Matthew D. Stockwell recently published an article in the June 2016 edition of Claims magazine, a PropertyCasualty360 publication, titled “Is That Product Liability Claim Covered?” In the article, he discusses Commercial General Liability insurance policies and whether or not these policies cover claims of bodily injury and property damage.
When a jury awards punitive damages against an insurance company for bad faith, the maximum it may award is determined based on a multiple of its underlying award of compensatory damages and attorney fees (so-called “Brandt fees”). In a June 9 decision, the California Supreme Court unanimously held that when a judge, instead of a jury, awards the attorney fees, they should still be included when considering the maximum punitive damages the jury may award.
Ever since the U.S. Court of Appeals for the Second Circuit decided Zeig v. Mass. Bonding & Insurance Co. in 1928, it has been well-settled that a policyholder can compromise a disputed claim with its insurer for less than the full limits of the policy without putting its rights to excess coverage at risk. In a seminal opinion by Judge Augustus Hand, the Zeig court said, “We can see no reason for a construction so burdensome to the 
insured,” to require collection of the full amount of primary polices in order to exhaust them. The Zeig court emphasized that a compromise payment by the primary insurer discharges the limits of the primary coverage, while the excess insurer is unharmed, since it must pay only the amount exceeding the attachment point of its policy.
Feeling wired about risks arising from the Telephone Consumer Protection Act? Maybe you should. The TCPA subjects businesses that use text messaging, auto-dialing, and bulk faxing for advertising and marketing to potential class action litigation. Financial institutions, various supermarket chains, and recently Caribou Coffee have all been targeted in TCPA class actions. But policyholders who get static over such claims are not without recourse: several lines of liability insurance may answer the call.
Insurance covers the unexpected. Courts sometimes struggle to assess what an insured did expect, didn’t expect, or sometimes, should have expected. Contractors, construction firms and others should bear this in mind in their daily operations and when seeking a defense from their insurance companies.
In Auto-Owners Insurance Co. v. Ryan Stevens Construction, Inc. the U.S. District Court for the District of Utah recently held that a contractor’s commercial general liability insurance carrier had no 
duty to defend a contractor who should have expected property damage resulting from its use of certain equipment on a construction project. The decision cautions contractors around the country to consider the expected consequences of their on-site actions to avoid arguments from insurers that any resulting damages are not accidental.
Many policyholders assume that if an insurer pays to defend a claim against them, the policyholder will never be asked to pay those costs back. And most often they’re right. But sometimes the insurer may demand that the policyholder pay back some or all of the defense costs. Such insurers treat the contractual duty to defend or to indemnify the insured for defense costs as little more than a lending facility.
Most of the time, such insurer demands are unjustified. But companies should understand when and under what circumstances insurers might seek reimbursement or recoupment of defense costs so they can avoid agreeing to do so unnecessarily or at least plan in advance financially.
In The Odyssey, Homer describes Orion as a giant hunter armed with bronze club. As the legend goes, Orion was killed—either by the sting of a great scorpion or by the bow of Artemis—and was placed among the stars, creating the well-known constellation.
Orion Insurance Company is now set to join its mythic namesake as an artifact of history, though without the long-lasting twinkle. Barring one important, if remote, opt-out scenario, Orion and its sister company, the London and Overseas Insurance Company Limited (collectively OIC), are expected to dim and fade away over the next few years.
Recently, we wrote about the breadth of the “duty to defend,” and its importance to policyholders. As if on cue, late last week the Ninth Circuit Court of Appeals confirmed in Ash Grove Cement Company v. Liberty Mutual Insurance Company that, under Oregon law, an insurer’s duty to defend begins with an information request from the Environmental Protection Agency, and continues for the duration of the regulatory process. 
The particular information request at issue in Ash Grove Cement is known as a “104(e) letter,” which is issued by the EPA under section 104(e) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). As companies that have owned or operated a contaminated site know from experience, a 104(e) letter or a similar request under state environmental law typically is the first step in a regulatory enforcement process under which they face strict and retroactive liability for the costs of investigating and cleaning up the site. The ruling in Ash Grove Cement means that defense cost coverage begins at this critical juncture and continues until site investigation and cleanup is completed.
The recent bombings at the Brussels Airport and Maalbeek metro station are another sobering reminder of how much vigilance is needed to protect against these kinds of public health and safety from attacks. They show once again that violence—whether resulting from terrorism or otherwise—can occur any time at any place, and can have far-reaching impacts.
Risk management programs should generally include measures to reduce the risk of violent attacks, such as security policies and procedures. At the same 
time, companies should also prepare for the possibility that precautions are not enough to prevent all attacks. As a result, preparations should also include steps such as creating a comprehensive crisis response plan as well as reviewing the “terrorism” provisions in the company’s insurance policies.
Over time, New York’s courts have erected multiple barriers to policyholders seeking to recover insurance for long-tail, progressive injury claims—such as environmental or asbestos liabilities—that can implicate multiple policies over multiple policy terms. Now, in a New York minute, just weeks after hearing oral argument, the Empire State’s highest court leveled the playing field by endorsing the “all sums” and “vertical exhaustion” approach to allocation advocated by a policyholder, at least as to policies containing “non-cumulation” and “prior insurance” provisions.
In In re Viking Pump, Inc., New York’s Court of Appeals did not overrule its 2002 decision in Consolidated Edison Co. of New York v. Allstate Ins. Co., which had applied pro rata allocation where the non-cumulation clause argument was not raised, but the court made clear that pro rata allocation is not the default rule in New York. Rather, the specific wording of the triggered policies will control, and can require allocation on an all-sums basis. This is a huge win for policyholders with New York liabilities and a further endorsement, by a prestigious court, of the “all sums” approach to allocation.
