Coverage & Claims

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The Superior Court of New Jersey, Appellate Division recently held that the term “physical damage,” as used in a policy covering damage due to the loss of electric power, was ambiguous in the context of the Northeast Blackout of 2003 involving a loss of power that was not caused by permanent “physical damage” to the electrical plant and equipment. 

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Read More New Jersey Appellate Court Reverses Summary Judgment Ruling in Favor of Insurer in Coverage Dispute Regarding Northeast Blackout of 2003

On June 16, 2009, U.S. District Court Judge Stanwood R. Duval Jr. granted a request by insurers to strike class allegations asserted in In re Katrina Canal Breaches Consolidated Litigation (click here for a copy of the Order).  Judge Duval reasoned that the claims required individualized fact-specific inquiries which made them inappropriate for class certification. 

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Read More Katrina: Insurance Class Allegations Stricken in In re Katrina Canal Breaches Consolidated Litigation

In Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, Persimmon appealed three issues relating to the construction of a payment clause in a contract for the redevelopment of Chartbrook’s land by Persimmon. Persimmon contended that (1) its construction of the clause was correct (2) the rule on excluding pre-contractual negotiations as an aid to construction of a contract should be reversed (3) rectification of a contract should be based on an objective, rather than subjective, assessment of the parties’ common intention. 

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Read More UK: Construction of a Contract – House of Lords Delivers Significant Decision

In Taylor v. Sentry Group of Companies, No. 08-35116 (9th Cir. May 20, 2009), the plaintiff was severely injured in an automobile accident, with medical expenses alone exceeding $200,000.  The tortfeasor’s insurance policy had a limit of only $25,000.  The tortfeasor’s insurer offered the plaintiff the entire policy limits as settlement on three separate occasions.  Each offer was rejected by the plaintiff. …
Read More Ninth Circuit Holds That Insurer’s Failure to Offer More Than Policy Limits Is Not Bad Faith

In Ginther v. Farmers New Century Insurance Company, No. 04-3478 (3d Cir. Apr. 21, 2009), the United States Court of Appeals for the Third Circuit recently upheld “the other household vehicle exclusion” contained in an automobile insurance policy. …
Read More Third Circuit Upholds Validity of Other Household Vehicle Exclusion

The United States Environmental Protection Agency (EPA) recently conducted comparative testing on drywall manufactured in China and the United States.  As reported here, here, and here, Chinese drywall emits fumes that allegedly smell like rotten eggs, cause health problems and corrode metal in thousands of new homes built between 2002 and 2007.  Complaints have been registered nationwide but are concentrated in the Southeast, particularly in Florida. 

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Read More Chinese Drywall – Environmental Protection Agency Releases Preliminary Test Results

Last month, a federal district court in Alabama ruled, as a matter of first impression that, under Alabama law, a litigant seeking to pursue an insurance bad faith claim against an insurer must have a direct contractual relationship with that insurer. 

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Read More Alabama Federal Court: Third-Party Beneficiary to Insurance Policy May Not Pursue Bad Faith Claim

In Flexsys America LP v XL Insurance Co Ltd [2009] EWHC 1115 (Comm) the Claimant, Flexsys America LP (Flexsys) sought to recover the balance of its legal costs from the defendant XL Insurance Company (XL) under a Master Policy when its Local Policy (which covered Flexsys), taken out with XL Select, was exhausted. It also sought a declaration that it was entitled to be indemnified by XL in respect of the potential damages to a third party, Korean Kumo Petrochemical Company Limited (KKPC), and its costs of defence. 

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Read More UK: Interpreting the Drop Down Clause in a Master Policy

In Woodworth v. Erie Insurance Company, No. 05-CV-6344CJS (Jun. 12, 2009), the federal district court for the Western District of New York held that recovery of consequential damages under Bi-Economy Mkt., Inc. v. Harleysville Ins. Co. of NY, 10 N.Y. 3d 187 (2008), is not limited to commercial property insurance claims. …
Read More NY Federal Court: Availability of Consequential Damages Not Limited to Commercial Property Insurance