Coverage & Claims

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The body of California law standing for the general proposition that insurers may be able to recoup defense costs expended for non-covered claims continues to grow.  In a December decision, a federal judge in San Jose granted an insurer’s request for reimbursement of approximately $11 million that the insurer had paid to its insured under a reservation of rights. …
Read More California Continues to Permit Carriers to Recoup Defense Costs for Non-Covered Claims

As we reported earlier in the week, the Federal Deposit Insurance Corporation (“FDIC”) has begun filing lawsuits against the directors and officers of banks that it now holds in receivership .  The lawsuits are consistent with previous public statements in which the FDIC committed to try to recover, from the directors and officers of these failed banks, some of the $2.5 billion lost to bad loans in recent years.  It seems likely that that the D&O policies issued to those directors and officers will be called upon to respond to these lawsuits. …
Read More FDIC Continues Lawsuits Against Directors & Officers of Failed Banks

A federal district court in Iowa recently held that a lawsuit against a city for malicious prosecution and civil rights violations did not trigger certain insurance policies issued to the city, because the relevant events did not occur during the policy periods. …
Read More Federal Court Rules That Malicious Prosecution Suit Did Not Trigger Policies, Applying “Manifestation” Trigger

In R.G. Wegman Const. Co. v. Admiral Ins. Co., No. 09-2022, 2011 WL 117086, 5 (7th Cir. 2011), the Seventh Circuit considered whether a carrier’s duty of good faith to its insured required it to give timely notice that potential damages may exceed the policy’s limit.  This case is significant because it explores a positive duty in the good faith context. …
Read More Breach of Good Faith: 7th Circuit Holds Insurer must Notify Insured of Risk of Liability in Excess of Policy Limits

The FDIC brought suit last week against the directors and officers of a bank in FDIC receivership, in what appears to be the implementation of a strategy it announced earlier this year to recover up to $2.5 billion in damages caused by bad loans. …
Read More FDIC Brings Suit Against Defunct Bank’s Directors and Officers, Part of Larger Effort to Recover on Bad Bank Loans

In Meritz Fire & Insurance Co Ltd v (1) Jan De Nul NV (2) Codralux SA [2010] EWHC 3362 (Comm), the High Court ruled that advance payment guarantees (APGs) issued by the claimant insurance company to the defendants, guaranteeing the repayment of payments made by the defendants under three shipbuilding contracts (the Contracts), were performance bonds or demand guarantees on which the claimant was liable without regard to the Contracts. …
Read More UK: High Court Considers Whether Advance Payment Guarantees Issued By Insurance Company Were Performance Bonds or Contracts of Suretyship

In Council Tower Ass’n v. Axis Specialty Ins. Co., No. 09-3900, 2011 WL 31519 (8th Cir. 2011), the Eight Circuit considered whether, under Missouri law, the falling of seven stories of a twenty-six-story exterior brick veneer was a covered “collapse” of a building. …
Read More Eighth Circuit Holds that the Collapse of Seven Stories of Decorative Brick Veneer is Not a “Collapse of a Part of a Building”

Inez Tenenbaum, the head of the U.S. Consumer Product Safety Commission, said this week that the U.S. has not been able to persuade Chinese officials to agree to compensate U.S. homeowners for losses associated with Chinese manufactured drywall. …
Read More Chinese Drywall – Manufacturers Still Refusing to Compensate U.S. Homeowners

In Amerisure Mutual Insurance Co. v. Albanese Popkin the Oaks Development Group L.P., 2010 U.S. Dist. LEXIS 125918 (Nov. 30, 2010), Judge Kenneth A. Marra of the U.S. District Court for the Southern District of Florida ordered that the developer’s insurer has no duty to provide coverage or a defense for claims related to Chinese drywall, which were made against the developer. …
Read More Chinese Drywall – Florida Federal District Court Finds No Coverage Under CGL Policy

Suffolk Federal Credit Union (“SFCU”) brought an action against Cumis Insurance Society to recover certain losses arising under a fidelity bond.  During discovery, SFCU served interrogatories, that included a request that Cumis disclose the identity of any reinsurance agreement that might indemnify Cumis for the losses at issue. …
Read More Federal Court Orders Insurer to Produce Reinsurance Information, Despite Acknowledging Split Among Courts on the Issue