rsarget's picture
From rsarget rss RSS  subscribe Subscribe

Challenges In Insurance Coverage Litigation 

Challenges In Insurance Coverage Litigation

 

 
 
Views:  332
Downloads:  1
Published:  December 18, 2009
 
0
download

Share plick with friends Share
save to favorite
Report Abuse Report Abuse
 
Related Plicks
Virginia Beach, VA Needed Least Legal responsibility of Car Insurance

Virginia Beach, VA Needed Least Legal responsibility of Car Insurance

From: eye26berry
Views: 12 Comments: 0
Virginia Beach, VA Needed Least Legal responsibility of Car Insurance
 
Useful Tips For Anyone Wishing To Purchase Auto Insurance

Useful Tips For Anyone Wishing To Purchase Auto Insurance

From: nicbulb35
Views: 31 Comments: 0
Useful Tips For Anyone Wishing To Purchase Auto Insurance
 
Difficulties Car Drivers May Experience When Not Owning Auto Insurance in Virginia Beach

Difficulties Car Drivers May Experience When Not Owning Auto Insurance in Virginia Beach

From: march19pilot
Views: 7 Comments: 0
Difficulties Car Drivers May Experience When Not Owning Auto Insurance in Virginia Beach
 
Virginia Beach Vehicle Insurance Principles, Restrictions and Liabilities

Virginia Beach Vehicle Insurance Principles, Restrictions and Liabilities

From: kniferadar9
Views: 10 Comments: 0
Virginia Beach Vehicle Insurance Principles, Restrictions and Liabilities
 
How Auto Insurance in Virginia Beach will save You Time, Money, and Stress and anxiety

How Auto Insurance in Virginia Beach will save You Time, Money, and Stress and anxiety

From: felony4throat
Views: 11 Comments: 0
How Auto Insurance in Virginia Beach will save You Time, Money, and Stress and anxiety
 
Affordable Auto Insurance Premium in Virginia Beach - Discover ways to Spend less

Affordable Auto Insurance Premium in Virginia Beach - Discover ways to Spend less

From: shipstone4
Views: 10 Comments: 0
Affordable Auto Insurance Premium in Virginia Beach - Discover ways to Spend less
 
See all 
 
More from this user
Car Online Uk Cheap Insurance

Car Online Uk Cheap Insurance

From: rsarget
Views: 494
Comments: 0

04 Aaron Hockley: Reading the Fine Print: You Gave Yourself Away

04 Aaron Hockley: Reading the Fine Print: You Gave Yourself Away

From: rsarget
Views: 192
Comments: 0

Communicate, Save Money and make money

Communicate, Save Money and make money

From: rsarget
Views: 773
Comments: 0

Sony Vaio VGN-NW160J Sale

Sony Vaio VGN-NW160J Sale

From: rsarget
Views: 656
Comments: 0

InSTEDD Mesh4x Platform

InSTEDD Mesh4x Platform

From: rsarget
Views: 430
Comments: 0

Joe Barton Diabetes Reversal Report - Natural Cure For Diabetes Review

Joe Barton Diabetes Reversal Report - Natural Cure For Diabetes Review

From: rsarget
Views: 438
Comments: 0

See all 
 
 
 URL:          AddThis Social Bookmark Button
Embed Thin Player: (fits in most blogs)
Embed Full Player :
 
 

Name

Email (will NOT be shown to other users)

 

 
 
Comments: (watch)
 
 
Notes:
 
