A New York appeals court affirmed the lower court’s ruling that RSUI Indemnity Co. does not have to provide indemnity coverage for Forest Laboratories’ $65 million class action settlement because lower level excess insurers did not exhaust their policies first. RSUI was a 7th layer excess carrier above a primary policy in an $80 million “tower” of insurance. Forest... Read More

The First Circuit U.S. Court of Appeals held that AIG must advance defense costs to the directors and officers of Westernbank of Puerto Rico because it was unclear whether the insured-vs.-insured exclusion applied. The FDIC sent a written demand to the bank’s directors and officers for the defunct bank’s losses. The directors and officers notified AIG of the claim,... Read More

No Horizontal Exhaustion By Layer For Excess Under NY Law – A Delaware state court applying New York law held that the horizontal exhaustion rule applies only to primary and umbrella policies, and does not apply to excess layers. Horizontal exhaustion by layer generally means that in a long-tail situation such as asbestos or pollution, an entire layer of... Read More

An Illinois federal district court found that withdrawal of all coverage defenses by a primary insurer does not vitiate a conflict of interest and the policyholder’s right to independent counsel where potential liability exceeds the primary insurer’s limits. The district court, applying Illinois law, determined that Liberty Surplus Insurance Company breached its duty to defend Perma-Pipe Inc. by refusing to... Read More

Ct. of Appeals of NY reverses itself. The Court of Appeals of New York, by a vote of 4-2, reversed its previous ruling that a breach of the duty to defend precludes the insurer from later challenging its indemnity obligation.  In its previous ruling the court held that because Zurich had breached its duty to defend it could not assert... Read More

Does not begin to run until entry of final underlying judgment. A New York Federal District Court applying Rhode Island and Massachusetts laws ordered an insurer to reimburse defense costs related to a CERCLA action involving the release of ferric ferrocyanide during a remediation of a Massachusetts landfill (Mendon Road in Attleboro, MA).  The insurer had asserted that the suit... Read More

2nd Cir. rewrites NBA referee policies based on marketing pitch. The Second Circuit Federal Court of Appeals reversed a Connecticut Federal District Court’s dismissal of a suit involving two former NBA referees. The policyholders argued that the insurance salesman represented that the “own occupation” policy was broader than a standard disability policy in that it would cover them until age... Read More

10th Cir. applying Kansas law finds insurer must demonstrate “substantial prejudice.” The Tenth Circuit reversed an earlier win for Lexington Insurance Co., finding the insurer was still potentially on the hook for $7.5 million in damages to a salt mine, even though its policyholder reported water streaming into the mine two years after the problem was actually found.  The court... Read More

Finding that product actually contained salmonella unnecessary to conclude “property damage” occurred. The Eighth Circuit has upheld a Minnesota federal judge’s ruling that The Netherlands Insurance Co. must cover instant milk supplier Main Street Ingredients LLC’s $1.4 million settlement with Malt-O-Meal Co. over losses from an instant oatmeal recall tied to salmonella fears.  The court rejected Netherlands’ argument that the... Read More