Litigating Insurance Disputes

Chapter 1: Liability Insurance: A General Introduction

    1.01 Introduction
    1.02 Obtaining Insurance - Applications
    1.02A Severability
    1.03 Binders
    1.04 Certificates of Insurance
    1.05 Automobile Insurance
    1.06 General Policy Terms in Auto Policies
    1.07 Uninsured and Underinsured Motorists Clauses
    1.08 Commercial General Liability Insurance
    1.09 Professional Liability Insurance
    1.10 Directors' and Officers' Liability Insurance
    1.11 Workers' Compensation Liability Insurance
    1.12 Layers of Insurance - Primary Insurance
    1.13 Excess Insurance
    1.14 Umbrella Insurance
    1.15 Reinsurance

    Appendix 1A Commercial General Liability Coverage Form
    Appendix 1B Specialty Errors or Omissions Liability Insurance Form
    Appendix 1C Lawyers Professional Liability Insurance Form

Chapter 2: How to Read a Business Liability Policy

    2.01 Parts of a Liability Policy Introduction
    2.02 Declarations
    2.03 Insuring Agreement
    2.04 Definitions
    2.05 Exclusions
    2.06 Endorsements
    2.07 Conditions
    2.08 Analysis of Liability Policy - Introduction
    2.09 Declarations - Named Insured
    2.10 Policy Period and Monetary Limits of Liability
    2.11 Insuring Clause with Definitions
    2.12 Conditions
    2.13 Issues Concerning Lost Policies -  Introduction
    2.14 Secondary Evidence of Lost Policies
    2.15 Types of Secondary Evidence
    2.16 Conclusion

Chapter 3: Rules of Liability Policy Construction

    3-01 General Rules of Construction - Policy as Contract
    3.02 Plain Meaning of Insurance Contract
    3.03 Ambiguous Policy Terms
    3.04 Centra-Insurer Doctrine
    3.05 States Applying Contra-Insurer Doctrine
    3.06 Reasonable Expectations Doctrine
    3.07 Application of Reasonable Expectations Doctrine
    3.08 States Applying Reasonable Expectations Doctrine
    3.09 Extrinsic Evidence Concerning Intentions of Parties
    3.10 Rules of Construction in Business Insurance Application of Contra-Insurer Rule
    3.11 Size and Insurance Sophistication of Business Insured
    3.12 Disputes Between Insurers
    3.13 Involvement of Brokers and Counsel
    3.14 Manuscript Policy
    3.15 Rejection of Business Insured Exception
    3.16 Renewal of Insurance Policy
    3.17 Notice of Proposed Changes in Renewal Policy
    3.18 Cancellation of Policy
    3.19 Notice
    3.20 Conclusion

    Appendix 3A States Following Contra-Insurer Doctrine
    Appendix 3B States Following Reasonable Expectations Doctrine

Chapter 4: Insured's Duty of Notice and Cooperation

    4.01 Purpose of Notice Requirement
    4.02 Insured's Duty to Notify Insurer - Sufficiency of Notice
    4.03 To Whom Given
    4.04 By or Through Whom Given
    4.05 Timeliness of Notice
    4.06 Late Notice
    4.07 Prejudice and Late Notice
    4.08 Majority View: Prejudice Required
    4.09 Minority and Traditional View: Prejudice Not Required
    4.10 Circumstances Excusing Late Notice
    4.11 Lack of Knowledge of the Occurrence
    4.12 Reasonable Belief that a Claim Would Not Arise or be Asserted
    4.13 Lack of Knowledge of Coverage
    4.14 Other Circumstances Excusing Late Notice
    4.15 Notice Required by Other Types of Policies - Excess Insurance
    4.16 Notice by Insurer
    4.17 Claims-Made Policies
    4.18 Insured's Duty to Cooperate with the Insurer
    4.19 Insured's Failure to Cooperate Failure to Disclose Information
    4.20 Insured's Cooperation or Settlement with Claimant
    4.21 Insured's Refusal to Testify or Attend Trial
    4.22 Insurer's Waiver of Insured's Breach of Cooperation

Chapter 5: Insurer's Duty to Defend

    5.01 Assessing Insurer's Duty to Defend - Existence of Duty in General
    5.02 Duty to Defend Determined by Allegations of Complaint Against Insured
    5.03 Insurer's Knowledge of Extrinsic Information Concerning Allegations of Complaint
    5.04 Conflicts of Interest
    5.05 Self-Insured Retention and Directors' and Officers' Duty to Defend - Self-Insured Retention
    5.06 Directors' and Officers' Policy
    5.07 Excess Insurer's Duty to Defend
    5.08 Limits of Duty to Defend - Amendment or Dismissal of Claims
    5.09 Exhaustion of Policy Limits
    5.09 A Exhaustion of Policy on Behalf of Less Than All Insurers
    5.10 Tender of Policy Limits
    5.11 Apportioning Duty to Defend Between Potentially Covered and Non-Covered Claims
    5.12 Effect of Insurer's Refusal to Defend - Waiver and Estoppel
    5.13 Theories of Recovery for Refusal to Defend
    5.14 Damages Recoverable for Breach of the Duty to Defend