Slide 1: Challenges in Insurance Coverage Litigation Gerry Schulze B.J. Walker May 5, 2004
Slide 2: Analyzing Insurance Contract Provisions • Pre Litigation Opinions on Underwriting and Coverage Issues – Does the Policy Cover the Damage Claimed? – Did the Damage Occur within the policy period?
Slide 3: What is Insurance? • Insurance is a special kind of contract • Insurance is heavily regulated • Three elements: – Risk Distribution – Among a substantial number of members – Through an insurer engaged primarily in the business of insurance
Slide 4: Risk Distribution • • • • • • Risk: According to Black’s The chance of injury, damage, or loss The chance or degree of probability of loss to the subject matter of an insurance policy The amount that an insurer stands to lose A person or thing that an insuraer considers a hazard The type of loss covered by a policy
Slide 5: Who will suffer the risk? • Without insurance, the unlucky person who suffers the misfortune • A person who intentionally or negligently proximately causes the misfortune to occur to others • Under certain statutory schemes, the party the legislature decides should bear the loss (Workers’ Compensation, e.g)
Slide 6: What risk can be transferred • Obviously, the actual misfortune cannot be transferred. If someone runs over me in the parking lot and breaks my leg, I can’t transfer the broken leg to him • Economic loss, and economic compensation for other losses is all we can transfer.
Slide 7: Insurance transfers risk • Insurer work on the basis of statistics • Actuaries calculate the risk of certain eventualities over the population of the insured • Insurers fix premium rates to cover losses, administrative costs, and other costs – Bonuses for insurance executives, for example
Slide 8: Factors in calculating risk/cost • To figure out a premium the actuary has to consider – What is the risk to be covered? – How frequently will the risk occur? – How much will it cost to cover the risk? – What will it cost to administer the program?
Slide 9: The Insurer • Primarily in the business of insurance • Compare warranties on merchandise – An insurer is in the business of insuring against risk of loss – A manufacturer can guarantee that its widgets will work. There is always a risk that the widgets won’t work. If that risk occurs, the insurer will replace the widgets. But the manufacturer isn’t really an insurer
Slide 10: Insurers act as underwriters • Underwriting in this context is just the act of assuming a risk by insuring it • The insurer assumes liability to pay the proceeds on loss • Historically, there were mutual assessment associations. Sometimes it was hard to collect when members were assessed. That’s where the underwriter came in.
Slide 11: Underwriting • Lloyd’s Coffee House in London, 1600’s, shippers would pass around a slip of paper with relevant facts. Interested person would write on the slip the amount of insurance, the rate, and his initials. Hence: Underwriting.
Slide 12: So what must the insurer do? • Gather data to fix premiums • Determine what losses it will cover • Drafting insurance contracts consistent with the law • Investigate and pay (or not pay) claims – It’s the “or not pay” that is why we’re here today
Slide 13: Types of Insurance • In theory just about anything legal could be insured • In practice most insurance actually written can be categorized as: – Life Insurance – Fire and Casualty Insurance – Marine and Inland Marine Insurance
Slide 14: Life Insurance • Pay on death—easy enough • Who is involved: – Insurer – “Owner” of the policy—who can change beneficiary – “Owner” often is, but is not always the subject of the policy, the cestui que vie – “Beneficiary” Who is paid in the event of loss
Slide 15: Fire and Casualty • Fire – Pretty simple concept – Except that by now this insurance also can cover other losses such as weather (lightning, water, etc). There is also earthquake, riot, etc. insurance available.
Slide 16: Casualty • • • • • • • • • Liability Theft/burglary Accident Health Property damage Workers Compensation Fidelity and surety bonds Car insurance Boat / airplane insurance
Slide 17: Marine Insurance • “Perils of the sea” • Fairly comprehensive, covering all losses except those excluded. • Similar, Inland Marine Insurance, covers gaps between seas and docks.
Slide 18: Yacht Insurance Policy • PERILS • Upon the Hull, Spars, Sails, Tackle, Apparel, Machinery, Boats, and • • • • • other Furniture of and in the Yacht hereby insured. Touching the adventures and perils which we, the Assurers, are contented to bear, and do take upon us, they are of the seas, men-of-war, fire, enemies, pirates, rovers, assailing thieves, jettisons, letters of mart and countermart, reprisals, takings at sea, arrests, restraints and detainments of all kings, princes and people, of what nation, condition or quality soever, barratry of the Master and Mariners, and of all other like perils, losses and misfortunes, that have or shall come to the hurt, detriment or damage of said Yacht or any part thereof.
Slide 19: Floater policies • All risk insurance on personal property not situated at a fixed location. Another kind of inland marine insurance.
Slide 20: No fault Compensation • Workers’ Compensation • Automobile No Fault
