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Executive Summary Blog

Legal developments affecting professional liability insurers

Category Archives: Rescission

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West Virginia High Court Reinstates Rescission Suit

Posted in Rescission
The West Virginia Supreme Court of Appeals has reinstated a lawsuit seeking to rescind a doctor’s professional liability policy on the grounds that the insured made material misrepresentations in applying for the policy.  Admiral Ins. Co. v. Fisher, 2018 WL 2688182 (W. Va. June 6, 2018).  In reversing the trial court, the Supreme Court of… Continue Reading

No Coverage Due to Material Misrepresentation on Insurance Application Based on Totality of Circumstances

Posted in Prior Knowledge/Warranty Exclusion, Rescission
An intermediate New Jersey appellate court has affirmed a trial court’s decision concluding that no coverage was available for a legal malpractice claim because the insured law firm made material misrepresentations on its insurance renewal application in failing to disclose the insured’s knowledge of circumstances that could result in a professional liability claim.  Ironshore Indem.,… Continue Reading

Application Exclusion Does Not Apply When Misstatements Were Not “But For” Cause of Claim

Posted in Rescission
The United States District Court for the Southern District of Texas has held that an exclusion contained in the application incorporated into the policy barring coverage for claims “based upon, arising out of or in connection with” misstatements in the application did not apply because the misstatements at issue, regarding a change in the insured’s… Continue Reading

Insurer Entitled to Rescind Policy Where Insured Law Firm Made Material Misrepresentations in Application

Posted in Rescission
The United States District Court for the Southern District of New York, applying New York law, has held that an insurer was entitled to rescind a lawyers professional liability policy because the insured law firm made a material misrepresentation in its application.  Travelers Cas. & Surety Co. of Am. v. Gold, Schollar, Moshan, PLLC, 2018… Continue Reading

Insurer Entitled to Rescind Policy But Not to Reimbursement of Defense Costs

Posted in Rescission
The United States District Court for the Southern District of West Virginia, applying West Virginia law, has held that an insurer which was entitled to rescind a lawyer’s professional liability policy, and thus owed no duty to defend the underlying action, was not entitled to reimbursement of defense costs.  ALPS Prop. & Cas. Ins. Co.… Continue Reading

Insurer May Rescind Policy Where Insured Failed to Disclose Pending Investigation

Posted in Rescission
Applying California law, the United States Court of Appeals for the Ninth Circuit has held that an insurer was entitled to rescind a directors and officers liability insurance policy where the insured failed to disclose a pending investigation in response to an application question.  Western World Ins. Co. v. Professional Collection Consultants, 2018 WL 259309… Continue Reading

Court Grants Summary Judgment to Insurer Based on Failure to Disclose Prior Claims in Application

Posted in Prior Knowledge/Warranty Exclusion, Rescission
A California federal district court, applying California law,  has held that an insurer was entitled to summary judgment that it had no duty to defend a suit against its insured because the insured failed to disclose a related claim in its application, and the claim therefore predated the policy period.  Kelly v. Starr Indem. &… Continue Reading

Disputes Over Amounts of Premiums and Claims Paid Prevent Summary Judgment in Rescission Case

Posted in Rescission
The United States District Court for the Southern District of Indiana, applying Indiana law, denied an insurer’s motion for summary judgment based on rescission, holding that there was a question of material fact where the insurer did not provide evidence of the amount of claims paid or premiums received for the policies to be rescinded.… Continue Reading

Missouri Federal Court Denies Motion to Stay Coverage Action Pending Resolution of State Insolvency Proceedings Against Insured

Posted in Rescission
In a win for Wiley Rein’s client, a Missouri federal court has denied a motion to stay a coverage action against an insolvent insurer pending the resolution of insolvency proceedings in state court, holding that the insolvent insurer had failed to demonstrate that the case presented one of the exceptional cases where abstention is appropriate.… Continue Reading

Insurer May Not Rescind Renewal Policy Based on Misrepresentations in Prior Policy’s Application

Posted in Loss, Prior Knowledge/Warranty Exclusion, Rescission
An Illinois intermediate appellate court, applying Illinois law, has held that a renewal insurance policy may only be rescinded based on material misrepresentations made in the renewal application, and not based on misrepresentations made in applications for prior policies.  Ill. State Bar Ass’n Mut. Ins. Co. v. Rex Carr Law Firm, 2017 WL 2806126 (Ill.… Continue Reading

