Supreme Court of Texas Declines to Adopt Incorporation Theory: But Destructive Repairs are Covered

Ruling on certified questions from the Fifth Circuit Court of Appeals, the Supreme Court of Texas has positioned the state as another jurisdiction to refuse to characterize mere incorporation of a defective component into a product or system as “physical injury” to property that would trigger coverage under a standard form CGL policy. The court also refused to narrowly apply the “impaired property” exclusion by rejecting the insured’s argument that the exclusion should be limited to those situations where the property is restored to use …

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Louisiana Supreme Court Expands Failure to Settle and Misrepresentation Claims Against Insurers

In Kelly v. State Farm Fire & Casualty Co., 2015 La. LEXIS 697 (La. May 5, 2015), the Louisiana Supreme Court answered two critical questions regarding an insurer’s claim handling responsibilities. First, the court held that an insurer can be found liable for bad faith failure to settle, notwithstanding that the insurer never received a firm settlement offer. Second, the court held that an insurer can be found liable for misrepresenting or failing to disclose facts that are not related to the insurance policy’s …

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