Slide 21: Policy language: Liability Insurance • The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of ... the property damage to which this insurance applies, caused by an occurrence.
Slide 22: Occurrence • An accident, including continuous repeated exposure to conditions, which results in bodily injury or property damage, neither expected nor intended from the standpoint of insured.
Slide 23: Language of Insurance Policies • Legal Language is a dialect of English – Special meaning of words--jargon – Special constructions • Subjunctive more common • Struggle for more precision in language • Use of “magic words”
Slide 24: Talking about legal writing • What is it that makes the language of contracts, including insurance contracts, so difficult for not only the lay person, but the lawyer as well? • In the most carefully crafted language, insurance policy forms, educated lawyers and judges can disagree greatly about the meaning of words, phrases, clauses, and paragraphs.
Slide 25: Characteristics of Legal Writing • Clarity – Word choice – Organization – Avoid Legalese where possible • In functional writing, legalese is often preferable • In persuasive writing you can get by with it when you have to • In “informative” writing it will seldom do much good
Slide 26: Characteristics of Legal Writing • Conciseness – Strunk’s advice, “Make each word tell.” – Sometimes you have to balance the need for completeness and the need for concise writing – Avoid repetition
Slide 27: Characteristics of Legal Writing • Accuracy/Precision – The goal is to be precise and understandable. – Ambiguity works against the insurer.
Slide 28: Kinds of Legal Writing • Informative • Persuasive • “Functional”
Slide 29: Informative • Letters to client – Not necessarily “simple” but not “legalese” – Explain terms • Interoffice memoranda • Opinion letter – understandable. – disclaimers
Slide 30: Persuasive • Briefs – Vary in complexity – Probably the most time consuming of all documents – Different concerns with • Trial Courts • Appellate Courts • Administrative Agencies • Settlement Brochures
Slide 31: Functional • This kind of document is one which is supposed to create a result – – – – – – – – Will Deed Complaint Trust Power of Attorney Contract Real Estate Documents and, for our purposes INSURANCE POLICY
Slide 32: Pre Litigation Opinions • Locate and read all relevant policies – Sometimes more than one policy may apply • Especially in business cases – Coordination of benefits • Who’s primary? • Excess coverage? • Umbrella coverage?
Slide 33: Read the Policy • , "Read the Statute and Read the Policy." State Farm Mut. Auto. Ins. Co. v. Beavers, 321 Ark. 292, 295, 901 S.W.2d 13 (1995)
Slide 34: Notice Provisions • Insurance policies typically have notice provisions. – Notice of “occurrence” – Notice of “claim” – Notice of “suit.”
Slide 35: Notice of loss • The insurance policy provides: 1. What To Do In Case Of Loss. If a covered loss occurs, the insured must: (a) give us immediate written notice. In case of theft, also notify the police. .... (d) send to us, within 60 days after loss, a proof of loss signed and sworn to by the insured, including: .... 10. Suit Against Us. We may not be sued unless there is full compliance with all the terms of this policy. Suit must be brought within one year (in Kansas 5 years) after the loss or damage occurs. Ripley v. Shelter Mut. Ins. Co. 1991 WL 89652, *1 (Ark.App.) (Ark.App.,1991)
Slide 36: Another example • Duties After Loss. In case of an accident or occurrence, the insured shall • • • • • • perform the following duties that apply. You shall cooperate with us in seeing that these duties are performed: a. Give written notice to us or our agent as soon as practicable, which sets forth: the identity of this policy and insured; reasonably available information on the time, place and circumstances of the accident or occurrence; and names and addresses of any claimants and available witnesses; b. Immediately forward to us every notice, demand, summons or other process relating to the accident or occurrence. "Immediately" means within a reasonable time under the circumstances. With most losses, the circumstances are that damage has been done, and evidence of how the damage was done, and how much damage was done, is quickly disappearing.
Slide 37: Definition of Damage • Property damage in the policy is defined as: • (1) Physical injury to or destruction of tangible • property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) Loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
Slide 38: Pre-Litigation Negotiations • Open a dialog with the insurer/insured if you can. • Sometimes it’s a waste of time, but if both parties are willing to resolve the dispute, it’s in both parties’ best interest to do it sooner rather than later.
Slide 39: Whether a Policy Covers the Damages Claimed—Example • Hit-and-run automobile means an automobile which causes bodily injury to an insured arising out of physical contact of such automobile with the insured or with an automobile which the insured is occupying at the time of the accident, provided: (1) there cannot be ascertained the identity of either the operator or owner of such "hit-and-run automobile. . .
