. Apart from that, other industries also use these chains frequently for process atomization. However, failure of these chains is perennial problem in these industries which causes huge losses to these industries along with its dependents and in turn economic growth of the state. Material uncertainty plays an important role on formation of elastic and plastic stresses. Breakage of chain is also affected due to faulty manufacturing such as wall thickness of link, breaking area of links, bending movement of pin, inner width of chain and shape of the link and uncertainty in heat treatment. Roller conveyor chains are the critical component in sugar mills, paper mill, food processing, fertilizer industry, pharmaceutical industry, cement industry, foundry industry, heat treatment units, coal mines etc. From the previous studies, it can be noted that, even though several patents are filed on roller chains and conveyors, most of the patents are based on metallurgical investigation, improvement of efficiency and performance of chain. Hardly few patents are there on improving life of the chain and minimization of its failure. From the chain failure case studies it can be noted that the root cause of failure was faulty material processing, heat treatment and improper material selection.
Because of Evidence of a "Special Relationship" Between Insureds and Their Br...NationalUnderwriter
Because of Evidence of a "Special Relationship" Between Insureds and Their Broker, Insureds' Suit Against Broker Should Not Have Been Dismissed, NY's Highest Court Holds
New York’s highest court, the New York Court of Appeals, has ruled that sufficient evidence of a “special relationship” existed between insureds and their insurance broker such that a negligence lawsuit brought by the insureds against their broker should not have been dismissed at the summary judgment stage.
Business Liability Policy Requires Insurer to Defend Defamation and Business ...NationalUnderwriter
Business Liability Policy Requires Insurer to Defend Defamation and Business Tort Claims Arising Out of Business' Website Publications by Michael S. Levine and Patrick M. McDermott
The U.S. District Court for the Eastern District of Virginia has held that an insurer has a duty to defend claims arising out of Web site publications.[1] In that case, the court rejected an insurer’s attempt to disclaim coverage based upon an exclusion barring coverage for insureds whose business is advertising, broadcasting, publishing or telecasting, finding that posting news stories on a Web site was incidental to the insured’s business and therefore not excluded.
Supreme Court of New Jersey Confirms "Fairly Debatable" Standard for First Pa...NationalUnderwriter
Supreme Court of New Jersey Confirms "Fairly Debatable" Standard for First Party Bad Faith; Acknowledges Relevance of Actual Investigation by Frederic J. Giordano and Robert F. Pawlowski
The Supreme Court of New Jersey recently issued an important pair of decisions for policyholders with bad faith claims against their first-party insurance companies in Badiali v. New Jersey Manufacturers Insurance Group[1] and Wadeer v. New Jersey Manufacturers Insurance Company.[2] In Badiali and Wadeer, the court reiterated the narrow “fairly debatable” standard as the threshold for bad faith claims in New Jersey. But, the court also opened the door to modify this standard in the Badiali decision by recognizing the relevance of the actual claims handling in a particular case.
Emergency Mitigation Measures and Repairs, Allegedly Faulty, Doom CoverageNationalUnderwriter
From FC&S Legal: Emergency Mitigation Measures and Repairs, Allegedly Faulty, Doom Coverage.
A federal district court has ruled that an insurer was not obligated to cover claims stemming from allegedly faulty
emergency mitigation measures and repairs made to a roof damaged by Hurricane Isaac.
The Case
Cedar Ridge, LLC, alleged that its Riverlands Shopping Center was damaged by Hurricane Isaac and that it contracted with Roof Technologies, Inc., to perform “emergency mitigation work,” which generally consisted of fastening tarps to Riverlands’ roof. Cedar Ridge then filed a claim with Landmark American Insurance Company and RSUI Indemnity Company (together, “Landmark”), which was denied on the ground that the emergency mitigation work had caused additional damage to Riverlands.
Cedar Ridge sued Landmark, which filed a complaint against Roof Tech, asserting that, “in the event [Landmark was] held liable to plaintiff for any of the claims asserted, third party defendant, Roof Technologies, Inc. [was] liable to [Landmark] for the damage it caused to the property at issue as a result of its defective workmanship and by the improper installation of tarps on the roof following Hurricane Isaac.”
Roof Tech moved for summary judgment.
