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Insurance Coverage Update November 2014

Covered in this post:

  • True Excess Policy Takes Priority of Coverage Over Primary Liability Policy Containing Excess Other Insurance Clause
  • District Court Untangles Six-Way Priority of Coverage Dispute Arising from Multi-Million Underlying Personal Injury Settlement
  • Court Finds Letter Seeking Information from the Insured and Requesting Insured Cease Business Operations Constitutes a Demand for Injunctive Relief
  • New York Trial Court Finds Policyholder Responsible for Allocated Share of Environmental Liabilities Attributable to Period of Self-Insurance Pursuant to New York Regulation Prohibiting Coverage for Sudden and Accidental Pollution

Covered in this post:

  • True Excess Policy Takes Priority of Coverage Over Primary Liability Policy Containing Excess Other Insurance Clause
  • District Court Untangles Six-Way Priority of Coverage Dispute Arising from Multi-Million Underlying Personal Injury Settlement
  • Court Finds Letter Seeking Information from the Insured and Requesting Insured Cease Business Operations Constitutes a Demand for Injunctive Relief
  • New York Trial Court Finds Policyholder Responsible for Allocated Share of Environmental Liabilities Attributable to Period of Self-Insurance Pursuant to New York Regulation Prohibiting Coverage for Sudden and Accidental Pollution

NEW JERSEY 

Priority of Coverage - Excess Insurance
True Excess Policy Takes Priority of Coverage Over Primary Liability Policy Containing Excess Other Insurance Clause   Encompass Ins. Co. v. Quincy Mutual Fire Ins. Co., 2014 N.J. Super. Unpub. LEXIS 2684 (App. Div., November 14, 2014)   The New Jersey Appellate Division ruled that an excess policy that generally provided that its  "[c]overage is excess over any other insurance" was not superseded in priority of coverage by virtue of a primary policy that contained an excess "other insurance" clause.  The Court also remanded so the trial court could further consider whether attorney's fees and/or prejudgment interest were appropriate.   The claim arose in connection with a traffic accident in which a motorcyclist was severely injured after colliding with a motor vehicle driven by a real estate agent returning to her office from a title closing. The motorcyclist brought a claim against the real estate agent and her employer, and both defendants sought coverage from their respective insurers.   Read the full summary...
Apportionment - Multiple Policies
District Court Untangles Six-Way Priority of Coverage Dispute Arising from Multi-Million Underlying Personal Injury Settlement   Carolina Cas. Ins. Co. v. Travelers Prop. Cas. Co., 2014 U.S. Dist. LEXIS 150002 (D.N.J. Oct. 22, 2014)   The District Court apportioned liability in connection with a $5,000,000 personal injury settlement among six insurance policies.  In so doing, it examined how the New Jersey Omnibus motor vehicle insurance law and a subcontracting agreement interacted with policy terms.   An employee of a subcontractor hired to pick up concrete road barriers from a construction staging area suffered a severe injury to his foot while the general contractor's employees moved materials into his trailer.  The employee's subsequent negligence claim settled for $5,000,000.   The general contractor's liability insurer contributed its $1,000,000 limit to fund the settlement while the remaining $4,000,000 was paid by the general contractor's excess liability insurer.  Both contributing insurers sought to recover amounts under other primary and excess policies covering, respectively, the subcontractor (who owned the trailer) and a third party (who leased the tractor to the subcontractor).     Read the full summary...

NEW YORK 

Claims Made and Reported - Interrelated Wrongful Acts
Court Finds Letter Seeking Information from the Insured and Requesting Insured Cease Business Operations Constitutes a Demand for Injunctive Relief   Weaver v. Axis Surplus Ins. Co., 2014 U.S. Dist. LEXIS 154746 (E.D.N.Y. Oct. 30, 2014)   The EDNY found that no Directors & Officers coverage was available to an insured for an indictment related to its business as the claim and a prior demand letter constituted interrelated wrongful acts first made prior to the inception of the policy period.   The insured, the President and CEO of a vending machine sales company, sought insurance coverage under a Director & Officers Claims Made Coverage Policy following the receipt of an indictment filed in the United States District Court for the Southern District of Florida (hereinafter the "2012 claim").  The indictment contained allegations of conspiracy, mail fraud and wire fraud.  Shortly before the indictment was filed, the insured received a letter informing him that he was identified as a "target of a federal grand jury investigation in the Southern District of Florida with respect to possible criminal violations including mail fraud, write fraud and conspiracy."  The insured forwarded this to the insurer whom denied coverage.  Upon receipt, the insurer denied coverage on the following bases: (1) the claim was not first made during the policy period as it arose from the same "wrongful acts" as a prior claim, a 2007 letter from the Securities Division of the Office of the Attorney General of Maryland (hereinafter the "2007 claim"); and (2) the 2007 claim occurred prior to the "Pending or Prior Claim Date" and the 2007 claim and the 2012 claim constitute interrelated wrongful acts.   Read the full summary...
Allocation
New York Trial Court Finds Policyholder Responsible for Allocated Share of Environmental Liabilities Attributable to Period of Self-Insurance Pursuant to New York Regulation Prohibiting Coverage for Sudden and Accidental Pollution   Keyspan Gas E. Corp. v Munich Reins. Am., Inc, 2014 N.Y. Misc. LEXIS 4469 (N.Y. Sup. Ct. Oct. 17, 2014)   The New York Supreme Court finds that pro rata time on the risk allocation methodology applies to long-tail environmental contamination claim, with the insured being responsible for the period of 1971-1982 when pollution coverage was barred by statute but finds a question of fact regarding the insured's failure to purchase coverage when it was available in the marketplace.   An excess insurer sought a declaration that a pro rata time on the risk approach should be applied to property damage at two manufacturing plants and that the insurer's share should not include those damages that occurred outside its policy periods.  Further, the insurer argued that the insured should be considered self-insured for those years in which the insured declined to purchase coverage that was available in the marketplace and those years - - 1971 to 1986 - - in which Insurance Law § 46 prohibited the issuance of pollution insurance.  In opposing summary judgment, the insured argued that New York follows the "availability of insurance" allocation methodology and as such, should allocate costs in those periods.  Furthermore, the insured argued it was the insurer who bears the burden of demonstrating the availability of insurance.   Read the full summary...
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    Jon McHenry is the Chair of Connell Foley's nationally recognized Insurance Coverage Practice Group. Since joining the firm more than two decades ago, Jon has continually achieved groundbreaking results for the firm’s domestic ...

  • Partner

    Neil Mody represents insurance companies in complex insurance coverage matters, devoting personal attention to his clients' needs and the unique circumstances of each exposure to achieve favorable results. His clients include ...

  • Partner

    William Deveau is a versatile practitioner who focuses his practice in the areas of commercial litigation and insurance coverage law. He counsels and represents insurers on complex insurance coverage issues including bad faith ...

  • Partner

    William Krauss is a seasoned commercial litigator with a strong track record of positive outcomes. Working primarily with large national insurers, Bill litigates complex insurance disputes, including appeals, in state and ...

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