Only A Few Insurance-Related Bills Enacted By The Hawaii Legislature

June 21, 2024
Tred R. Eyerly - Insurance Law Hawaii

Several insurance-related bills were introduced by the Hawaii Legislature, but only a few were passed before the session ended on May 3, 2024. Here are the bills that were passed by the Legislature and sent to the Governor for signature.

HB 1686 - Increases the reimbursement rate for chiropractic treatments for personal injury protection benefits under motor vehicle insurance from $75 to $100.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Florida’s 125% Surge in Property-Insurance Bills Sows Havoc

June 17, 2024
Lauren Coleman-Lochner & Melina Chalkia - Bloomberg

For Filicia Porter, the insurance bills were the final straw. They’d been climbing steeply for her assisted-living business as Florida was battered with ever more-powerful storms, and eventually, the numbers stopped adding up.

So in March, she finally decided to call it quits, shutting the facility near Palm Beach that she opened just two years ago. That came four months after she closed an older location in Port St. Lucie, opened in 2017. Together, they left a dozen residents scrambling to find another place to live.

Reprinted courtesy of Lauren Coleman-Lochner, Bloomberg and Melina Chalkia, Bloomberg


Excess Policy Not Triggered Despite Dissolution of Primary Carrier

June 10, 2024
Tred R. Eyerly - Insurance Law Hawaii

The excess carrier did to have to contribute to the defense and indemnity of the insureds because the dissolution of one of the primary carriers meant full exhaustion had not been accomplished. Continental Cas. Co., et al. v. Argonaut Ins. Co., et al., 331 Ore. App. 26 (Or. Ct. App. 2024).

Schnitzer Steel Industries, Inc. and MMGL Corporation (insureds) were deemed potentially responsible parties by the EPA for the environmental cleanup of the Portland Harbor Superfund Site. The insureds submitted claims for defense and indemnity to their CGL insurers, including Continental. They also filed a claim with Insurance Company of the State of Pennsylvania (ICSOP), which provided umbrella insurance with limits of $5,000,000. ICSOP denied coverage, contending that the insureds' environmental claims were subject to the excess liability portions of its policies and those provisions had not been triggered.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Coverage for Fire Loss Denied Based on Inaccurate Application for Insurance

June 3, 2024
Tred R. Eyerly - Insurance Law Hawaii

The Ninth Circuit affirmed the District Court's granting summary judgment to two insurers who denied coverage based upon inaccurate insurance applications. Hughes v. First National Insurance Company of America, 2024 U.S. App. LEXIS 6609 (9th Cir. March 20, 2024).

Plaintiff submitted a claim to First National Insurance Company of America and General Insurance Company of America when her property burned down. After learning that the property was used as a short-term rental and had suffered three prior lossses in the past five years, both insurers denied the claim. They then sought judicial recission of the policites based on material misrepresentations in plaintiff's insurance applications.

Both insurers had applications asking whether the property was used for business or commercial purposes, and whether the applicant had suffered a loss on the property in the last five years. If an applicant answered either question in the affirmative, the application was denied.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Collapse Caused by Termites and Wood Rot Not Covered

May 28, 2024
Tred R. Eyerly - Insurance Law Hawaii

The court found that damage to the insured's home was not due to a covered collapse, but was caused by wood rot and termite damage. Pezzano v. Liberty Mut. Midatlantic Inc. Co., 2024 U.S. Dist. LEXIS 46971 (D. N.J. March 18, 2024).

When putting up a Christmas tree, the insured pulled a couch away from the wall and noticed a gap between the floor and the wall. She was not aware of when or how the gap was formed. Upon inspection, it was discovered that a beam was cracked in the crawl space. Efforts were made to shore the cracked beam.

Subsequently, the insured retained The Ramtin Group to investigate. Ramtin opined the damage to the beam was caused by wood rot and termite damage, and that deterioration of the beam happened over a period of time. The report agreed that the shoring of the beam was the correct course of action; othewise the house would have been at risk of collapse.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Baltimore Bridge Collapse Incident Unlikely to Impact Profitability of US Insurers, Says GlobalData

May 20, 2024
GlobalData

The Francis Scott Key Bridge collapse with the crash of container vessel Dali on March 26, 2024, in Baltimore was one of the most significant maritime losses in US history so far. As a result of the damages caused in terms of business interruptions and logistics scrambles, insurers will witness higher claims in 2024 across general insurance lines such as property, liability, and marine, aviation, and transit (MAT) insurance. However, the incident is unlikely to have a significant impact on the overall profitability of US insurers, as the average loss ratio of general insurance is expected to remain at 78.8% over 2024–28, according to GlobalData, a leading data and analytics company.