Class Actions: Insurance Related Claims
by Thomas F. Segalla
Whether prosecuting or opposing a motion for class certification, within the context of insurance related claims, there are certain principles that are critical to determining the allegations that are necessary to successfully assert such claims and the nature of any challenge to a motion to certify the punitive class. As the court noted, in the case of Deborah Mahon v. Chicago Title Insurance Co.:[1]
CGL Coverage Form -- Coverage A (from FC&S Legal: The Insurance Coverage Law ...NationalUnderwriter
This article analyzes coverage A, bodily injury and property damage coverages of the ISO CGL form CG 00 01.
Bodily Injury and Property Damage Liability:
Summary: Coverage A of the current commercial general liability (CGL) coverage forms, both the
occurrence form and the claims-made form, provides bodily injury and property damage liability
insurance. This article discusses the features of coverage A that are common to both the occurrence
and the claims-made form.
Countdown to 2021: 60 Important Supreme Court Decisions for Rhode Island Civ...Nicole Benjamin
As we countdown to 2021, we look back on the important civil decisions of the past five Rhode Island Supreme Court terms and the issues of first impression, practice pointers, and significant holdings that fill the pages of the Atlantic Reporter.
Excess and Surplus Lines Law: A 3-State Sample of a Complete State-by-State C...NationalUnderwriter
Welcome to the 2015 Excess and Surplus Lines Law: A State-by-State Compendium!
This is a 3-state sample of the FREE complete, 186-page state-by-state compendium.
This state-by-state compendium, culled from FC&S Legal’s Eye on the Experts column, is taken from the 2015 Excess and Surplus Lines Laws in the United States Manual, contributed by John P. Dearie, Jr., John N. Emmanuel, Robert A. Romano, and Paige D. Waters, attorneys at Locke Lord LLP, which reflects all of the pertinent changes in the surplus lines laws and regulations of the 50 states and U.S. territories including a special section on the Non-Admitted and Reinsurance Reform Act (“NRRA”) and the steps surplus lines carriers and brokers should be
taking now to ensure compliance with this groundbreaking legislation.
Easy to use and highly informative, this State-by-State Compendium will be your go-to resource for Excess and Surplus Lines Law around the nation.
Get your complete--and complimentary--compendium today: https://fs8.formsite.com/sbmedia/form1661/index.html
How to Successfully Navigate the Latest Changes to the Affordable Care ActNationalUnderwriter
From ALM's National Underwriter comes a timely and necessary ACA presentation covering:
Employer Mandate Penalties
• Reporting Requirements
• Small Business Health Options (SHOP) Changes
• Cadillac Tax Delay
• Delay of Menu Labeling Rule
• Other Affordable Care Act Changes
• Changes to IRS Forms
• Statistics
Finding in Favor of Insurer, Jury Rejects Homeowners¹ Bid for $600,000 for Wa...NationalUnderwriter
From the NEW Verdicts & Settlements section of FC&S Legal: The Insurance Coverage Law Information Center: Finding in Favor of Insurer, Jury Rejects Homeowners¹ Bid for $600,000 for Water Damage to Their Home
A Florida jury has rejected a couple’s claim that they were entitled to $600,000 from their homeowner’s insurance company for water damage to their residence, finding that the damage claimed by the couple had not been caused by water flowing from a water spout that had been left on overnight.
Facts & Allegations
Andres and Doris Cabo alleged that on January 11, 2011, their residence in Miami-Dade County sustained property damage as a result of their daughter leaving the kitchen faucet’s filtered water spout on overnight. The couple filed a claim with their insurance carrier, Security First Insurance, for water damage to their home.
The EU Solvency II Regime for Insurers: An Update on ImplementationNationalUnderwriter
The EU Solvency II Regime for Insurers: An Update on Implementation by Jeremy G. Hill, James C. Scoville, Edite Ligere, and Benjamin Lyon
The Prudential Regulation Authority’s Policy Statement 2/15: A New Regime for Insurers
On March 20, 2015, the Prudential Regulation Authority (“PRA”) published Policy Statement 2/15 on Solvency II: A new regime for insurers (“PS2/15”),[1] which runs to 330 pages, sets out the rules and accompanying supervisory statements[2] required for the PRA’s implementation of Solvency II.