Failure to Disclose Untimely Filings on Application Voids Lawyer’s Policy

Posted in Rescission
The United States District Court for the District of New Jersey, applying New Jersey law, has held that an insured attorney’s failure to disclose on an insurance application an appeal filed late and a lawsuit filed outside of the statute of limitations constitutes a material misrepresentation warranting a default judgment voiding the policy.  Liberty Ins.… Continue Reading

Insurer Entitled to Rescind Lawyers Professional Liability Policy Where Insured Made Material Misrepresentations in Application

Posted in Rescission, Rescission-Materiality, Rescission-Waiver
The U.S. District Court for the Southern District of Illinois, applying Illinois law, has held that an insurer was entitled to rescission of a policy where the insured made material misrepresentations in its application.  Carolina Cas. Ins. Co. v. Robert S. Forbes PC, 2017 WL 86136 (S.D. Ill. Jan. 10, 2017).  The court also held that… Continue Reading

Subjective Standard Applies to Rescission of E&O Policy Based on Response to Application Question

Posted in Prior Knowledge/Warranty Exclusion, Rescission
The United States District Court for the Southern District of Ohio, applying California law, has held that an errors and omissions insurer is not entitled to rescission of its policy based on an alleged misrepresentation by the insured on the application for the policy.  Maxum Indem. Co. v. Nat’l Condo & Apartment Ins. Grp., 2016… Continue Reading

Insured Lawyers’ Material Misrepresentations Warrant Rescission and Coverage also Barred by Prior Knowledge Exclusion

Posted in Prior Knowledge/Warranty Exclusion, Rescission
The United States District Court for the Northern District of Mississippi, applying Mississippi law, has granted summary judgment in favor of an insurer, holding that the insurer is entitled to rescind a lawyers professional liability policy based on the insured attorneys’ material misrepresentations in the insurance application.  Imperium Ins. Co. v. Shelton & Assocs. P.A.,… Continue Reading

Lawyer’s Material Misrepresentations in Policy Renewal Applications Justify Rescission

Posted in Notice of Potential Claim (Timeliness), Rescission
A federal district court in Illinois has granted an insurer’s motion for summary judgment rescinding three consecutive professional liability policies.  This comes after the court determined under Illinois law that the insured attorney made material misrepresentations in each of the renewal applications.  Minn. Lawyers Mut. Ins. Co. v. Schulman, 2016 WL 4988006 (N.D. Ill. Sept.… Continue Reading

Rescission Voids All Policy Provisions, Including Innocent Insured Provision

Posted in Rescission
Applying Georgia law, a federal district court has held that rescission of an insurance policy based on a material misrepresentation in the application voids all provisions of the policy, including the “innocent insured” provision, such that the insureds who had no knowledge of the fraud cannot rely on that provision to preserve coverage for themselves. ProAssurance… Continue Reading

Rescission Warranted When Policyholder Failed to Disclose Past Department of Insurance Investigations in Application

Posted in Rescission
Applying Arizona law, a federal district court has held that an insurance brokerage firm’s failure to disclose past investigations by the Department of Insurance in response to a specific question on its professional liability insurance application warranted rescission of its policy. Admiral Ins. Co. v. AZ Air Time, LLC, No. CV-15-00245-PHX-SRB (D. Ariz. Aug. 10,… Continue Reading

No Rescission Based on Application Signer’s Fraud; Fraudster’s Knowledge Cannot Be Imputed to Bank

Posted in Rescission
Applying Louisiana law, the United States District Court for the Western District of Louisiana has held that an insurer cannot rescind a fidelity bond issued to a bank because it could not prove as a matter of law that the bank intended to deceive the insurer. Everest Nat’l Ins. Co. v. Tri-State Bancshares, Inc., No.… Continue Reading

Insurer Entitled to Rescind Policy Based on Insured’s Failure to Disclose Claim Made After Application Submitted but Before Coverage Bound

Posted in Rescission
Applying Iowa law, the United States Court of Appeals for the Eighth Circuit has held that an insurer can rescind an E&O policy because the insured failed to disclose the existence of a claim made after the submission of the application but before the insured agreed to purchase coverage. Capson Physicians Ins. Co. v. MMIC… Continue Reading

Claimant Without a Judgment Has No Standing to Bring Declaratory Judgment Action Against Alleged Tortfeasor’s Insurer

Posted in Rescission
A Kentucky federal court has held that a claimant has no standing to bring a declaratory judgment action against her alleged tortfeasor’s insurer where the claimant has yet to obtain a judgment in the underlying action. Summers v. Scottsdale Indem. Co., No. 1:15-cv-0092 (W.D. Ky. March 31, 2016). The court also held that, even if… Continue Reading