Insurance Law

Perkins Coie LLP on Notable Insurance Coverage Decisions from the Second Half of 2014 and Early 2015

By Nishant Kumar

The second half of 2014 and early 2015 brought noteworthy insurance coverage cases in contemporary areas of interest -- for instance, coverage for media providers and for privacy breaches -- as well as significant new developments in jurisprudence regarding oft-disputed aspects of insurance policies such as trigger, the assignability of coverage, and the contract liability exclusion.

In his commentary, Perkins Coie LLP on Notable Insurance Coverage Decisions from the Second Half of 2014 and Early 2015, Nishant Kumar analyzes federal and state appellate decisions on those issues and explains their significance to attorneys whose practice includes insurance coverage disputes.

Here are some highlights of the commentary:

A Tenth Circuit decision serves as a warning that a policyholder may not be able to rely on a technical, regulatory or industry-specific construction of an undefined but “commonly understood” term within a policy, even where that construction would be favorable to coverage and in accord with the principle of narrowly construing exclusions to coverage.

The Seventh Circuit, in declining to establish a bright-line rule for property policies, avoided setting the stage for a possible contraction of policyholder’s coverage under the less favorable “manifestation” of loss theory, while at the same time allowing insurers to “remain free to create innovative policies that they draft according to the unique circumstances of each client and policy.”

The Pennsylvania Supreme Court set forth at length the public policy arguments concerning assignability of claims. This opinion should help in addressing this issue as it arises in other jurisdictions.

The Fifth Circuit reinforced the understanding that a host of typical faulty workmanship claims are covered by commercial general liability policies, notwithstanding the policies’ contractual liability exclusion or the slight variations in the contractual provisions safeguarding against negligent construction work.

Although an Eleventh Circuit’s opinion was unpublished, it is significant to the contemporary issue of insurance coverage for privacy breaches under traditional general liability policies. The ruling provides a nuanced treatment on a general liability policy exclusion that might often come into play in suits alleging personal injury predicated on violation of privacy statutes.

A Fourth Circuit ruling, although unpublished, stands as markedly favorable to policyholders making waiver or estoppel arguments against an insurer denying coverage based on material misrepresentations or noncompliance with policy conditions.

    Nishant Kumar is an associate in the Insurance Recovery practice at Perkins Coie LLP. He has experience in litigating coverage disputes, including assertion of bad faith and punitive damages claims against insurers, as well as advising policyholders on claims under a variety of policies, including commercial general liability (CGL), errors and omissions (E & O) and environmental.

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