Insurance: April 2008 Archives
In a ruling preferring form over substance, a
In Home Depot U.S.A. v. Ohio Casualty Ins. Co., the retail store was sued for negligence and fraud after one of its window installation contractors installed a house’s windows backwards and upside down. Home Depot reported the claim and tendered its defense to its insurer. Assuming that it was entitled to coverage by its insurer, Home Depot failed to provide notice of this claim to the contractor’s insurer at this time.
Home Depot’s insurer denied the claim because it resulted from the contractor’s acts. Home Depot then reported the claim and tendered its defense to the contractor’s insurer, who denied coverage claiming that it was prejudiced as a result of the late notice. Home Depot had argued that the contractor’s insurer was on notice of the claim because it was defending the contractor in this lawsuit.
The court inexplicably held that Home Depot was a sophisticated corporate entity who should have familiarized itself with the policy, including the notice provision, that it required the contractor to obtain and name Home Depot as an additional insured. The court held that a potential insured should notify any and all potential insurers about a loss, even if they think they are covered by a different insured. Good advice. But left unsaid was how the court considered the insurer was in any way prejudiced by the late notice given that its insured had provided timely notice of the claim.
The lesson to be learned here, of course, is that a party should give notice in such circumstances to every carrier who might be on the risk. Also that courts sometimes put the windows in backwards, too.
Melissa Birnbaum
Criminal charges have been filed against two men who are accused of burning down the
As a result, the towns where “Twinkle Twinkle Little Star” and “Baa Baa Black Sheep” were penned are on high alert.
No word yet on whether Mary’s carrier had refused coverage on the grounds that either Mary or one of her lambs had conspired to have their residence set ablaze.
Jeffrey Resnick
There may be some relief for individuals and their families who suffered from exposure to asbestos. In Continental Casualty Co., et al. v. Employers Ins. Co. of Wausan, a New York trial court found that employees of Robert A. Keasbey Company, a small New York insulating company who has been out of business since 1995, were exposed to asbestos during the installation and removal processes. The employees’ injuries occurred before the completion of the work, not after, and thus the premises/operations coverage applies rather than the products/completed operations coverage.
This distinction is important because the premises/operations coverage does not have an aggregate limit, it only has a per occurrence limit. On the other hand, the products/completed operations coverage has an aggregate limit, which is exhausted.
Before determining that the company’s primary and excess insurers are on the hook, the Court also examined whether exposure to asbestos in general was considered one occurrence under the policy or whether each injured employee’s exposure was considered a separate occurrence. The Court determined correctly that each injured employee’s exposure was a separate occurrence because the exposure occurred at various work sites over many years. Injured employees and their families may now seek funds from the companies’ primary and excess insurers under the premises/operations coverage.
This decision has many other injured individuals and their families re-examining their facts and it will be interesting to see what effect it has on asbestos litigation. Finally some employees and their families will receive long overdue compensation for their illnesses.
Melissa Birnbaum
In Cinergy. v. Associated Elec. & Gas Ins. Services, Ltd, an insurer, AEGIS, sought a declaratory judgment that it was not liable for the defense costs of its insureds until it was determined that its insureds were entitled to coverage for the underlying claims. The underlying action in Cinergy concerned whether the insureds were entitled to coverage for an action brought under the federal Clean Air Act by the
The Indiana Supreme Court confirmed the appellate division’s decision that the insureds were not entitled to a defense in the underlying action even though the insureds’ policies stated that the policies imposed a duty on the insurer to directly pay for all amounts associated with its insureds’ defense of a lawsuit.
Even though prior
The Court avoids deciding whether insurers as a general rule should defend their insureds in environmental actions brought by the government even though concern for public health and environmentalism are in the forefront. The Court also declines to examine whether the public good is served by obligating the insurers to pay for costs to defend litigation, rather than the power companies, who are less able to absorb the costs of litigation than their insurers.
One important question that this decision leaves us with is whether these power companies will survive and be able to pay for a defense for these actions and upgrades to their facilities to meet environmental standards when insurers can avoid coverage by adding a phrase in the insurance contract which redefines the scope of coverage. If independent power companies are not able to survive and bought out by larger companies, what will happen to competition? Will our power companies follow the path of the oil companies and will the public eventually be the ones to pay for the defense and upgrade through our power bills?
Melissa Birnbaum
