Failure to Issue a Reservation of Rights, and to Address an Insured’s Affirmative Defenses in a Coverage Dispute, May Preclude Denial of an Otherwise Excluded Claim

A recent Florida state court opinion emphasizes the importance of an insurer’s obligations in the event of a liability claim against an insured and a subsequent coverage dispute with that insured. In Hurchalla v. Homeowners Choice Property & Casualty Insurance Company, the insured was sued for tortious interference with business contracts. Although her liability policy did not insure against intentional acts, the insurer initially provided the insured with a defense. However, the insurer neglected to inform the insured that the
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Seventh Circuit Enforces Products-Completed Operations Hazard Exclusion in Faulty Workmanship Coverage Dispute

The Seventh Circuit, applying Illinois law, held that a Products-Completed Operations Hazard exclusion in a commercial general liability policy precluded coverage for a construction defect suit.  The coverage dispute arose out of the alleged faulty workmanship by the developer-insured in connection with a condominium conversion project, which allegedly caused damage to the condominium owners’ personal property. Following the construction of the condominiums, the condominium owners discovered water damage.  The board of the condominiums ultimately sued the developer, alleging faulty workmanship
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