According to GlobalData's Global Insurance Database, property and motor insurance claims are expected to account for 11.9% and 14.7% share of the total general insurance claims in the US in 2024, amounting to $200.7 billion and $247.7 billion, respectively. Additionally, liability and marine, aviation, and transit (MAT) insurance claims are expected to account for a 6.6% and 1.3% share, amounting to $110.8 billion and $22.7 billion, respectively. However, with this event, the actual claims in 2024 might increase once the complete impact of the damage is realized.

The incident is expected to lead to the biggest marine insurance payout that is expected to cost insurers billions of dollars in losses. It is expected to surpass the marine losses of the Costa Concordia cruise ship disaster in 2012.


Policy Rescission: Avoid Relying Solely on the Broker

May 13, 2024
Yosef Itkin & Patrick M. McDermott - Hunton Insurance Recovery Blog

Policyholders purchase insurance policies as a safety net, promising financial protection in times of need. However, that safety net can disappear when an insurer rescinds a policy—a devastating consequence for potentially innocent policyholders. We recently published a post following a Fourth Circuit decision addressing this issue. The Ninth Circuit has also addressed this issue, most recently in the decision discussed below.

Policy rescission generally occurs when an insurer retroactively cancels a policy, usually citing a material misrepresentation or omission by a policyholder in its insurance application. California law allows rescission even when the misrepresentations or omissions are purportedly innocent. This means that even unintentional errors or omissions on an insurance application can lead to the cancellation of coverage, leaving policyholders without the protection they thought they had. One may think they can rely on their broker to handle the application for them, but doing so might not excuse the policyholder from issues in their application.

Reprinted courtesy of Yosef Itkin, Hunton Andrews Kurth and Patrick M. McDermott, Hunton Andrews Kurth

Mr. Itkin may be contacted at yitkin@HuntonAK.com
Mr. McDermott may be contacted at pmcdermott@HuntonAK.com


Delay and Disorganization ≠ Failure to Cooperate

May 6, 2024
Rachel E. Hudgins & Adriana A. Perez - Hunton Andrews Kurth

Insurance policies usually have cooperation clauses requiring policyholders to work with the insurance company when making a claim. These clauses ensure policyholders actively participate in claims investigations. Failure to cooperate may be a breach of the policy, and the insurer may deny coverage.

Proving non-cooperation, though, is challenging, as seen in a recent Eighth Circuit case, Cardinal Building Materials, Inc. v. Amerisure Insurance Company.[1] Amerisure claimed that its insured, Cardinal, had failed to cooperate in investigating Cardinal’s tornado claim.[2]

Reprinted courtesy of Rachel E. Hudgins, Hunton Andrews Kurth and Adriana A. Perez, Hunton Andrews Kurth

Ms. Hudgins may be contacted at rhudgins@HuntonAK.com
Ms. Perez may be contacted at pereza@HuntonAK.com


One's Loss is Another's "Claim"

April 29, 2024
Michael A. Amato & Jeffrey J. Vita - Saxe Doernberger & Vita, P.C.

While analyzing liability policies, courts grapple with a common issue: what constitutes a claim under a claims-made or claims-made-and-reported provision? When third-party claimants file suit, the analysis is often straightforward; the complaint itself is the claim. The analysis becomes murkier, however, when courts must determine whether a pre-suit notice—such as a demand letter—constitutes a claim.

While insurers often argue that attorney demand letters do not constitute claims—and thereby do not trigger coverage—under liability policies, two recent cases, one from the Delaware Supreme Court and one from the Second Circuit Court of Appeals, analyzed insurers arguing the opposite: that because attorney demand letters were claims asserted before the policy period, the insureds should not be entitled to coverage.

Reprinted courtesy of Michael A. Amato, Saxe Doernberger & Vita, P.C. and Jeffrey J. Vita, Saxe Doernberger & Vita, P.C.