Slide 40: Broad “Personal Injury” coverage under Commercial and General Liability coverage • • • • • • “Personal injury" means injury, other than "bodily injury," arising out of certain enumerated "offenses." These include: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor; d. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or e. Oral or written publication of material that violates a person's right of privacy
Slide 41: Pollution Exclusions • This insurance does not apply to: (1) "Bodily injury" or "property damage" arising out of the • actual, alleged or threatened discharge, dispersal, release or escape of pollutants at or from premises owned, rented or occupied by the named insured. (2) Any loss, cost or expense arising out of any governmental • direction or request that the named insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants. Pollutants means solid, liquid, gaseous or thermal irritant or • contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Slide 42: Another Pollution Exclusion • In consideration of the premium charged, it is hereby agreed and declared that this policy shall not apply to bodily injury of property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere, or any water course or body of water.
Slide 43: Another version • 2. a "hit and run" land motor vehicle whose owner or driver remains unknown and which strikes: • a. the insured; or • b. the vehicle the insured is occupying and is the proximate cause of bodily injury to the insured.
Slide 44: Uninsured Motorist—Contact Rule • Still good law, probably • State Farm Mutual Ins. Co. v. Henderson, ___ Ark. ___ , ___ S.W.3d ___, 2004 WL 396355 (Mar. 4, 2004).
Slide 45: There may be a way out • Additionally, Henderson urges us to consider a recent act of the legislature, Act 1043 of 2003, which amended Ark.Code Ann. § 2719-503 (Repl.2004) to provide a presumption that both a motorist and the vehicle itself are uninsured if the motorist fails to file a certificate of insurance within ninety days of an accident. Prior to that change, section 27-19-503 only provided such a presumption to the motorist, but not to the vehicle. Henderson asserts that this change relieves him of the burden to prove that the other vehicle was uninsured, as required in Ward, 259 Ark. 696, 535 S.W.2d 830. [FN1] We do not address this argument, as the amendment to section 27-19-503 was not made until some three years after the issuance of Henderson's policy and the date of his accident. This court has previously recognized that an insurance policy is governed by statutes in effect at the time of its issuance.
Slide 46: Whether the damage occurred during the policy period An occurrence policy provides coverage if the event insured against takes place within the policy period, regardless of when the claim is presented. The "claims made" policy provides coverage only if a claim is made during the policy period.
Slide 47: Duty to Defend • Can be broader than duty to indemnify • "As a general matter, the duty to defend is determined by comparing the allegations in the underlying complaint to the scope of the coverage provided by the insurance policy. If injury or damage within the policy coverage could result from the underlying suit, the duty to defend arises." Union Insurance Company v. The Knife Company, 897 F.Supp. 1213 (W.D.Ark. 1995).
Slide 48: Duty to Defend • ... the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false, or fraudulent ...
Slide 49: Comprehensive General Liability • In examining the duty to defend, this court has recognized the general rule that the allegations in the pleadings *176 against the insured determine the insurer's duty to defend. Murphy Oil USA, Inc. v. Unigard Security Ins. Co. 347 Ark. 167, 175-176, 61 S.W.3d 807, 812 (Ark.,2001)
Slide 50: Duty to defend broader • Additionally, this court has recognized that the duty to defend is broader than the duty to indemnify. See Commercial Union Ins. Co. of America v. Henshall, supra. However, the duty to defend arises when there is a possibility that the injury or damage may fall within the policy coverage. See Home Indemnity Co. v. City of Marianna, 291 Ark. 610, 727 S.W.2d 375 (1987). Conversely, where there is no possibility that the damage alleged in the complaint may fall within the policy coverage, there would be no duty to defend. Murphy Oil USA, Inc. v. Unigard Security Ins. Co. 347 Ark. 167, 176, 61 S.W.3d 807,812 - 13 (2001)
Slide 51: If the possibility of damages exists, the duty to defend arises • Home's secondary argument is that genuine issues of material fact remain. We are not persuaded that that is so. One fact assertedly undecided deals with the issue of whether damages will result in the federal suit. But the duty to defend is broader than the duty to pay damages and as we have seen, it is enough if the possibility of damages exists. If injury or damage within the policy coverage could result, the duty to defend arises. Commercial Union Ins. Co. v. Henshall, 262 Ark. 117, 553 S.W.2d 274 (1977).
Slide 52: Claim for reimbursement of Defense and Settlement Costs • An insured who is forced to defend and settle a case may have a cause of action against an insurer which wrongfully denied coverage • An insurer which defended an action under reservation of rights may have a claim for reimbursement against the insured.
