Executive Summary Blog

Executive Summary Blog

Legal developments affecting professional liability insurers

Obligation to Timely Report Claim Applies Even if Claim Appears to Have Been Abandoned

Posted in Late Notice, Related Claims and associated exclusions

Applying Illinois Law, the United States District Court for the Northern District of Illinois has held that an insurer had no duty to defend a claim reported more than nine months after the end of the policy period.  Wesco Ins. Co. v. Elements Architectural Grp., Inc., 2019 WL 5725440 (N.D. Ill. Nov. 5, 2019).

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No Coverage for Claim Made During Initial Policy Period but Reported During Renewal Policy Period

Posted in Notice of Claim

Applying Ohio law, an Ohio appellate court has held that renewal of a claims-made policy does not extend the time by which an insured may report a claim.  ISCO Indus., Inc. v. Great Am. Ins. Co., 2019 WL 6353709 (Ohio Ct. App. Nov. 27, 2019).  The court further held that the “notice prejudice” rule does not apply because coverage under a claims-made policy is generally restricted to claims made and reported during the policy period.

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Ill. Ruling Clarifies Wrongful Incarceration Insurance Triggers

Posted in Wrongful Conviction

This article was originally published in Law360

In Sanders v. Illinois Union Insurance Company, the Supreme Court of the State of Illinois resolved a split in state and federal decisions applying Illinois law on trigger of coverage in the context of wrongful incarceration.[1]

According to the Illinois Supreme Court, the City of Chicago Heights’ insurers had no coverage obligation under policies in effect when the claimant was retried for murder and exonerated, two decades after the initiation of the prosecution. As a result, Illinois law on trigger of coverage for wrongful incarceration lawsuits is now on all fours with decisions by courts nationwide.

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Exclusion for Violation of Consumer Protection Laws Does Not Bar Coverage for Alleged Violation of Landlord-Tenant Law

Posted in Consumer Protection Exclusion

An Illinois intermediate appellate court has held that an exclusion for claims arising from “unfair or deceptive business practices” including “violations of any local, state or federal consumer protection laws” did not bar coverage against an insured property manager for alleged violations of a city residential landlord-tenant ordinance.  Evergreen Real Estate Servs., LLC v. Hanover Ins. Co., 2019 WL 5704599 (Ill. App. Ct. Nov. 4, 2019).

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No EPL or D&O Coverage for Intra-Corporate Shareholder Dispute

Posted in “Claim”, Wrongful Act

In a win for an insurer represented by Wiley Rein, the United States District Court for the District of Maryland has held that an intra-corporate dispute between shareholders was not covered under an EPL insuring agreement because the underlying demand letter and complaint did not state a claim “for” an Employment Practices Wrongful Act, and it was not covered under a D&O insuring agreement because the claimant owned 10% or more of the outstanding shares of the insured company at the time the claim was made.  Madison Mechanical, Inc. v. Twin City Fire Ins. Co., 2019 WL 6035690 (D. Md. Nov. 14, 2019).

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Coverage for Lawsuit Against School District Involving Student’s Acts of Sexual Misconduct Not Barred by Sexual Misconduct Exclusion

Posted in Uncategorized

Applying Illinois law, a federal district court has held that a policy’s sexual misconduct exclusion did not apply to preclude coverage for an underlying lawsuit against a school district involving a student’s acts of sexual misconduct, where the applicability of the exclusion in that context was not “clear and free from doubt.”  Netherlands Ins. Co. v. Macomb Cmty. Unit Sch. Dist., 2019 WL 5417144 (C.D. Ill. Aug 6, 2019).

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Fraud Exclusion Inapplicable Where Insured Unwittingly Transferred Funds to Fraudsters

Posted in Cyber Policies and Issues, Dishonesty Exclusion

The United States District Court for the Southern District of New York, applying Connecticut law, has concluded that a fraud exclusion is not triggered where an insured unwittingly transferred a client’s funds to third-party fraudulent actors based on spoofed emails, because the fraudulent acts were not committed by the insured.  SS&C Techs. Holdings, Inc. v. AIG Specialty Ins. Co., No. 19-cv-7859 (S.D.N.Y. Nov. 5, 2019).

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Outside Business Exclusion Bars Coverage for Claims Indirectly Related to Outside Business

Posted in Outside Business Exclusion

In a win for the insurer, the United States Court Appeals for the Third Circuit, applying Pennsylvania law, affirmed the district court’s holding that an outside business exclusion barred coverage for counts against an insured law firm indirectly based on the insured’s conduct with an outside business.  Westport Ins. Corp. v. Hippo Fleming & Pertile Law Offices, 2019 WL 5855792 (3d Cir. Nov. 8, 2019).

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Civil Contempt Proceeding Inherently Seeks Non-Covered “Sanctions”

Posted in Loss

The United States District Court for the District of Hawaii, applying Hawaii law, held that an insurer was not obligated to defend an insured law firm against a civil contempt proceeding, where the policy carved out “sanctions” from the definition of Loss.  Damon Key Leong Kupchak Hastert v. Westport Ins. Corp., 2019 WL 5088739 (D. Haw. Oct. 10, 2019).  The court held that the term “sanction” was unambiguous, even though the policy did not define it, and that civil contempt proceedings necessarily seek sanctions.

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Exclusion for Wage and Hour Law Claims Limited to Laws Concerning Duration Worked or Remuneration Received in Exchange for Work

Posted in Uncategorized

The California Court of Appeal, applying California law, has held that the undefined term “wage and hour . . . law” in a wage and hour exclusion is limited to laws “concerning duration worked and/or remuneration received in exchange for work.”  S. Cal. Pizza Co., LLC v. Certain Underwriters at Lloyd’s London Subscribing to Policy No. 11EPL-20208, 40 Cal. App. 5th 140 (Ct. App. Sept. 20, 2019).

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