Chapter 6: Reservation of Rights and Conflicts of Interest

    6.01 Introduction
    6.02 Reservation of Rights - Legal Basis
    6.03 Types of Reservation of Rights Letters
    6.04 Non-Waiver Agreements
    6.05 Disclaimers/Declinations
    6.06 Effect of Failure to Reserve Rights - Waiver
    6.07 Estoppel
    6.08 Election of Remedies
    6.09 Excess Insurer's Reservation of Rights
    6.10 Conflicts of Interest Created by Reservation of Rights
    6.11 Intentional Act/Negligence
    6.12 Late Notice
    6.13 Permissive Use
    6.14 Punitive Damages
    6.15 Insured's Selection of Independent Counsel
    6.16 Fees of Independent Counsel

    Appendix 6A Insurers Letter to Insured, Conflict of Interest
    Appendix 6B Non-Waiver Agreement
    Appendix 6C Insurability of Punitive Damages

Chapter 7: Number of Occurrences or Claims - Deductible and Limits

    7.01 Accident or Occurrence Giving Rise to Liability
    7.02 CGL Insurance Damage - Fortuity Requirement
    7.03 Damage Expected or Intended is Not an Occurrence
    7.04 Insured's Expectation or Intention is Based on an Objective Reasonable Person Standard
    7.05 Number of Occurrences
    7.06 Causation Analysis
    7.07 Unfortunate Event Test
    7.08 Effects Analysis
    7.09 Policy Language and Single or Multiple Occurrences
    7.10 Timing of Bodily Injury or Property Damage
    7.11 Exposure Theory
    7.12 Manifestation Theory
    7.13 Continuous Trigger Theory
    7.14 Injury-in-Fact Theory
    7.15 Special Problems Relating to Claims-Made Policies
    7.16 Definition of a Claim
    7.17 When is a Claim Made?
    7.18 Number of Claims; Related Claims
    7.19 Conclusion

    Appendix 7A Directors and Officers Insurance and Company Reimbursement Policy

Chapter 8: Relationship of Multiple Insurers

    8.01 Primary and Excess Insurance
    8.02 Duties Owed Between Primary and Excess Insurers
    8.03 Equitable Subrogation
    8.04 Direct Independent Duty
    8.05 Triangular Reciprocity
    8.06 The Nature of the Duty
    8.07 Settlement of Claims Involving Primary and Excess Insurers
    8.08 Settlement for Less Than Primary Insurer's Limits of Liability
    8.09 Primary Insurer Insolvency and Drop Down Liability of Excess Insurers
    8.10 Cases Holding No Drop Down
    8.11 Cases Holding the Excess Insurer Must Drop Down
    8.12 Other Insurance Clauses
    8.13 Resolving Conflicts Between "Other Insurance" Clauses
    8.14 Similar "Other Insurance" Clauses
    8.15 Dissimilar " Other Insurance" Clauses
    8.16 Contribution by Equal Shares vs. Contribution by Limits
    8.17 Conclusion

Chapter 9: Failure to Settle: Bad Faith and Extra-Contractual Liability

    9.01 Introduction
    9.02 Extent of Bad Faith Required - Negligence Standard
    9.03 Bad Faith Standard
    9.04 Circumstances Demonstrating Bad Faith or Negligence
    9.05 Amount of Consideration Given to Insured's Interest
    9.06 Bad Faith Actions under Unfair Claim Settlement Practice Statutes
    9.07 Insured's Bad Faith Refusal to Settle - Limitations to Bad Faith Actions
    9.08 Defenses to Bad Faith Actions
    9.09 Damages for Bad Faith Refusal to Settle - Compensatory Damages
    9.10 Punitive Damages
    9.11 Damages for Emotional Distress
    9.12 Attorney Fees
    9.13 Conclusion

Chapter 10: The Role of the Broker

    10.01 Introduction
    10.02 Definition of Broker
    10.03 Legal Effect of Broker's Agency Status
    10.04 Duties Owed by Broker to Insured
    10.05 Brokers Duty to Procure Insurance
    10.06 Broker's Duty to Place Insured with Solvent or Authorized Insurer
    10.07 Broker's Duty to Renew or Service the Insured's Policy
    10.08 Broker's Duty to Notify Promptly of Rejection or Cancellation
    10.09 Broker's Duty to Advise the Insured of Alternative Coverages or Higher Limits
    10.10 Duties Owed by Broker to Insurer
    10.11 Theories of Liability Asserted Against the Broker
    10.12 Negligence Theory
    10.13 Negligent Misrepresentation and Fraud
    10.14 Breach of Fiduciary Duty
    10.15 Breach of Contract
    10.16 The Insured's Duty to Read the Policy as a Defense to Broker's Misconduct
    10.17 The Broker's Right to Litigate the Issue of Coverage as a Defense to Liability
           

