Insurance law – Week of September 16, 2022 – Laws and insurance products

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PANDEMIC UPDATE

Another early policyholder victory was overturned this week as the Oklahoma Supreme Court joined the growing number of state supreme courts banning coverage for COVID BI claims. A split court ruled in Cherokee Nation v. Lexington Ins. Co., No. 119359 (Okla. Sept. 13, 2022) that the District Court erred in finding business interruption coverage where the Cherokee Nation “has not suffered immediate deprivation or destruction and tangible property”. Three dissenting justices argued that the wording in question was ambiguous and that the majority gave “all perils” coverage the “armor” of an old named perils form.

The Maryland Court of Appeals heard oral argument last Friday on a certified question from a local federal district court in Tapestry, Inc. v. Factory Mutual Insurance Company.

Consistent with its decision earlier this year in Estes v. Cincinnati Ins. Co., 23 F.4th 695, 699 (6th Cir. 2022), the Sixth Circuit ruled last week in Wild Eggs Holdings v. State Auto & Property Ins. Co., No. 21-5962 (6th Cir. Sept. 9, 2022) that COVID does not cause direct physical loss under Kentucky law. Further, the court declined to find any cover by civil authorities on the grounds that any suspension of operations “due” to civil authority was not the result of alleged “exposure” to disease. Writing in his dissent, Justice Moore argued that the insured had a reasonable expectation of coverage because of the conflicting meanings of the term “exposure.”

NEW CONSEQUENCE CASES

CALIFORNIA
Other insurance clauses

In a dispute between several liability insurers arising from claims against a property manager for failing to prevent the murder of a community resident by her roommate, the Court of Appeals ruled in Western World Ins. Co. c. Federal Ins. Co., B311994 (Cal. App. Sept. 8, 2022) (unpublished) that the “other insurance” language in Western World’s deductible policy prevailed over that contained in Federal’s policy because Federal’s clause does not caused its coverage to be in excess of the underlying primary policy, while the Western World policy was complementary to all other available insurance, whether primary or excess. As a result, the Second District ruled that Western World was entitled to be reimbursed for the amounts it paid to settle the tort claims.

FLORIDA
Misrepresentation / first party procedure / post-disaster

The Florida District Court of Appeals ruled that new Florida Civil Procedure Rule 1.510, which states that summary judgment is appropriate when “the evidence is such that a reasonable jury could not return a verdict for the non-moving party”, does not change the general principle that questions of misrepresentation regarding the value of the loss claimed should be resolved by the jurors, not the trial judge. In setting aside summary judgment by a trial court for a property insurer, the Fifth District said in Gracia v. Security First Ins. Co., 5D21-1456 (Fla. DCA5 September 9, 2022) that “[w]Although no longer an absolute prohibition – depending on the nature of the evidence – the general rule remains intact: credibility determinations and the weighing of evidence are jury functions, not those of a judge. »

ILLINOIS
First Party/Pre-Judgment Interest

The Court of Appeal ruled that a trial judge did not err in refusing to add prejudgment interest to an award for first party loss because “the amount owed was not liquidated or easily calculable”. In 4220 Kildare v. Regent Ins. Co., 2022 IL App (1st) 201803 (Ill. App. Ct. Aug. 31, 2022), the court noted the disparity between the amount claimed by Kildare and the amount determined to be owed by the jury in holding that the amount owed was not liquidated or easily calculated from Regent’s denial of coverage in August 2009. The court also declined to find that Regent’s conduct was vexatious and unreasonable, inasmuch as that claim had not was asserted at trial.

MONTANA
Abduction/”Occurrence”/Claims Between Spouses

The Montana Supreme Court ruled last week that an auto liability insurer should not cover allegations that its insured assaulted and then kidnapped his estranged wife in an insured vehicle. In 21st Century North American Ins. Co. v. Frost, 2022 MT 173N (Mt. Sept. 6, 2022) (unreported), the court ruled that despite Frost’s belief that his wife was removed from the police at the time of their divorce, she was still, in fact, a assured. This (and the fact that his injuries were not the result of an accidental “event”) excluded coverage.

NEBRASKA
Agents and brokers/negligent buying/maturity

The Nebraska Supreme Court has ruled that a lower court erred in preventing a company from suing its insurance agent in negligence for failing to obtain an E&O policy that would have covered pending claims. While the trial court held that the suit was not mature since the plaintiff’s liability had not been established and insurance coverage issues were therefore moot, the Supreme Court ruled in Great Plains Consulting Co., Inc. c. Midwest Ins. Exchange, 312 Neb. 367 (Neb. Sept. 2, 2022) that while questions of indemnification may be premature, plaintiff had already paid legal fees to fund his own defense and therefore had a mature claim that could be pursued.

NEW YORK
Agents and Brokers / Negligent Sourcing

The second department ruled in Yu v. Allstate Ins. Co., 2022 NY slip op 05079 (App. Div. Aug. 31, 2022) that a judge did not err in dismissing a homeowner’s negligent purchase claim against his insurance agent “because there was no rational process by which the Supreme Court could find that Better Choice negligently failed to obtain adequate coverage, since the evidence demonstrated that the plaintiff did not specifically request coverage for the property other than owner-occupied coverage.

OTHER DEVELOPMENTS TO NOTE

Inside the insurance industry

Lloyd’s reports that its underwriting income and combined ratio improved in the first half of 2022, but still suffered an overall loss of $2.1 billion due to investment losses driven by higher interest rate.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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