Neal, Gerber & Eisenberg LLP: Insurer’s Silence Does Not Evidence Consent For Purposes of Voluntary Payments Condition

by Andrew May In West Bend Mutual Insurance Co. v. Arbor Homes LLC , No. 12-2274 (7th Cir. Jan 8, 2013), ( lexis.com enhanced version of decision available ), the Seventh Circuit reaffirmed the critical importance of obtaining an insurer's consent before settling a case. The coverage action...

Perkins Coie LLP on Second Circuit Decision Not Precluding Excess Insurance When Settlement Is Below Policy Limits

The commentary "Perkins Coie LLP on Second Circuit Requires Payment of Underlying Losses to Trigger Excess Coverage Based on Policy Provisions," by Les Brown and Norton Cutler, analyzes the much discussed recent decision of Ali v. Fed. Ins. Co ., 2013 U.S. App. LEXIS 11384 (2d Cir. June 4,...

California Court Holds No Affirmative Duty to Settle Based Solely on the Likelihood of an Excess Judgment

By Ryan C. Tuley , William D. Burger, Jr. , and Christina Y. Ahn On October 7, 2013, the California Court of Appeal, in Reid v. Mercury Insurance Company [ enhanced version available to lexis.com subscribers ], held that an insurer does not have an affirmative duty to settle based solely on the...

Settlements With Underlying Layers Satisfy Exhaustion Conditions in Excess Policies

In his commentary, "Settlements With Underlying Layers Satisfy Exhaustion Conditions in Excess Policies," Michael T. Sharkey of Perkins Coie LLP analyzes the recent decision of Quellos Group LLC v. Federal Insurance Co. , No. 68478-7-1, 2013 Wash. App. LEXIS 2626 (Nov. 12, 2013) [ enhanced...

Pennsylvania Appellate Court Establishes New Approach To An Insurer's Offer Of A Defense Under A Reservation Of Rights

By Joshua Broudy and James Killelea A Pennsylvania intermediate appellate court recently prescribed new rules relative to the defense of insureds under a reservation of rights. In Babcock & Wilcox Company, et al. v. American Nuclear Insurers, et al., 2013 PA Super. 174, 2013 PA Super. LEXIS 1630...

Separating Fact From Fiction: Strategies For Contesting The Excess Consent Judgment

By Brian Webb I. Introduction Few legal maneuvers generate greater skepticism–among courts and insurers–than the excess consent judgment, an increasingly common settlement device used in liability cases. An excess consent judgment is a type of judgment entered by agreement between...

Commercial Court Clarifies the Position on Follow Settlement Clauses for Retrocessionaires

On 6 November 2013, the Commercial Court handed down its judgment in Tokio Marine Europe Insurance Ltd v Novae Corporate Underwriting Ltd [2013] EWHC 3362 (Comm). Mr Justice Hamblen held that the defendant retrocessionaire had agreed to follow the insurer's settlements in respect of the underlying...

Washington Appellate Court Enforces Strict Exhaustion Language in Excess Directors and Officers Liability Policies

By Leslie S. Ahari and Gabriela A. Richeimer The State of Washington has joined the growing list of jurisdictions that have enforced strict exhaustion language in an excess policy’s insuring agreement in favor of the excess carrier in situations where the insured has settled with the underlying...

Ten Most Significant Insurance Coverage Decisions Of 2013 – Alaska Supreme Court: Demand To Settle For Limits, But Not For All Insureds, Insurer Between A Rock And A Hard Case

It is the proverbial “damned if you do and damned if you don’t” situation for insurers. An insurer is presented with a policy limits demand to settle for one insured – and it should be accepted based on liability and damages considerations -- but the settlement offered will not...

Ten Most Significant Insurance Coverage Decisions Of 2013 – Texas Supreme Court: Insured’s Settlement Without Insurer’s Consent Covered Insured’s Texas 1-Step: Settle And Skip Insurer’s Consent

As a general rule, when an insured is tardy in providing notice of claim to an occurrence-based liability insurer, the insurer is not relieved of coverage, on such ground, unless it can demonstrate that it was prejudiced by such late notice. This is often-times a high hurdle for the insurer to meet....

Ten Most Significant Insurance Coverage Decisions Of 2013 – California Appeals Court: No Bad Faith For Insurer’s Failure To Attempt To Settle When There Is No Demand

Talk of bad faith among coverage folks often centers around whether an insurer’s interpretation of a policy could constitute bad faith. However, given how high the burden is for an insured to prove bad faith, it is usually very difficult to do so. Even if the insurer were wrong, even really wrong...