Part II Litigation and Arbitration in Insurance Disputes 

Chapter 11: Choice-of-Law Resolution in Insurance Cases

    11.01 Introduction
    11.02 Choice-of-Law Resolution
    11.03 The First Restatements Lex Loci Approach
    11.04 The Second Restatements Most Significant Relationship Test
    11.05 Governmental Interest Analysis
    11.06 Choice Influencing Considerations
    11.07 Variations in Method Application - Issue Splitting and Multiple Risk Policies - Depecage
    11.08 Multiple Risk Policies
    11.09 Federal-State Differences
    11.10 Tort-Contract Distinctions
    11.11 Conclusion

    Appendix 11A State-by-State Approach
    Appendix 11B Summary of Results: Breakdown by Rules Applied

Chapter 12: Declaratory Judgment Litigation Issues and Strategies

    12.01 Introduction
    12.02 Statutory Basis for Declaratory Judgment Actions
    12.03 Jurisdiction, Venue, and Service of Suit Causes
    12.04 Proper Parties
    12.05 Justiciable Controversy
    12.06 Preemptive Suits and Prior Pending Actions
    12.07 Burden of Proof of Insured and Insurer in Declaratory Judgment Action
    12.08 Right to Trial by Jury in a Declaratory Judgment Action
    12.09 Attorney Fees Incurred in Declaratory Judgment Actions
    12.10 Fees Not Recoverable
    12.11 Fees Recoverable

Chapter 13: Discovery and Case Management in Declaratory Judgment Actions

    13.01 Scope of Discovery
    13.02 Attorney-Client Privilege
    13.03 Work Product Doctrine
    13.04 Waiver of Privilege
    13.05 Protective Orders
    13.06 Reinsurance and Privilege
    13.07 Reserves Information and Privilege
    13.08 Discovery of Claims of Other Insuneds
    13.09 Case Management and Cost Sharing

    Appendix 13A Joint Defense Agreement
    Appendix 13B Sample Protective Order
    Appendix 13C Sample Case Management Order
    Appendix 13D Sample Cost Sharing Agreement

Chapter 14: Arbitration in Insurance Disputes

    14.01 Introduction
    14.02 Arbitration Statutes
    14.03 The Arbitration Agreement - Formal Requirements
    14.04 Broad and Narrow Arbitration Clauses
    14.05 Avoiding the Arbitration Agreement for Drafting Deficiencies or Formation Defects
    14.06 Arbitration Procedure - The Demand to Arbitrate
    14.07 Appointing the Arbitration Panel
    14.08 Arbitrator Partiality
    14.09 Time Within Which Arbitrators Must Act
    14.10 Scope of Discovery
    14.11 Parties to the Arbitration
    14.12 Arbitration Award - Form and Content of the Award
    14.13 Effect of the Award
    14.14 Grounds for Vacating the Award
    14.15 Appealing the Award

    Appendix 14A Sample Arbitration Clauses
    Appendix 14B Sample Arbitrator Disclosure Statement

            Part III Special Litigation Problems 

Chapter 15: Litigating Directors and Officers Coverage Claims

    15.01 Introduction
    15.02 Directors' and Officers' Policies - Two-Part Claims-Made Policy
    15.03 Possible Insureds
    15.04 Wrongful Act
    15.05 Loss
    15.06 Costs Included in Limits
    15.07 Claims-Made" Fonn
    15.08 Rescission of the D&O Policy Based on Fraud or Misrepresentation
    15.09 Cancellation/Non-Renewal of Policy
    15.10 Defense Cost Reimbursement under D&O Policies
    15.11 Obligation to Reimburse Contemporaneously
    15.12 No Obligation to Reimburse Contemporaneously
    15.13 Allocation of Defense Costs
    15.14 Exclusions
    15.15 Deliberate Dishonesty Exclusion
    15.16 Insured vs. Insurer Exclusion
    15.17 Regulatory Exclusion
    15.18 Personal Profit Exclusion
    15.19 The Securities Exclusion
    15.20 Fines & Penalties

