The Insurance and Reinsurance Report

Exclusion Does Not Bar Coverage Where Interpreting as Such Would Render Policy Illusory

Piper v. Nitschke’s Northern Resort Condominium Owner’s Assoc., LLC  (Wis. App. November 3, 2009)

A condominium association and two condominium owners were sued by several other owners when the association amended its declaration to allow the defendant owners to use commonly owned areas to expand their condos. The defendant owner’s title insurer disclaimed coverage for the suit based upon an exclusion which it contended precluded coverage for all losses arising in any manner from the bylaws and amendments to the condominium declaration. The appellate court held that such an interpretation of the exclusion would render the policy illusory and, accordingly, that coverage was afforded under the policy.

For a copy of the decision click here

Bryan Richmond and Joseph Oliva

http://www.goldbergsegalla.com/attorneys/Richmond.html

http://www.goldbergsegalla.com/attorneys/Oliva.html

“Continuous Trigger” Theory Applies Separately to Each Policyholder

Franklin Mutual Ins. Co. v. Metropolitan Property & Casualty Ins. Co..

(N.J. App., April 17, 2009)

A property insurer sought pro-rata reimbursement from a policyholder’s previous insurer following payment for environmental contamination from an underground heating oil tank.  The contamination occurred continuously during both policy’s effective periods as well as a period of ownership by previous owner.  The court held that, under New Jersey’s “continuous trigger” theory, the pro-rata formula is applied separately to each individual policyholder and not collectively to all policies in effect for all policyholders who owned the property during the period of contamination.

 

By Daniel W Gerber and Sarah J. Delaney

 

http://www.goldbergsegalla.com/attorneys/Gerber.html

http://www.goldbergsegalla.com/attorneys/Delaney.html

Occurrence Determined by Cause of Injury, Rather Than Injury Itself

Budway Enterprises, Inc. v. Federal Ins. Co.

(C.D. Cal., April 14, 2009)

The plaintiff failed to allege facts showing there were two separate causes of theft resulting in loss of two aluminum shipments, with separate Bills of Lading and separate delivery numbers, loaded into two separate tractor-trailers.  Accordingly, the insurer did not breach the insurance contract by applying the $100,000 per occurrence policy limit.

 

By Richard J. Cohen and Carrie P. Appler

 

http://www.goldbergsegalla.com/attorneys/Cohen.html

http://www.goldbergsegalla.com/attorneys/Appler.html

 

 

 

OCCURRENCE/TRIGGER OF COVERAGE - Emergency Demolition of Structure Was an Intentional Act and Not an Occurrence

Village of Springville v. Argonaut Insurance et. al.

(N.Y.A.D. 4^th Dept., April 24, 2009)

 

In a case successfully handled by the authors, the Appellate Court declared that the insurer was not required to defend the policyholder against a federal claim asserting constitutional violations arising from a Village’s demolition of a fire-damaged building.

 

In January, 2005 a fire occurred causing significant damage to a structure. As a result of the fire, Village officials determined that it was necessary to demolish the remnants of the building, and did so. Subsequently, the building owner commenced an action in federal court seeking relief premised upon the violation of his constitutional rights, including free speech and lack of due process.

 

The Village sought defense under a Commercial General Liability policy arguing the federal action was within the scope of the policy. The insurer argued that the demolition of the structure was not an “accident” and therefore, not an occurrence as required to trigger coverage. Moreover, the “intentional act” exclusion applied and precluded coverage. The trial court agreed with the policyholder and entered a judgment requiring the insurer provide a defense.

 

On appeal, the Appellate Court reversed the trial court stating that the loss was not an occurrence from the viewpoint of the insured. The court noted that the complaint asserted the destruction of the building was intentional, requiring the court to conclude there was no accident and therefore, no coverage. (Full Case available here:

http://www.nycourts.gov/ad4/court/Decisions/2009/04-24-09/PDF/0407.pdf )

 

        By       Daniel W. Gerber and  Brian Biggie

http://www.goldbergsegalla.com/attorneys/Gerber.html

http://www.goldbergsegalla.com/attorneys/Biggie.html