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PANDEMIC UPDATE
The U.S. Circuit Court of Appeals for the Fourth Circuit has upheld a Virginia ruling that found a fitness store chain not eligible for commercial property insurance for its COVID-related business interruption losses. In Fountain Enterprises v. Markel Ins. Co., no. 21-2326 (4th Cir. Nov. 2, 2022) (unpublished), the court stated in a curial order and without a hearing that there was no coverage unless there was “material destruction or damage to the covered premises” im Consistent with the “unanimous decisions of our Sister Circles…”
NEW FOLLOW CASES
SECOND CIRCLE Statute of Limitations/Bad Faith (NY)
The Second Circuit has issued summary judgment in Sportsinsurance.com, Inc. v. The Hanover Ins. Co., No. 21-1967 (Cir. 2. Nov. 2, 2022) that a New York district court made no mistake in ruling that a company’s suit of embezzlement by its chief financial officer was dismissed by the 2nd -Annual insurance of the policy is excluded statute of limitations. The court stated that under New York law, “an agreement that modifies the statute of limitations by providing a shorter but reasonable time limit for bringing an action is enforceable.” In addition, the Second Circuit agreed with Hanover that the New York District Court should also have dismissed the insurance claims for breach of implied good faith as also barred. Notwithstanding the insurance argument that the term “loss” was ambiguous and should only apply to embezzlement and not to claims arising out of claims or damages arising out of Hanover’s handling of the damage, the court ruled that all underlying allegations concerned the rectification of the underlying damage and are therefore subject to the same limitation period.
Ninth circuit “Due to physical harm” (OR)
After being sued by the family of an injured customer and eventually settling the $49 million claim, a water park sued its insurance agent for only purchasing liability insurance with a $5 million limit policy. In Bliss Sequoia Insurance and Risk Advisors, Inc. v. Allied Property and Casualty Ins. Co., No. 20-35890 (Cir. 9 Oct. 27, 2022), the Ninth Circuit agreed in an Oregon District Court that these negligence claims do not fall under the agency’s general liability policy. Notwithstanding the agency’s argument that its liability “for” “personal injury” was based on a rigorous “but-for” analysis, the Ninth Circuit Court held that this construction represented a “highly unlikely understanding” of the policy’s scope of coverage and that, if “because” were taken to be literal but causal, liability insurers would have no way of setting premiums equal to expected costs; they would be insuring against a range of possible claims so large that an estimate of the likelihood of damage would occur occurs, it is possible that this area would actually be discarded would be arbitrary.” The court ruled that the phrase “for personal injury” in this policy only includes damages that are the foreseeable result of personal injury, “not just those that may arise in a chain of legal proceedings connected in some way with the injury of a person The court further stated that it saw no reason to delay the resolution of this case by referring the issue to the Oregon Supreme Court.
FLORIDA Car insurance/assessment/waiver
The Florida District Court of Appeal upheld a trial judge’s dismissal of assigned claims by an auto insurer and in NCI, LLC v. Progressive Ins. Co., 5D21-1282 (Fla. DCA, Nov. 4, 2022), that the assessment provision in this automobile policy was enforceable and that Progressive had not waived its right to insist that the insured’s claim be assessed, before this litigation can proceed.
MASSACHUSETTS “Created and Reported Claims”/ERP
A high-level dispute between Harvard and Zurich over the availability of liability insurance for litigation related to the university’s affirmative action efforts, now pending before the United States Supreme Court, came to an abrupt halt last week after Judge Burroughs ruled in President and Fellows of Harvard College v. Zurich American Ins. Co., No. 21-11530 (D. Mass. Nov. 2, 2022) that Harvard’s claims are premature because they were submitted and reported to Zurich after the 90-day extended reporting period in 2014-2015 “Politics in question. The district court found that claims made and reported provisions are strictly enforced in Massachusetts. In addition, the district court refused to find that an insured event’s actual or factual knowledge of a claim triggered coverage without the requisite notification. As a result, Judge Burroughs ruled that “it is thus clear that Zurich’s lack of prejudice or constructive or even factual knowledge would not alter Harvard’s obligation of notification in full compliance with the provisions of the policy”.
PENNSYLVANIA “Accident”/Intentional Acts Exclusion/“Abuse”
A federal district court in Pittsburgh has ruled that a homeowner’s efforts to cover up his son’s murder of a friend by turning the handgun over to a third party, delaying the police investigation and discovery of the boy’s body by several months, leading to emotional distress in his parents did not result from an “accident” arising under the homeowner’s insurance policies. In Rosenberg v. Chubb Indemnity Ins. Co., No. 22-137 (W. Pa. Oct. 31, 2022), Judge Horan also ruled that these claims were subject to the policy’s exclusion of “willful acts” and dismissed the insured’s argument that the liability was merely it could be based on frivolous behavior that is not affected by the exclusion. The court also ruled that these claims are subject to “abuse” under the policy’s exclusion of damages arising out of sexual harassment, sexual misconduct or harassment; or abuse.” The court emphasized the fact that only the terms “harassment” and “misconduct or harassment” were modified by “sexual” and that the lack of a similar limitation in relation to abuse signaled an intention to give it a much broader scope give , including that act of murder. Finally, the court dismissed the insured’s argument that their parent company (Hudson) had a duty of defense after Chubb’s refusal to provide coverage under their principal policy, and ruled that any coverage that might have applied was likely This umbrella cover also does not apply in the absence of an “event” or “accident”.
OTHER NOTICEABLE DEVELOPMENTS
In the insurance industry
Despite a 20 percent growth in earned premiums in the third quarter of 2022, Markel reported last week that it suffered a net investment loss of $281.5 million for the quarter.
After recently selling most of its Northbrook campus, Allstate is reportedly considering moving its headquarters to downtown Chicago.
State insurance commissioners were re-elected this week in California, Georgia, Kansas and Oklahoma.
MM on the way
Boston partner Michael Aylward took part in an insurance panel at the SMU Dedman School of Law in Dallas this week and discussed the unique problems encountered in making insurance claims with prominent policyholders.
The content of this article is intended to provide a general guide to the topic. In relation to your specific circumstances, you should seek advice from a specialist.
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