Chapter 16: Advertising Liability Coverage

    16.01 Introduction
    16.02 Advertising Liability Clauses
    16.03 The Importance of the Nexus to Advertising Activity in Restricting Policy Coverage
    16.04 International Insurance Co. v. Florist Mutual Insurance Co,
    16.05 National Union Fire Ins, Co. v. Siliconix, Inc
    16.06 Bank of the West v. Superior Court
    16.07 A Meyers & Sons Corp. v. Zurich American Insurance Group
    16.08 Lazzara Oil Co. v. Columbia Casualty Co.
    16.09 Nexus Requirement Held to be Satisfied
    16.10 Jefferson-Pilot Fire &. Casualty Co. v. Booth, Prichard dc Dudley
    16.11 John Deere Insurance Co. v. Shamrock Industry, Inc.
    16.12 Coverage for Infringement of Trademark and Trade Dress

Chapter 17: Litigating Environmental and Toxic Tort Coverage Claims

    17.01 Overview of Environmental Coverage Concerns
    17.02 Potentially Available Coverages - Commercial General Liability Coverage
    17.03 Environmental Impairment Liability Coverage
    17.04 Other Coverages
    17.05 Typical Environmental Coverage Issues
    17.06 Is There a "Suit" Requiring a Defense? - Potentially Responsible Party Letters
    17.07 Administrative Orders
    17.08 Are Damages Sought?
    17.09 Was There an Occurrence, and Related Issues? - Accidental, Unexpected, and Unforeseen Injury
    17.10 Known Risk
    17.11 Number of Occurrences
    17.12 Timing of Property Damages
    17.13 Potentially Applicable Exclusions: Overview
    17.14 The Standard Pollution Exclusion
    17.15 Types of Pollution Governed by the Standard Pollution Exclusion Clause
    17.16 To What Type of Pollution Does the Pollution Exclusion Apply?
    17.17 The Sudden and Accidental Exception
    17.18 Cases Holding "Sudden" Means "Unexpected"
    17.19 Cases Holding "Sudden" Has Temporal Meaning
    17.20 What Does Accidental Mean in the Sudden and Accidental Exception?
    17.21 Interplay Between "Occurrence" and the Standard Pollution Exclusion
    17.22 Cases Holding Pollution Exclusion Clause in Coextensive with Occurrence Definition
    17.23 Cases Holding Pollution Exclusion Clause Not Coextensive with Occurrence Definition
    17.24 The Absolute Pollution Exclusion
    17.25 Owned Property and Care, Custody, or Control Exclusions
    17.26 Choice of Law
    17.27 Forum Non Conveniens in Multi-Site Litigation
    17.28 Personal Injury Coverage for Environmental Claims
    17.29 Regulatory Estoppel
    17.30 Allocation

    17.31 Investigation Costs-Defense or Indemnity

Chapter 18: Employment Liability Coverage

    18.01 Introduction
    18.02 Comprehensive General Liablility Insurance
    18.03 Review of Other Liability Insurance
    18.04 Employment Practices Liability Insurance (EPU)

    Appendix 18A Specimen Policy and Application

Chapter 19: Fiduciary Responsibility Insurance

    19.01 Introduction
    19.02 Fiduciary Liability
    19.03 Claims-Made Policy
    19.04 Named Insured
    19.05 Wrongful Act
    19.06 Loss or Damages
    19.07 Insuring Agreement
    19.08 Deductible and Limits
    19.09 Exclusions
    19.10 Claims-Made Extension Clause
    19.11 Other Key Policy Provisions
    19.12 The FRIP Policy as Compared to Other Insurance Policy Forms
    19.13 Conclusion

Table of Cases

Table of Authorities

Index

 

CD- ROM Table Of Contents

Part I Overview of Basic Insurance Issues

Chapter 1: Liability Insurance: A General Introduction

Appendix 1A Commercial General Liability Coverage Form
Appendix 1B Specialty Errors or Omissions Liability Insurance Form
Appendix 1C Lawyers Professional Liability Insurance Form

Chapter 6: Reservation of Rights and Conflicts of Interest

Appendix 6A Insurers Letter to Insured, Conflict of Interest
Appendix 6B Non-Waiver Agreement
Appendix 6C Insurability of Punitive Damages

Chapter 7: Number of Occurrences or Claims - Deductible and Limits

Appendix 7A Directors and Officers Insurance and Company Reimbursement Policy

Part II Litigation and Arbitration in Insurance Disputes

Chapter 13: Discovery and Case Management in Declaratory Judgment Actions

Appendix 13A Joint Defense Agreement
Appendix 13B Sample Protective Order
Appendix 13C Sample Case Management Order
Appendix 13D Sample Cost Sharing Agreement

Chapter 14: Arbitration in Insurance Disputes

Appendix 14A Sample Arbitration Clauses
Appendix 14B Sample Arbitrator Disclosure Statement

Part III Special Litigation Problems

Chapter 18: Employment Liability Coverage

Appendix 18A Specimen Policy and Application