Mr. Amato may be contacted at MAmato@sdvlaw.com
Mr. Vita may be contacted at JVita@sdvlaw.com


Treasurer’s Payment Mistake Requires Defense Coverage Under Property Association’s D&O Policy

April 22, 2024
Evan Holober & Geoffrey B. Fehling - Hunton Insurance Recovery Blog

A federal court recently ruled that a carrier must defend its policyholder against a claim involving the treasurer’s erroneous payment to a scammer. The ruling shows that a “wrongful act” under a D&O policy need not be an egregious act of wrongdoing, that coverage may hinge on whether extrinsic evidence can establish coverage, and that breach of contract claims are not always uninsurable as a matter of law.

In Bridlewood Estates Property Owners Association v. State Farm General Insurance Co., a California federal district court evaluated whether an insured association may be entitled to coverage for a breach of contract claim under an endorsement to its package liability policy providing directors and officers (D&O) coverage. Because the claims arose from an email spoofing scheme resulting in the association’s treasurer mistakenly issuing payment to a fraudster instead of the contracting party, the court determined that contract claims were based on a “wrongful act” by an officer potentially covered by the policy and that, as a result, the lawsuit triggered the insurer’s defense obligations. The decision shows the potential for D&O coverage for contract claims, as well as highlights the difficulty insurers face to exclude contractual liability on public policy grounds, which vary greatly between states and can be swayed by policy provisions applying one particular state’s laws over another.

Reprinted courtesy of Evan Holober, Hunton Andrews Kurth and Geoffrey B. Fehling, Hunton Andrews Kurth
Mr. Holober may be contacted at eholober@huntonak.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com


Avoiding Rescission of Insurance Coverage: An Insured’s Worst Nightmare

April 15, 2024
Geoffrey B. Fehling, Cary D. Steklof & S. Alice Weeks - Hunton Insurance Recovery Blog

No policyholder wants to hear the word “rescission” in the context of an insurance claim. The reality, however, is that when policyholders complete applications for insurance, they are typically focused on obtaining the best policy terms for the best rate. Nuances about question wording, the breadth of the applicant’s representations or how a court may analyze the insurer’s questions or the policyholder’s answers usually take a back seat to the central importance of placing and renewing coverage at a realistic price. But once a claim is made, insurers look back at applications to assess the accuracy and completeness of all information received during the underwriting process, especially in signed applications. If the insurer discovers a misrepresentation, it can be used to rescind the policy, leaving the insured with no coverage.

Reprinted courtesy of Geoffrey B. Fehling, Hunton Andrews Kurth, Cary D. Steklof, Hunton Andrews Kurth and S. Alice Weeks, Hunton Andrews Kurth

Mr. Fehling may be contacted at gfehling@HuntonAK.com
Mr. Steklof may be contacted at csteklof@HuntonAK.com
Ms. Weeks may be contacted at aweeks@HuntonAK.com


Year in Review: Top Insurance Cases of 2023

April 8, 2024
Michael S. Levine, Latosha M. Ellis & Olivia G. Bushman - Hunton Insurance Recovery Blog

Directors and Officers (“D&O”) and cyber-related incidents continued to make headlines while ramped up regulatory enforcement and new legislation significantly altered the insurance landscape for both policyholders and insurers. Other noteworthy decisions reinforced the importance of foundational insurance coverage principals. Now that 2023 has wrapped, we highlight and review some of the most significant decisions and insurance developments that will continue to impact the world of insurance in 2024 and beyond.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth, Latosha M. Ellis, Hunton Andrews Kurth and Olivia G. Bushman, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Ellis may be contacted at lellis@HuntonAK.com
Ms. Bushman may be contacted at obushman@HuntonAK.com


Broad Forum Clause Favors Policyholders’ Choice of Venue

April 2, 2024
Michael S. Levine, Christopher J. Cunio & Madison W. Sherrill - Hunton Insurance Recovery Blog

The Washington Supreme Court’s recent en banc decision in Pacific Lutheran University et al. v. Certain Underwriters At Lloyd’s London et al. looked to the broad language of the forum selection clause in the governing insurance policies in upholding the policyholders’ rights to select the forum for their coverage suit.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth, Christopher J. Cunio, Hunton Andrews Kurth and Madison W. Sherrill, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Cunio may be contacted at ccunio@HuntonAK.com
Ms. Sherrill may be contacted at msherrill@HuntonAK.com


Court Finds Matching of Damaged Materials is Required by Policy

March 25, 2024
Tred R. Eyerly - Insurance Law Hawaii

The court granted, in part, the insured's motion for summary judgment by finding that matching roof tiles were required under the policy. Bertisen v. Travelers Home and Marine Ins. Co., 2024 U.S. Dist. LEXIS 3907 (D. Colo. Jan. 8, 2024).