Another Multistate Settlement Reached in Death Master Case - Genworth Life Insurance Agrees to Business Practice Reforms

The California Department of Insurance has announced that along with other state insurance departments, they have reached a settlement with the Genworth Life Insurance Company over the insurer's use of the Social Security Administration's Death Master File database. The settlement ensures protection...

Prejudgment Interest: It’s Not Discretionary! Insurers Should Pay Up

By Jill Berkeley , Partner, Neal, Gerber & Eisenberg LLP Who has not heard in the first round of mediation, insurers say, “prejudgment interest and extracontractual damages are off the table.” That’s just wrong. In the last three months alone, policyholders have won prejudgment...

Recent Cases Discussing The Advice Of Counsel Defense: The Good, The Bad, And The Discovery

By David A. Mercer Introduction The gravamen of a third-party claim of bad faith is that the insurer failed to settle a claim against an insured when it had the opportunity to do so.1 The essence of the claim is that the insurer acted solely on the basis of its own interests, failed to properly...

Oh Oh . . . Did I Really Just Waive My Coverage?

Incidents are common place on construction sites. Unfortunately, sometimes things happen that damage the work or cause injury. Typically there is insurance coverage that covers these incidents, but a recent Federal Court decision highlights the pitfalls to the insured taking unilateral action to resolve...

Advertising Injury Coverage: Defense by Independent Counsel Dangerous

In June 2006, Theodore W. Lay, d/b/a Ted Lay Real Estate Agency (Lay), faxed an advertisement in regard to the sale of a particular property to Locklear Electric, Inc. (Locklear), and others. Because the facsimile message (fax) recipients had not given permission to receive these messages, Lay violated...

Insured May Settle Claim Before Suit if Insurer Wrongfully Denies Coverage

By Jill Berkeley , Partner, Neal, Gerber & Eisenberg LLP In Selective Ins. Co. v. Cherrytree Cos. , 2013 IL App (3) 120959 [ enhanced version available to lexis.com subscribers ], the Illinois Appellate Court for the Third District drove the final nail in the insurer’s “if there...

Another Item For Your Checklist: The Bad Faith Concerns Related To Overreaching Proposed Releases

By David A. Mercer A common scenario: claimant's counsel issues a time limit demand for policy limits and the insurer decides to accept the demand and tender the limits. Once the decision is made to accept the demand, the insurer should go through its checklist of concerns to make sure that each...

Halliburton Decision May Drive Up Litigation Costs and Impact Settlement

The U.S. Supreme Court’s recent decision in Halliburton Co. v. Erica P. John Fund, Inc. , [ enhanced version available to lexis.com subscribers ], is not the game changer for securities litigation that some hoped for, but D&O insurers will be keeping a close eye on securities cases to see whether...

California Fair Claims And SIU Regulations Require Annual Training

You Must Comply With California Regulations by September 1 Fair Claims Settlement Practices Regulations All insurers doing business in California must comply with the requirements of California Fair Claims Settlement Practices Regulations (the “Regulations”) or face the ire of, and...

Below-Limits Settlements Do Not Result In The Loss Of Excess Coverage - Zeig Remains Guiding Precedent, Even Post-Ali

By Adam G. Unikowsky, Attorney, Jenner & Block LLP Excess insurance policies typically include provisions stating that the policyholder cannot pursue coverage from the excess insurer until the policyholder has received payment from the underlying insurers. One of the most frequently-litigated...

Final Adjudication of Regulatory Enforcement Actions and Its Effect on D&O Insurance Coverage: Recent Developments

By Gregory J. May, Partner, Nelson Mullins Riley & Scarborough LLP In the wake of the 2008 crash, federal regulators, including the Securities and Exchange Commission ("SEC") and the Federal Deposit Insurance Corporation ("FDIC"), have markedly increased their investigation...

Supreme Court Awards The Kitchen Sink For Insurer’s Breach Of The Duty To Defend

If an insurer is determined to have breached the duty to defend, consequences will attach. It may be that the insurer must pay for the defense costs that it otherwise owed. Or the consequences may be much harsher – the insurer may lose the right to assert otherwise applicable defenses to indemnity...

Settlement Must Be In Writing and Meeting of Minds Required to Enforce Settlement

Litigants understand that the best resolution of a lawsuit is a settlement. Most are entered into with the assistance of mediators and multiple contacts with counsel. Sometimes one party thinks there is a settlement and the other does not agree. In just such a situation, Akers v. Minnesota Life Ins....

Court Declares Excess Policy Triggered Based On Insured’s Own Funding To Establish Exhaustion Of Primary

I rarely address primary--excess exhaustion cases in CO . They are often too policy language specific to offer any takeaways of substance. But I address Plantation Pipe Line Company v. Highlands Ins. Co., No. 12-29 (Tex. Ct. App. Aug. 29, 2014) here, [ enhanced version available to lexis.com subscribers...