Articles Posted in Insurance Law

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The panel certified the following questions of state law to the Oregon Supreme Court: 1. If the Director of the Department of Consumer and Business Services approves a contractual limitations provision in an insurance policy under Oregon Revised Statutes 742.021, does the language of the policy always control or do the standard provisions of the Oregon Insurance Code apply if the standard provisions are more favorable than the approved insurance policy provision? 2. If the Oregon standard provisions do apply, when does "the period for which the insurer was liable" under Oregon Revised Statutes section 743.429 end? View "Raynor v. United of Omaha Life Insurance" on Justia Law

Posted in: Insurance Law

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The Ninth Circuit certified the following questions of state law to the Arizona Supreme Court: 1. Whether Arizona equitable indemnity law incorporates Section 78 of the Restatement (First) of Restitution; and if so, 2. Whether equitable indemnity under Section 78 requires that the indemnity plaintiff's liability to the underlying plaintiff have been coextensive with the indemnity defendant's liability to the underlying plaintiff. View "KnightBrook Insurance v. Payless Car Rental System" on Justia Law

Posted in: Insurance Law

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The Ninth Circuit reversed the dismissal of plaintiff's putative class action filed under California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200–17210, and common law, alleging that AARP, through its arrangement with Medigap, transacts insurance without a license in violation of the California Insurance Code. The Ninth Circuit held that plaintiff stated a plausible claim at the motion to dismiss stage that AARP "solicits" insurance without a license, and consequently committed an unlawful act in violation of the UCL. Plaintiff also adequately alleged that AARP violated the UCL's "fraudulent" and "unfair" prongs where plaintiff plausibly alleged that members of the public are likely to be deceived into paying AARP's additional 4.95% fee because AARP collects and labels the the fee as a "royalty" rather than a "commission." View "Friedman v. AARP" on Justia Law

Posted in: Insurance Law

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LMA filed suit against its excess insurance carrier, National Union, based on National Union's refusal to either contribute $3.75 million toward the settlement of claims brought by a third party or take over the defense. At issue was whether the district court erred in applying the rule in Diamond Heights Homeowners Association v. National American Insurance Co., instructing the jury, denying National Union's motion for judgment as a matter of law (JMOL), and awarding fees and costs. In Diamond Heights, a California appellate court ruled that an excess liability insurer has three options when presented with a proposed settlement of a covered claim that has met the approval of the insured and the primary insurer. The excess insurer must (1) approve the proposed settlement, (2) reject it and take over the defense, or (3) reject it, decline to take over the defense, and face a potential lawsuit by the insured seeking contribution toward the settlement. The court held that the district court did not err in applying the rule in Diamond Heights where National Union has not presented convincing evidence that the California Supreme Court would not follow Diamond Heights, and Diamond Heights is not distinguishable on its facts. The court also concluded that the district court did not commit prejudicial error in defining the standard of proof applicable to LMA's breach of contract claim; National Union's challenge to the bad faith claim failed because a jury could rationally conclude based on these facts that National Union acted unreasonably by refusing to take over the defense or approve the reasonable settlement, knowing full well of its obligations under California law; and the court affirmed the district court's award of fees and costs. Accordingly, the court affirmed the judgment and denied National Union's motion for certification. View "Teleflex Medical Inc. v. National Union Fire Insurance Co." on Justia Law

Posted in: Insurance Law

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Plaintiffs, elderly Oregonians or their successors who purchased long-term healthcare insurance policies sold by Bankers, filed suit alleging that Bankers developed onerous procedures to delay and deny insurance claims. The court certified the following question to the Oregon Supreme Court, pursuant to Oregon Revised Statues 28.200: Does a plaintiff state a claim under Oregon Revised Statutes 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract? View "Bates v. Bankers Life & Casualty" on Justia Law

Posted in: Insurance Law

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The court certified the following questions of state law to the California Supreme Court: 1. Is California’s common law notice-prejudice rule a fundamental public policy for the purpose of choice-of-law analysis? May common law rules other than unconscionability not enshrined in statute, regulation, or the constitution, be fundamental public policies for the purpose of choice-of-law analysis? 2. If the notice-prejudice rule is a fundamental public policy for the purpose of choice-of-law analysis, can a consent provision in a first-party claim insurance policy be interpreted as a notice provision such that the notice-prejudice rule applies? View "Pitzer College v. Indian Harbor Insurance Co." on Justia Law