CFTC Grants No Action Relief to Commodity Pool Operators with Respect to Cert...NationalUnderwriter
CFTC Grants No Action Relief to Commodity Pool Operators with Respect to Certain Insurance-Linked Securitization Vehicles by Daphne G. Frydman, Brian Barrett, and Raymond A. Ramirez
Toward the end of 2014, the staff of the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight (“DSIO”) issued two letters affecting insurance-linked securitization vehicles: CFTC Letter No. 14-145[1] and CFTC Letter No. 14-152.[2]
Both CFTC Letters 14-152 and 14-145, which are summarized below, afford relief from certain Commodity Pool Operator (“CPO”) compliance obligations. Although Letter 14-145 preceded Letter 14-152, the summary begins with Letter 14-152 because Letter 14-145 is a no-action letter that was issued to a specific (and anonymous) market participant and cannot be relied on by other market participants. In contrast, Letter 14-152 was addressed to the Securities Industry and Financial Markets Association (“SIFMA”) and affords industry-wide relief from CPO registration to certain entities that engage in insurance-linked securities transactions.
Arbitration in Insurance Coverage Disputes: Pluses and MinusesNationalUnderwriter
Arbitration in Insurance Coverage Disputes: Pluses and Minuses By Peter A. Halprin
Deciding whether to proceed with arbitration, either after the denial of a claim or when procuring the placement of a policy,requires an understanding of arbitration and its advantages and disadvantages. This article analyzes the perceived advantages and disadvantages of arbitration.
Policyholders may be surprised to find that their insurance policies contain an arbitration provision. Deciding whether to proceed with arbitration, either after the denial of a claim or when procuring the placement of a policy, requires an understanding of the advantages and disadvantages of arbitration.
Supreme Court of Texas Marries Contractual Limitations to Insurance PoliciesNationalUnderwriter
Supreme Court of Texas Marries Contractual Limitations to Insurance Policies by Tom Stilwell, John English, Justin T. Scott, and J. Sean Jain
In a case that has been closely watched by the oil and gas industry and its insurers, the Supreme Court of Texas recently issued its opinion in In re Deepwater Horizon, and settled the debate concerning whether a company’s insurance policies stood alone or were married to and dependent upon an insured’s limited obligation in a separate contract to insure and indemnify a third party. Specifically, the court found that Transocean’s $750 million primary and excess insurance policies did not offer unrestricted coverage to BP as an additional insured, but instead incorporated and were bound by the
limitations placed on Transocean’s liability under the parties’ drilling contract (the “Drilling Contract”).
New York State Department of Financial Services Expands Its Cyber Focus to In...NationalUnderwriter
New York State Department of Financial Services Expands Its Cyber Focus to Insurers by Eric R. Dinallo, Jeremy Feigelson, David A. O’Neil, Jim Pastore, and Jordan R. Friedland
The New York State Department of Financial Services (“DFS”) recently announced a major expansion of its cybersecurity efforts: DFS will require insurers to respond to a special “comprehensive risk assessment” on cybersecurity, with those assessments to be followed by an enhanced focus on cybersecurity as part of DFS’s regular examinations of insurers. DFS’s announcement expands to insurance the increasingly rigorous approach it has recently applied to banks in the area of cyber security. More importantly, it offers critical guidance to all industries about what regulators will consider adequate precautions and preparation in this area.
Cyber Security and Insurance Coverage Protection: The Perfect Time for an AuditNationalUnderwriter
Cyber Security and Insurance Coverage Protection: The Perfect Time for an Audit by Lynda Bennett
2014 ended almost the same way that it began for most companies – having concerns about cyber security and hackers. At the beginning of the year, the news cycle was focused on breaches that took place in the consumer product space as Target, Michael’s, Neiman Marcus, and Home Depot worked fast and furious to address breaches that led to concerns about a massive amount of credit card information possibly being “in the open.” Later in the year, we learned that corporate giants like JPMorgan Chase and Apple were not immune from cyber security breaches as still more personally identifiable information and very personal photographs were released into the public domain. Finally, as 2014 drew to a close, the entertainment industry was further rocked by the cyber-attack on Sony Corp., which led to even broader concerns about national security and terrorist threats.
