Rescission

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The United States District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, has held that an insurer was not entitled to summary judgment voiding a medical malpractice liability policy, finding that triable issues of fact remained about whether an insured could have anticipated litigation stemming from past medical procedures at the time it completed its policy application.  MDAdvantage Ins. Co. of N.J. v. Hasiuk, 2020 WL 1531817 (E.D. Pa. Mar. 31, 2020).
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Continue Reading Issues of Fact Halt Insurer’s Attempt to Rescind Malpractice Policy

Applying Ohio law, a federal district court has held that misrepresentations in an application warranty statement regarding three unreported lawsuits filed against the insured during the initial policy period rendered a renewed claims-made and reported policy void ab initio.  Certain Underwriters at Lloyds London Subscribing to Policy No.  HMPL 18-0164 & HMPL 17-0158 v. KG Admin. Servs., Inc., 2019 WL 6770061 (N.D. Ohio Dec. 12, 2019).  The court also held that, because the claims were not reported during the initial policy period, the insurer did not have any coverage obligations under the initial policy.
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Continue Reading Concealment of Pending Lawsuits in Renewal Application Voids Policy

Applying California law, a federal district court has rejected an insured law firm’s argument that the terms “may” and “might” as used in connection with an application question regarding knowledge of potential claims are ambiguous and unenforceable.   Am. Alternative Ins. Corp. v. Warner, 2019 WL 6493945 (N.D. Cal. Dec. 3, 2019).
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Continue Reading “May” and “Might” are Sufficiently Clear and Unambiguous to Support Rescission Claim

Applying California law, a federal district court has held that an insurer was not obligated to cover a labor union’s defense costs and damages in a lawsuit brought by a former employee because the alleged wage and hour violations were not “wrongful employment practices” or “wrongful acts” under the policy.  United Farm Workers of Am. v. Hudson Ins. Co., 2019 WL 1517568 (E.D. Cal. Apr. 8, 2019).  The court also held that material misrepresentations in the labor union’s application for insurance voided the policy.
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Continue Reading No Coverage for Wage and Hour Claims Under Labor Professional Liability Policy

The U.S. District Court for the Central District of California, applying California law, held that a warranty exclusion barred coverage where a start-up company made material misrepresentations regarding contemplated acquisitions in its policy application.  Scottsdale Ins. Co. v. CSC Agility Platform, Inc., 2019 WL 1452910 (C.D. Cal. Feb. 4, 2019).  The court further held that the insurer did not waive its right to enforce the warranty exclusion, nor was it estopped from doing so.
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Continue Reading Warranty Exclusion Bars Coverage Where Start-Up Made Material Misrepresentations in Application about Potential Acquisitions

The U.S. District Court for the Western District of Pennsylvania, applying Pennsylvania law, has held that a professional liability insurance policy’s outside business exclusion precluded coverage for an underlying lawsuit arising out of an insured attorney’s alleged use of privileged information to benefit his own business interests.  Westport Ins. Co. v. Hippo Fleming & Pertile Law Offices, 2018 WL 4705780 (W.D. Pa. Oct 1, 2018).
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Continue Reading No Coverage for Malpractice Suit Implicating Policy’s Outside Business Exclusion

The Supreme Court of Montana has held that a Montana statute allowing insurers to “prevent a recovery” under an insurance policy in certain circumstances, including when the insured made misrepresentations or omissions in its application, does not provide a right to rescind the policy ab initio.  ALPS Prop. & Cas. Ins. Co. v. McLean & McLean, PLLP, 2018 WL 3737950 (Mont. Aug. 7, 2018).  The court also held that an innocent insured attorney had a reasonable expectation of retaining attorney malpractice insurance by purchasing an extended reporting period endorsement.
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Continue Reading Montana Supreme Court Holds Insurer Does Not Have Statutory Right to Rescind Lawyers’ Professional Liability Policy

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 Appeals noted that the insured omitted information concerning several patient overdose deaths in response to questions on the application for the policy.
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Continue Reading West Virginia High Court Reinstates Rescission Suit

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., Inc. v. Pappas & Wolf, LLC, 2018 WL 2012009 (N.J. Super. Ct. App. Div. May 1, 2018).
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Continue Reading No Coverage Due to Material Misrepresentation on Insurance Application Based on Totality of Circumstances

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 executive leadership, were not the “but for” cause of the claimant’s alleged damages.  Columbia Lloyds Ins. Co. v. Liberty Ins. Underwriters, Inc., 2018 WL 1561816 (S.D. Tex. Mar. 30, 2018).
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Continue Reading Application Exclusion Does Not Apply When Misstatements Were Not “But For” Cause of Claim