Posted in: Insurance Law

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Plaintiffs filed suit against Lincoln seeking to recover damages for the injuries they incurred from the insured. The court certified the following question to the Supreme Court of California: When determining whether an injury arises out of the “use” of a vehicle for purposes of determining coverage under an automobile insurance policy and an insurance company’s duty to defend, is the appropriate test whether the vehicle was a “predominating cause/substantial factor” or whether there was a “minimal causal connection” between the vehicle and the injury? View "Gradillas v. Lincoln General Ins." on Justia Law

Posted in: Insurance Law

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Kaady, a mason, filed suit against Mid-Continent after Mid-Continent denied Kaady's claim for indemnification under its commercial liability insurance policy. The district court granted summary judgment to Mid-Continent based on the ground that Kaady's claim was barred by the policy's known-loss provision. The court concluded that MidContinent has offered no reason to treat the insured’s work and the work of others as different property in every provision of the policy except the known-loss provision. Thus, the known-loss provision also distinguishes between them. The insured’s knowledge of damage to his own work doesn’t automatically constitute knowledge of damage to the components of the structure furnished by others. Further, an insured’s knowledge of one type of damage to property doesn’t automatically constitute knowledge of any and all damage to the property; the claimed damage must be related to the known damage. In this case, Kaady’s knowledge of the cracks in the masonry before he bought the policy doesn’t constitute knowledge of the claimed “property damage” to the structural components. The court concluded that the correct inquiry is whether the claimed damage to the structural components was a “continuation, change or resumption” of the cracks. If it was, Kaady’s knowledge of the cracks would bar coverage of the claimed damage; if not, his knowledge of the cracks wouldn’t bar coverage. In this case, without any record evidence connecting the cracks in the masonry that Kaady observed before he bought the policy to the damage to the wooden components for which Kaady claims coverage, summary judgment was inappropriate. Accordingly, the court reversed and remanded. View "Kaady v. Mid-Continent Cas. Co." on Justia Law

Posted in: Insurance Law

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Guam Industrial owned a dry dock that sunk during a typhoon in Guam. Guam Industrial filed a claim under two insurance policies to cover the cost of damage to the dock and the clean up of oil barrels. The district court granted summary judgment in favor of the insurers. Whether derived from federal admiralty law or state law, the court concluded that the law requires strict compliance with marine insurance policy warranties, even when the breach of the warranty did not cause the loss. In this case, the policies required Guam Industrial to obtain and maintain Navy Certification and Guam Industrial breached the warranty because the dry dock was never Navy Certified. The court concluded that the district court correctly ruled that since there was no actual discharge of pollutants, even though the containers of oil were submerged after the sinking, Guam Industrial’s costs of retrieving the containers from the sea were not covered by the policy’s allowance of coverage for cleanup after the “discharge, dispersal, release, or escape” of pollutants. Accordingly, the court affirmed the judgment. View "Guam Indus. Servs. V. Zurich Am. Ins. Co." on Justia Law

Posted in: Insurance Law

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Plaintiff filed suit against Metropolitan after the insurance company denied coverage for the loss of her home. After a wildfire swept through Northern Arizona in 2011, flooding and mudslides in the area destroyed plaintiff's house. Plaintiff had a homeowner’s policy with Metropolitan which covered direct loss caused by fire but excluded coverage for loss caused by either water damage or earth movement, including mudslides. Under the Appleman definition of direct and proximate cause as adopted by Arizona, it is possible that the fire directly caused plaintiff's loss in “an unbroken sequence and connection between” the wildfire and the destruction of the house. In this case, a reasonable factfinder could conclude that the destruction of the house was caused by the fire, which likely caused the mudslide, “the operation and influence of which could not be avoided.” Therefore, although an efficient proximate cause analysis is not appropriate under Arizona law, the court need not apply that doctrine in order to find that the damage here could have been directly and proximately caused by the wildfire. The court concluded that the district court erred in determining that, under Arizona law, Metropolitan was entitled to summary judgment because there is a triable issue as to whether the fire directly caused the destruction of plaintiff's home. Accordingly, the court reversed and remanded. View "Stankova v. Metro. Prop. & Cas. Ins. Co." on Justia Law

Posted in: Insurance Law