CFTC Grants No-Action Relief to Commodity Pool Operators with Respect to Cert...NationalUnderwriter
CFTC Grants No-Action Relief to Commodity Pool Operators with Respect to Certain Insurance-Linked Securitization Vehicles
Toward the end of 2014, the staff of the Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer
and Intermediary Oversight (“DSIO”) issued two letters affecting insurance-linked securitization vehicles: CFTC Letter No. 14-145[1] and CFTC Letter No. 14-152.[2]
Both CFTC Letters 14-152 and 14-145, which are summarized below, afford relief from certain Commodity Pool Operator (“CPO”) compliance obligations. Although Letter 14-145 preceded Letter 14-152, the summary begins with Letter 14-152 because Letter 14-145 is a no-action letter that was issued to a specific (and anonymous) market participant and cannot be relied on by other market participants. In contrast, Letter 14-152 was addressed to the Securities Industry and Financial Markets Association (“SIFMA”) and affords industry-wide relief from CPO registration to certain entities that engage in insurance-linked securities transactions.
N.J. Trial Court Applies "Named Storm" Deductible in Superstorm Sandy Case
A New Jersey trial court has ruled that the “Named Storm” deductible applied to an insured’s claim in a Superstorm Sandy case.
The Case:
Wakefern Food Corporation, a buying cooperative of owners/operators of Shoprite and PriceRite supermarkets that purchased commercial property insurance from Lexington Insurance Company, claimed over $50 million in losses from Superstorm Sandy. Lexington paid about $22 million, and Wakefern sued the insurer.
Wakefern asserted that Superstorm Sandy was not a “Named Storm” by definition when it hit New Jersey and its losses had occurred. It asserted that when the storm hit New Jersey at approximately 8:00 p.m. EDT on October 29, 2012, the storm was not declared by the National Weather Service to be a hurricane, typhoon, tropical cyclone, or tropical depression, as its policy defined Named Storm. Wakefern pointed out that as of 5:00 p.m. EDT on October 29, 2012,
the storm already was “expected to transition into a frontal or wintertime low pressure system shortly.” Wakefern
contended that by 7:00 p.m. EDT, the National Weather Service’s National Hurricane Center (“NHC”) had declared the storm a “Post-Tropical Cyclone.” Wakefern argued that a “Post-Tropical Cyclone” was defined in the glossary of NHC terms as its own weather event and that a Post-Tropical Cyclone was a “former tropical cyclone” not a “Hurricane, Typhoon, Tropical Cyclone, Tropical Storm or Tropical Depression.”
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Clarifying Bad Faith Jurisprudence in Virginia, Federal Court Recognizes Bad-Faith Claim Against First-Party Insurer
In Great Am. Ins. Co. v. GRM Mgmt., LLC,[1] a federal district court denied an insurer’s motion to dismiss a bad-faith claim arising out of the insurer’s denial of its policyholder’s claim for property damage and loss of business income following the theft of rooftop air conditioning units from the policyholder’s hotel. The ruling is significant because it illustrates that Virginia law supports first-party bad-faith claims against insurers.
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Clarifying Bad Faith Jurisprudence in Virginia, Federal Court Recognizes Bad Faith Claim Against First-Party Insurer
1. The Insurance Coverage Law Information Center
The following article is from National Underwriter’s latest online resource,
FC&S Legal: The Insurance Coverage Law Information Center.
CLARIFYING BAD FAITH JURISPRUDENCE IN VIRGINIA, FEDERAL COURT
RECOGNIZES BAD-FAITH CLAIM AGAINST FIRST-PARTY INSURER
Michael S. Levine
January 29, 2015
In Great Am. Ins. Co. v. GRM Mgmt., LLC,[1] a federal district court denied an insurer’s motion to dismiss a bad-faith claim
arising out of the insurer’s denial of its policyholder’s claim for property damage and loss of business income following
the theft of rooftop air conditioning units from the policyholder’s hotel. The ruling is significant because it illustrates that
Virginia law supports first-party bad-faith claims against insurers.
Background
Great American Insurance Company (“GAIC”) issued a “business insurance policy” to GRM Management, LLC, and SN
Holdings, LLC, (collectively, the “policyholders”), covering property at and belonging to the Richmond Magnuson Grand
Hotel and Convention Center (the “hotel”).
The policyholders reported a loss to GAIC after the hotel’s HVAC roof units were stolen, resulting in damage to other
hotel property and a loss of business income. GAIC investigated the claim, and during the investigation issued five
reservation-of-rights letters discussing various policy exclusions, including an employee theft exclusion, that GAIC
contended applied to bar coverage for the claim.