Slide 53: Reimbursement • Brady & Handleman, INSURER'S RIGHT TO • • • • REIMBURSEMENT: NEGLECTED BUT VALUABLE REMEDY, 59 Def.Cou.J. 547 (Oct 1992) Dennis Wall, 68 INSURED'S REIMBURSEMENT OF INSURERS'S DEFENSE EXPENSES: SOME PRACTICAL STEPS, 65 Def.Cou.J. 68 (1998) Melinda Kirk, THE INSURER'S RIGHT TO SEEK REIMBURSEMENT: WILL THE BUSS STOP IN OKLAHOMA?, 38 Tulsa L.J. 599 (2000) – Interesting because it’s from another state that has not developed much law on the subject. – Buss refers to a seminal California case
Slide 54: Reimbursement • There are some practical difficulties – Insured probably won’t have the money – Insurer’s duty to defend is broader than duty to cover the losses.
Slide 55: Insurer’s right to withdraw defense • Arguably, if circumstances change in the course of litigation and it becomes clear that there is no conceivable liability covered by the policy, an insurer might withdraw • If so, it does so at its own risk.
Slide 56: Actions that Trigger Coverage • Occurrence – Means an accident, including continuous or repeated exposure to substantially the same general harmful conditions
Slide 57: Claim Analysis/Denial • Read the statute and read the policy • Who is the insured • What is covered • What is excluded • How much is payable?
Slide 58: Identifying the Insured • Named Insured • Defined Insured • Insured under “omnibus clause”
Slide 59: Named Insured • Since plain language came into effect, it’s usually something like, “Throughout this policy the words “you” and “your” refer to the Named Insured in the Declarations. The words “we,” “us,” and “our” refer to the Company providing this insurance.
Slide 60: Homeowner, example • --”and a spouse if a resident of the same household” • “Insured means you and the following persons if permanent residents of your household: – Your relatives – Anyone under the age of 21
Slide 61: Commercial General Liability, example • "your employees, other than your executive directors, but only for acts within the course and scope of their employment by you." Tri-State Ins. Co. v. Sing, 41 Ark. App. 142, 850 S.W.2d 6 (1993).
Slide 62: Omnibus Clause • Any person using your covered auto • Permission issues – Hell or High Water rule
Slide 63: Drafting a Reservation of Rights Letter • There are a lot of cases nationwide that hold that an insurer must state all possible grounds for claims denial in the reservation of rights letter. – Colorado Lawyer article, 26-AUG Colo. Law. 93 (Robinson and Powers)
Slide 64: Robinson and Powers • If the issue of coverage is anything but certain, it is advisable that the insurer provide a defense for its insured under a reservation of rights and, if appropriate, institute a declaratory judgment action to determine the insurer's obligations. A reservation of rights letter should be sent as soon as a coverage question is recognized, and it must inform the insured in detail of all the potential defenses to coverage the insurer has discovered from its investigation and analysis of the claim or suit.
Slide 65: Robinson and Powers, continued • Defenses known to the insurer, or those that the insurer reasonably should have known, that are omitted from the reservation of rights letter may be waived by the insurer. However, if additional grounds come to the knowledge of the insurer during its continued investigation of the claim or during discovery in the underlying lawsuit, the insurer can supplement its reservation of rights letter to add the newly discovered coverage defenses.
Slide 66: Robinson and Powers, Continued • The reservation of rights letter should make specific reference to the insurance policy and should quote from the actual policy provisions that are the basis for the insurer's decision to reserve the right to assert that there is no coverage for the claim under the policy. The reservation of rights letter should be sent to each person or entity that may assert a right to be considered a named insured or additional insured under the policy. Additionally, because an insured is entitled to know the excess insurer's position regarding coverage, the excess insurer should issue a reservation of rights letter to preserve the right to deny coverage.
Slide 67: Robinson and Powers, continued • Finally, the insurer should include in the reservation of rights letter a statement that it is reserving any and all rights that it might have under the pertinent insurance policy. This phrase was recently scrutinized in Employers' Fire Ins. v. Western Guaranty Fund, [in which the court held that while Employers' participated in the defense of its insured, it expressly reserved "any and all rights" which it might have under the policy to later contest the existence of any duty it may have to provide a defense. While the court refused to determine whether such language was sufficient to allow Employers' to seek reimbursement from the insured for defense costs, it found that the reservation of rights letter made it clear that the insurer's participation in the defense of its insured could not be construed as a waiver of its right to contest its duty to defend under the policy.

   
Time on Slide Time on Plick
Slides per Visit Slide Views Views by Location