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July 27, 2015 Reservation of Rights

Pennsylvania Supreme Court Holds that an Insurer’s Consent to Settle is Not Required if Insurer Is Defending Under Reservation of Rights

The Pennsylvania appellate courts have kept insurance coverage lawyers on their toes this summer. Weeks after the Pennsylvania Superior Court’s decision in Selective Way Insurance Co. v. Hospitality Group Services, Inc. provided guidance on when the statute of limitations for an insurance coverage declaratory judgment action accrues, on July 21, 2015, the state’s Supreme Court issued its much anticipated decision in Babcock & Wilcox Company v. American Nuclear Insurers.

In Babcock & Wilcox, the Supreme Court held that when an insurer is defending …

July 16, 2015 Reservation of Rights

In Pennsylvania, a Cause of Action for Declaratory Judgment Accrues When an Insurer has Sufficient Facts to Believe that its Policy Does Not Provide Coverage

When an insurer is asked to cover a liability claim for which coverage is in doubt, the prudent course of action is to provide a defense subject to a reservation of rights. The reservation of rights preserves the insurer’s ability to deny coverage, for either defense and indemnity, if it is determined that the claim is not covered under the policy. In many instances, a reservation of rights is accompanied with the filing of a declaratory judgment action in which the insurer asks the court …

October 23, 2014 Occurrence

Pennsylvania District Court Finds No Coverage for Faulty Workmanship

In State Farm Fire & Casualty Co. v. McDermott (E.D. Pa. Oct. 14, 2014), a Pennsylvania federal district court recognized the well-established rule in Pennsylvania that faulty workmanship resulting in construction defects is not caused by an “occurrence.” This coverage dispute arose out of work performed by McDermott at a residential housing development. After McDermott completed its work on windows and doors, the homeowners discovered water intrusion. They sued the developer, which, in turn, sued McDermott for negligence and breach of contract. McDermott sought coverage …

February 19, 2013 Policy Conditions, Considerations, Construction, and Formation

Number of Occurrences Limited to Just One in Pennsylvania Defective Drywall Litigation

Cincinnati Insurance Co. v. Devon International, Inc. et al. (E.D.Pa) (Index No. 2:11-cv-05930-GP)

A federal court in Pennsylvania limited the number of occurrences under a CGL policy for injuries caused by defective drywall. The case involved a sourcing agent for Chinese products who filled an order for drywall by purchasing them from a Chinese drywall manufacturer and shipping them to Florida. The drywall contained an improper amount of sulfur damaging real and personal property.

Although there were two separate consecutive policies at issue, the insurer …

December 6, 2010 Reinsurance

Pennsylvania District Court Grants Defendants’ Demand For Claim And Underwriting Materials But Denies Request For Reinsurance Agreements

TIG Ins. Co. v. Tyco Intn’l Ltd. (United States District Court, Middle District of Pennsylvania, November 12, 2010)

This coverage case involved the interpretation of an excess insurance policy issued by TIG and whether the policy covered Grinnell's payment in settlement of the underlying lawsuit arising out of a warehouse fire in May, 1997 due to a faulty sprinkler system. An endorsement to the policy extended coverage to "prior acts" that occurred before the policy's inception but the same endorsement also excluded "any claims of …

March 23, 2010 Uncategorized

Supreme Court of Pennsylvania to Hear Important Attorney-Client Privilege Case

The Supreme Court of Pennsylvania has agreed to hear a case of vital important to insurers and defense counsel, and their ability to defend claims against insureds. On March 16, 2010, the Supreme Court of Pennsylvania allowed the appeal of Gillard v. AIG Insurance, 947 A2d 836 (2008). In the trial court decision, 2007 Phila. Ct. Com. Pl. LEXIS 159, which was affirmed by the Superior Court without opinion, it was held that communications from defense counsel to the client’s claims representatives were not privileged.…

February 14, 2020 Duty to Defend

Court Finds That Insurer’s Duty to Defend is Not Cut Off by Judicial Admission by Insured

An insured’s admission in an answer to a declaratory judgment complaint dispositive of coverage was not considered by the Middle District of Pennsylvania. Instead, the court looked only to the allegations in the underlying complaint and held that an insurer had a duty to defend its insured.

The insured was sued in an underlying bodily injury lawsuit arising from a motor vehicle accident. In the complaint against the insured, the underlying plaintiff alleged that the vehicle driven by the insured’s employee was an auto covered …

November 14, 2019 General / Uncategorized

The Pollution Exclusion Can Bar Coverage for Alleged Carbon Monoxide Poisoning Claims

In Foremost Ins. Co. v. Rodriguez, a Pennsylvania federal district denied a motion to dismiss a declaratory judgment lawsuit filed by a liability insurer that sought to disclaim coverage for an underlying lawsuit alleging carbon monoxide exposure.[1]

In the underlying state court lawsuit, tenants sued their landlords, alleging that the landlords refused to repair a heating system, which resulted, ultimately, in carbon monoxide poisoning. After the tenants’ hospitalization, the local gas company deemed the heater on the property unsafe, and instructed the …

October 18, 2019 General / Uncategorized

Federal Judge Finds Mischievous Raccoons Incapable of Engaging in Vandalism or Malicious Mischief

A federal judge in the Western District of Pennsylvania dismissed a breach of contract and bad faith suit against an insurer by finding that a group of mischievous raccoons was incapable of committing vandalism or malicious mischief.[1]

At issue was substantial interior property damage to a Pittsburgh-area home owned by the plaintiff-insured caused by raccoons. The plaintiff submitted a claim under its named-peril policy for the damage. The insurer denied coverage because the named-peril policy only provided coverage for damage caused by specific causes. …

October 11, 2019 General / Uncategorized

Washington State Supreme Court Holds That Insurance Adjusters Cannot Be Liable for Bad Faith

In a highly anticipated decision, the Supreme Court of Washington closed the door on statutory bad faith claims against insurer-employed adjusters. The case is Moun Keodalah and Aung Keodala v. Allstate Insurance Company, Tracey Smith., and John Doe Smith, — P.3d – (2019, 2019 WL 4877438 (Wash. Oct. 3, 2019).

The case arose out of a 2007 accident, when an uninsured motorcyclist struck the plaintiff’s truck, killing the motorcyclist and injuring the plaintiff. The police investigated the collision and determined the motorcyclist had …