The same day GAIC sent its fifth reservation-of-rights letter, it filed suit seeking a declaration of no coverage under the
policy. The policyholders asserted counterclaims alleging breach of contract and breach of GAIC’s duty of good faith and
fair dealing. GAIC moved to dismiss the counterclaims and for judgment on the pleadings.
Arguments and Holdings
The court determined as a threshold matter that the policyholders made out a prima facie claim for breach of contract,
even though GAIC had not formally denied coverage for the claim, because the policyholders alleged that GAIC had not
paid the claims for property damage, missing property and loss of business income. By the same token, however, because
GAIC had not yet denied coverage, the court could not sustain the policyholders’ claim for anticipatory breach.
Nevertheless, the court sustained the policyholders’ bad-faith claim. The court found that good faith is implied in
insurance contracts, as in other contracts, notwithstanding the “oft-cited” Supreme Court of Virginia opinion in Ward’s
Equip., Inc. v. New Holland N. Am., Inc.,[2] in which the court held that “when parties to a contract create valid and
binding rights, an implied covenant of good faith and fair dealing is inapplicable to those rights.” GAIC relied heavily on
this aspect of Ward’s to support its argument that Virginia expressly disallows bad-faith claims in the first-party context.
But, the GRM court explained that subsequent federal opinions make clear that the holding in Ward’s means only that an
implied duty cannot override express contractual terms where the plain language and implied duty seem to conflict.
Moreover, the court found that the Fourth Circuit and the Eastern District of Virginia recognize an “implied duty of good
faith and fair dealing governing first party relationships in Virginia.” While noting that Virginia bad-faith law is “not
exceptionally clear,” the GRM court also explained that no Virginia state court has expressly rejected the implied
good-faith duty in the first-party insurance context. Because federal courts have recognized the possibility of bad-faith
claims in the first-party context, and because no Virginia court has repudiated that possibility, the GRM court upheld the
policyholder’s bad-faith claim.
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
2. Implications
The GRM opinion clarifies an important and previously uncertain area of Virginia insurance law, confirming that a
policyholder may indeed assert bad-faith claims against insurers who wrongfully deny coverage for first-party claims, at
least in federal courts. While Virginia state courts have recognized the possibility for bad-faith damages in the third-party
context, they have not ruled on (and therefore have not eliminated) bad-faith claims in the first-party context.
Bad-faith claims serve a vital role in the fair and timely adjustment and payment of first-party claims, just as they work as
a check on insurer misconduct when insurers wrongfully refuse to defend and indemnify third-party claims. Without an
avenue for extra-contractual recovery, property insurers have no incentive to pay a claim, since the most they could be
liable for if sued for breach of contract would be the amount they should have paid in the first place. Therefore, just as it
does in the third-party context, a viable claim of first-party bad faith will serve to prevent insurers from gambling with the
outcome of a claim by increasing the stakes should the denial be deemed unjustified, thereby forcing insurers to think
twice before shirking their contractual obligations.
Notes
[1] Case No. 3:14CV295, 2014 U.S. Dist. LEXIS 164147 (E.D. Va. Nov. 24, 2014).
[2] 493 S.E.2d 516 (Va. 1997).
About The Author
Michael S. Levine is counsel at Hunton & Williams LLP, where he focuses his practice on business litigation, insurance
coverage advice and related coverage litigation. He may be reached at mlevine@hunton.com.
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
![The Insurance Coverage Law Information Center
The following article is from National Underwriter’s latest online resource,
FC&S Legal: The Insurance Coverage Law Information Center.
CLARIFYING BAD FAITH JURISPRUDENCE IN VIRGINIA, FEDERAL COURT
RECOGNIZES BAD-FAITH CLAIM AGAINST FIRST-PARTY INSURER
Michael S. Levine
January 29, 2015
In Great Am. Ins. Co. v. GRM Mgmt., LLC,[1] a federal district court denied an insurer’s motion to dismiss a bad-faith claim
arising out of the insurer’s denial of its policyholder’s claim for property damage and loss of business income following
the theft of rooftop air conditioning units from the policyholder’s hotel. The ruling is significant because it illustrates that
Virginia law supports first-party bad-faith claims against insurers.
