Do Insurers Have an Interest in Interest?

“In some states, interest can be a significant portion of a judgement,” Goldberg Segalla partners Jonathan Schapp and Michael T. Glascott explain. “Although it is not generally expected that interest on a judgment falls within the coverage provided under a commercial general liability policy, many policies contain a Supplementary Payment provision which could give rise to an obligation to reimburse such interest.”

In a new article for Claims Journal, Jon and Mike take an in-depth look at how interest accrues, prejudgment and post-judgment interest, …

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Hawaiian High Court Allows an Excess Insurer to Equitably Subrogate a Bad Faith Claim

On a certified question from the Hawaiian federal district court, the Hawaiian Supreme Court allowed an excess insurer to sue a primary insurer for bad faith. The case, St. Paul Fire and Marine Insurance Co. v. Liberty Mutual Insurance Co., arose out of claims that the primary insurer failed to settle underlying claims within its policy limits. The excess insurer contended the primary insurer had multiple opportunities to settle an accidental death claim within the $1 million primary limits, and its failure to do …

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New York Appellate Division Finds No Coverage Under Bond For Losses Arising From Madoff’s Ponzi Scheme

In Jacobson Family Investments, Inc. v. Nation Union Fire Insurance Co. of Pittsburgh, PA, 2015 N.Y. App. Div. LEXIS 5175 (1st Dep’t; June 18, 2015), the New York Appellate Division, First Department reversed the Supreme Court, New York County’s decision and found that National Union Fire Insurance Company of Pittsburgh, PA is not required to pay the claimant for losses arising out of Bernie Madoff’s infamous Ponzi Scheme.

National Union provides coverage to the insured pursuant to a Financial Institute Bond. The insuring agreement …

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Total Frat Move: Eastern District of Arkansas Holds CGL Policy’s Exclusions Preclude Coverage for Injuries Arising Out of Hazing

In Admiral Insurance Co. v. Bradley, 2015 U.S. Dist. LEXIS 70490 (E.D. Ark., June 1, 2015) a federal judge sitting in the U.S. District Court for the Eastern District Court addressed whether a fraternity and individual fraternity members were entitled to coverage under a standard CGL policy for injuries sustained by a pledge of the fraternity on the night of his initiation. The underlying claimant alleged that he was caned, paddled, and hit by the fraternity’s members, resulting in his being hospitalized due to …

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No Coverage for Fraudulent Withdrawal of Electronic Funds

In Metro Brokers, Inc. v. Transp. Ins. Co., 2015 U.S. App. LEXIS 3473 (11th Cir. Ga. Mar. 5, 2015) an all risk policy was held to not provide coverage to an insured real estate brokerage company for online fraudulent withdrawals from the company’s bank account.

On December 10, 2011, thieves logged into the insured’s online banking system and authorized payments totaling over $188,000 from the insured’s escrow account to several other bank accounts. They had used a virus known as “Zeus” to gain access to …

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Carriers With Mutually Repugnant Other Insurance Clauses Found To Contribute Pro-Rata To Underlying Defense

Certain Underwriters at Lloyds v. Waveblast Watersports, Inc.. 2015 U.S. Dist. LEXIS 4267, (S.D. Fla. Jan. 14, 2015). This declaratory judgment action stems from an underlying parasailing accident.  Plaintiff sought a declaration that it had no duty to defend or indemnify under a policy it issued to defendant Waveblast as the named insured, and defendant Sands Harbor an additional insured. Defendant Scottsdale issued a policy to Sands Harbor as the named insured.

Scottsdale and Sands Harbor moved for Final Summary Judgment seeking a ruling that …

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Independent Contractors Fall within Employment-Related Practices Exclusions Says First Circuit

In Ruksznis v. Argonaut Insurance Co., 2014 U.S. App. LEXIS 23881 (1st Cir. Dec. 18, 2014), the First Circuit affirmed the district court’s grant of summary judgment in favor of Argonaut Insurance Company (Argonaut), finding that the employment-related practices exclusion in the subject Commercial General Liability Policy and Public Officials Liability Policy barred coverage.

The underlying dispute arose out of a lawsuit filed by Frank Ruksznis, the former plumbing inspector for the Town of Sangerville (the Town), against Lance Burgess, a Town Selectman.  Burgess, …

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Nebraska Courts Continue to Reject Faulty Workmanship as an “Occurrence”

In Cizek Homes, Inc. v. Columbia National Insurance Co., 22 Neb. App. 361 (Sept. 9, 2014), the Nebraska Court of Appeals reaffirmed that faulty workmanship does not constitute an “occurrence,” reversing the trial court’s finding to the contrary.

As background, Cizek had purchased a lot, sold the lot to the Riekeses, and constructed a home on the lot.  However, the soil beneath the home began settling and caused damage to the home.  The Riekeses sued Cizek alleging that it negligently designed and constructed the …

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Third Circuit Affirms Applicability of ‘Misappropriation’ Limitation Clause in Professional Liability Policy to Class-Action Fraud Scheme

On October 10, 2014, the Third Circuit Court of Appeals affirmed a lower court’s ruling that a professional liability insurance policy’s “misappropriation” sub-limit clause applied to limit the amount of defense costs owed to an insured whose employee plead guilty to mail and wire fraud in Camico Mutual Ins. Co. v. Heffler, Radetich & Saiita, LLP, 2014 U.S. App. LEXIS 19636 (3d Cir. Oct. 10, 2014).

Christian Penta was a senior claims analyst for Heffler, Radetich & Saiita, LLP, an accounting firm that distributes …

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“Other Insurance” Analysis Unnecessary If Policies Do Not Insure The Same Risk At The Same Level Of Coverage

This coverage dispute between the plaintiff,  Progressive, and the defendant, St. Paul, concerns their respective rights and obligations to their mutual insured Sonoma Valley Bancorp, in an underlying lawsuit. Progressive covered the cost of the defense and settlement of the underlying lawsuit and now seeks contribution from St. Paul.

The court noted that Progressive’s policy was a primary policy, with an “other insurance” provision. On the other hand, St. Paul’s policy was an excess and umbrella policy with an “other insurance” clause obligating St. Paul …

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