The insureds sued Travelers for breach of contract, common law bad faith, and unreasonable delay or denial of benefits. They alleged that their residence was damaged by a hailstorm and that Travelers breached their policy and acted in bad faith in the handling of the claim. The insureds demanded an appraisal to determine the "amount of loss" under the policy and an appraisal award was issued. Travelers then denied payment for all roof tiles that were contemplated by the appraisal award.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


COVID-19 Claims Survives Motion to Dismiss

March 19, 2024
Tred R. Eyerly - Insurance Law Hawaii

The Superior Court for the State of Washington denied the insurer's motion to dismiss the University of Washington's claim for property damage due to COVID-19. The Board of Regents of the University of Washington v. Employers Ins. Co. of Wausau, No. 22-2-15472-1 SEA (Amended Order Denying Defendant's CR 12 (B) (6) Motion to Dismiss, Jan. 4, 2024).

The parties disputed whether policies issued to University of Washington (UW) covered losses when the COVID-19 pandemic caused UW to close or limit access to its healthcare facilities and athletic facilities in 2020 and thereafter. The insurer argued that Washington courts and other state and federal courts rejected such claims because litigants such as UW could not demonstrate any "direct and physical loss or damage" to property. UW countered that its First Amended Complaint (FAC) alleged direct and physical loss and damage to property, with extensive citations to scientific studies to support its allegations.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Insurer's Declaratory Relief Action on Duty to Indemnify Dismissed

March 11, 2024
Tred R. Eyerly - Insurance Law Hawaii

The court granted the insured's motion to dismiss the insurer's action for a declaratory judgment on the issue of indemnity when the underlying action was still ongoing. Utica Mut. Ins. Co. v. Crystal Curtain Wall Sys. Corp., NYLJ LEXIS 3255 (N.Y. Sup. Ct. Dec. 1, 2023).

Crystal was a subcontractor to design and install window and curtain systems as well as terrace doors and a glass parapet in the construction of two mixed use residential and commercial buildings. After unit owners took possession, a significant rainstorm allowed water infiltration, causing property damage in the building including moldy conditions. The owners sued, asserting claims against Crystal for the cost of repair or replacement of the allegedly defective curtain wall, damage to personal property, diminution in value of the units, and delay damages consisting of increasing interest and carrying costs that allegedly resulted from delays in completion of the construction work.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


After $70 Billion Hit, Insurers Wake Up to New Risk Pattern

March 4, 2024
Gautam Naik - Bloomberg

The insurance industry is grappling with a new kind of weather risk that’s increasingly driving its biggest loss category.

While no single weather event caused more than $10 billion in losses for insurers last year, there were 37 thunderstorms that each cost at least $1 billion, according to a report by Aon Plc. That’s more than ever before and way above the average of 14 such storms in a single year, the insurance broker said.


Clash of the Clauses - Irreconcilable "Other Insurance" Clauses Will Result in Insurers Sharing Losses Pro Rata

February 25, 2024
Sarah J. Markham - Saxe Doernberger & Vita, P.C.

In National Casualty Company v. Georgia School Board Association – Risk Management Fund1, the Eleventh Circuit recently affirmed a Georgia rule under which irreconcilable “other insurance” clauses will not be enforced. The Eleventh Circuit found that, under Georgia law, when insurance policies’ “other insurance” clauses are “functionally the same” and cover the same risk, they are irreconcilable, requiring the insurers to provide coverage on a pro rata basis. “Other insurance” clauses are generally written with stock language, and this case affirms the principle that insurers may not escape coverage on the basis that competing clauses leave the insured without a primary policy. When an insured has multiple policies covering the same risk, either one insurer must take the position as primary, or all insurers will be forced to share the obligation on a pro rata basis.