Background
Great American Insurance Company (“GAIC”) issued a “business insurance policy” to GRM Management, LLC, and SN
Holdings, LLC, (collectively, the “policyholders”), covering property at and belonging to the Richmond Magnuson Grand
Hotel and Convention Center (the “hotel”).
The policyholders reported a loss to GAIC after the hotel’s HVAC roof units were stolen, resulting in damage to other
hotel property and a loss of business income. GAIC investigated the claim, and during the investigation issued five
reservation-of-rights letters discussing various policy exclusions, including an employee theft exclusion, that GAIC
contended applied to bar coverage for the claim.
The same day GAIC sent its fifth reservation-of-rights letter, it filed suit seeking a declaration of no coverage under the
policy. The policyholders asserted counterclaims alleging breach of contract and breach of GAIC’s duty of good faith and
fair dealing. GAIC moved to dismiss the counterclaims and for judgment on the pleadings.
Arguments and Holdings
The court determined as a threshold matter that the policyholders made out a prima facie claim for breach of contract,
even though GAIC had not formally denied coverage for the claim, because the policyholders alleged that GAIC had not
paid the claims for property damage, missing property and loss of business income. By the same token, however, because
GAIC had not yet denied coverage, the court could not sustain the policyholders’ claim for anticipatory breach.
Nevertheless, the court sustained the policyholders’ bad-faith claim. The court found that good faith is implied in
insurance contracts, as in other contracts, notwithstanding the “oft-cited” Supreme Court of Virginia opinion in Ward’s
Equip., Inc. v. New Holland N. Am., Inc.,[2] in which the court held that “when parties to a contract create valid and
binding rights, an implied covenant of good faith and fair dealing is inapplicable to those rights.” GAIC relied heavily on
this aspect of Ward’s to support its argument that Virginia expressly disallows bad-faith claims in the first-party context.
But, the GRM court explained that subsequent federal opinions make clear that the holding in Ward’s means only that an
implied duty cannot override express contractual terms where the plain language and implied duty seem to conflict.
Moreover, the court found that the Fourth Circuit and the Eastern District of Virginia recognize an “implied duty of good
faith and fair dealing governing first party relationships in Virginia.” While noting that Virginia bad-faith law is “not
exceptionally clear,” the GRM court also explained that no Virginia state court has expressly rejected the implied
good-faith duty in the first-party insurance context. Because federal courts have recognized the possibility of bad-faith
claims in the first-party context, and because no Virginia court has repudiated that possibility, the GRM court upheld the
policyholder’s bad-faith claim.
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com](https://image.slidesharecdn.com/clarifyingbadfaithjurisprudenceinvirginiafederalcourtrecognizesbad-faithclaimagainstfirst-partyinsur-150517235321-lva1-app6892/85/Clarifying-Bad-Faith-Jurisprudence-in-Virginia-Federal-Court-Recognizes-Bad-Faith-Claim-Against-First-Party-Insurer-1-320.jpg)
![Implications
The GRM opinion clarifies an important and previously uncertain area of Virginia insurance law, confirming that a
policyholder may indeed assert bad-faith claims against insurers who wrongfully deny coverage for first-party claims, at
least in federal courts. While Virginia state courts have recognized the possibility for bad-faith damages in the third-party
context, they have not ruled on (and therefore have not eliminated) bad-faith claims in the first-party context.
Bad-faith claims serve a vital role in the fair and timely adjustment and payment of first-party claims, just as they work as
a check on insurer misconduct when insurers wrongfully refuse to defend and indemnify third-party claims. Without an
avenue for extra-contractual recovery, property insurers have no incentive to pay a claim, since the most they could be
liable for if sued for breach of contract would be the amount they should have paid in the first place. Therefore, just as it
does in the third-party context, a viable claim of first-party bad faith will serve to prevent insurers from gambling with the
outcome of a claim by increasing the stakes should the denial be deemed unjustified, thereby forcing insurers to think
twice before shirking their contractual obligations.
Notes
[1] Case No. 3:14CV295, 2014 U.S. Dist. LEXIS 164147 (E.D. Va. Nov. 24, 2014).
[2] 493 S.E.2d 516 (Va. 1997).
About The Author
Michael S. Levine is counsel at Hunton & Williams LLP, where he focuses his practice on business litigation, insurance
coverage advice and related coverage litigation. He may be reached at mlevine@hunton.com.
Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)