Ms. Markham may be contacted at SMarkham@sdvlaw.com


West Virginia Court Strictly Construes Policy Requirements To Identify all Lost Personal Property

February 19, 2024
Tred R. Eyerly - Insurance Law Hawaii

The federal district court found that West Virgina required policyholders suffering a loss of personal property to list all such property before recovering under the policy. Idleman v. State Farm Fire & Cas. Co., 2023 U.S. LEXIS 123815 (N.D. W. Va. July 18, 2023).

The plaintiffs purchased a second home and, over time, furnished and supplied the residence. On November 29, 2021, the residence and its contents were destroyed in a fire.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Policy Purchased by Mortgagee Does Not Insure Homeowner's Hurricane Damage

February 12, 2024
Tred R. Eyerly - Insurance Law Hawaii

The court granted the insurer's motion to dismiss the homeowner's claim against the insurer because the policy insured the mortgagee, not the homeowner. Barbin v. Integon Nat'l Ins. Co., 2023 U.S. Dist. LEXIS 207192 (E.D. La. Nov. 20, 2023).

The home was damaged by Hurricane Ida. The homeowner claims that Integon National Insurance Company breached the policy and acted in bad faith by failing to make the required payments.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


“The Lines Are Not Blurred”: Attorney Claim Handlers Are Not Protected by Attorney-Client Privilege

February 5, 2024
Michael S. Levine & Torrye Zullo - Hunton Insurance Recovery Blog

A Michigan federal court in Wolverine World Wide Inc. v. The American Insurance Co. et al., No. 1:19-cv-00010 (W.D. Mich.), recently confirmed what should go without saying – a claim handler is a claim handler, even if they may also be a lawyer. Recognizing that it’s the nature of the work that drives the analysis, the court ordered an in-house Travelers’ attorney to sit for a deposition in a PFAS coverage suit because the attorney was performing ordinary claim-handling activity. In rejecting the insurer’s arguments, the court reiterated that “an insurer cannot create a ‘shroud of secrecy’ by simply designating an attorney to conduct an otherwise ordinary claim investigation.”

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Torrye Zullo, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Zullo may be contacted at tzullo@HuntonAK.com


Traditional Pollution Exclusion Does Not Bar COVID-19 Claim

January 29, 2024
Tred R. Eyerly - Insurance Law Hawaii

The trial court's dismissal of the insured's loss of business income claim due to COVID-19 based upon a traditional pollution exclusions was reversed and remanded as to most of the insurers. JRK Prop. Holdings v. Colony Ins. Co., 2023 Cal. App. LEXIS 760 (Cal. Ct. App. Oct. 2, 2023).

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Policyholders Score Win as Another State’s High Court Adopts the “Continuous-Trigger” Theory for General Liability Policies

January 22, 2024
Michael S. Levine & Jorge R. Aviles - Hunton Insurance Recovery Blog

Commercial general liability insurance policies are often written on an “occurrence” basis. An “occurrence” is typically defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Coverage, therefore, requires generally that the “bodily injury” or “property damage” (or “advertising injury” or “personal injury”) happen fortuitously during the effective policy period. Central to this inquiry is knowing when the injury or damage took place.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Jorge R. Aviles, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Aviles may be contacted at javiles@HuntonAK.com


The Importance of Understanding When a Claim is a "Claim"

January 16, 2024
Kyle A. Rudolph - Saxe Doernberger & Vita, P.C.

It is well known that insurance policies universally impose a requirement that a “claim” be timely submitted. Unfortunately, this basic coverage condition is so well known that policyholders often overlook what exactly constitutes a “claim” under their insurance policy. A decision rendered by the United States District Court for the Southern District of New York earlier this year is a reminder that policyholders must carefully read their insurance policies to understand exactly what constitutes a “claim” to avoid forfeiting coverage simply because of a misunderstanding of whether a claim as defined by the policy is a “claim.”

In Pine Management, Inc. v. Colony Insurance Company,1 the parties disputed whether a July 17, 2018, letter (the “Letter”) received by the insured, Pine Management, Inc. (“Pine”), constituted a “claim” under a claims-made and reported policy with a policy period of August 1, 2018, to December 1, 2019. The insurer, Colony Insurance Company (“Colony”), argued the Letter was a “claim” first made against Pine before the policy incepted to avoid providing coverage for a related lawsuit filed against Pine on July 26, 2019.

Mr. Rudolph may be contacted at KRudolph@sdvlaw.com



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