Texas operators, contractors and service companies need to carefully consider how a recent trend in Texas law affects the availability of insurance coverage?Çöfor themselves and their counterparties?Çöfor contractual liability. Most general liability policies, which insure claims for bodily injury and property damage, exclude coverage for liability assumed under a contract, unless the liability either exists in the absence of the contract or was assumed in a defined ?Ç£insured contract.?Ç¥?á For many years, this ?Ç£contractual liability?Ç¥ exclusion was understood to apply when an insured assumes a third-party?ÇÖs liability in an indemnity agreement.?á In 2010, the Texas Supreme Court held, under a unique set of facts, that the contractual liability exclusion could apply outside the context of a third-party indemnity agreement.?á More recently, in January 2014, the Texas Supreme Court spoke again.?á In Ewing Construction Company v. Amerisure Insurance Company, the Court held that an insured does not ?Ç£assume liability?Ç¥ as required… Continue Reading
Disputes often arise over whether proceeds from a third-party, including a co-insurer, can satisfy an insured?ÇÖs deductible or self-insured retention (SIR) obligations under a policy.?á A recent decision from the Florida Supreme Court resolved this question in the affirmative.?á In doing so, the Florida Court joins other jurisdictions, including Texas, which also allow third-parties to satisfy policy deductibles and SIRs on behalf of a policyholder absent express policy terms prohibiting indirect exhaustion. In Intervest Construction of Jax, Inc. v. General Fidelity Insurance Company, a residential contractor sought to apply a $1 million payment from its subcontractor toward the exhaustion of $1 million SIR owed under a general liability policy in connection with an underlying personal injury lawsuit.?á After an initial decision from the trial court finding that the contractor, ICI, could not use the subcontractor?ÇÖs indemnity payment to satisfy the SIR, the Florida Supreme Court ruled (on a certified question… Continue Reading
New York Court Of Appeals Rules Contractual Limitations Period Unenforceable, Resolving Conflicting Policy Conditions In Favor Of Coverage
In a decision issued on February 13, the New York Court of Appeals ruled that a policy?ÇÖs contractual limitations provision requiring suit to be filed within two years of a loss is ?Ç£unreasonable and unenforceable?Ç¥ when the insured?ÇÖs property cannot be reasonably replaced (as necessary to fulfill a separate condition of coverage) within the two-year limitations period. Many commercial property policies offer insureds the option to recover the ?Ç£replacement cost?Ç¥ of lost or damaged property, but only if the property is actually repaired or replaced. If the property is not replaced, the insured may only be entitled to recover the ?Ç£actual cash value,?Ç¥ i.e., the replacement cost less depreciation. In Executive Plaza, LLC v. Peerless Insurance Company, a similar policy condition requiring replacement of damaged property conflicted with a separate policy term stating that no action could be maintained against the insurer unless brought within two (2) years after the… Continue Reading
On Friday, January 17, 2014, the Texas Supreme Court issued its opinion in Ewing Construction Company v. Amerisure Insurance Company?Çöholding that ?Ç£a general contractor who agrees to perform its construction work in a good and workmanlike manner, without more, . . . does not ?Çÿassume liability?ÇÖ for damages arising out of its defective work so as to trigger the Contractual Liability Exclusion.?Ç¥ ?áA copy of the Court’s opinion can be found here. The case came to the Texas Supreme Court on certified questions from the Fifth Circuit Court of Appeals arising out of Ewing?ÇÖs request for defense and indemnity from Amerisure for underlying allegations of faulty construction of a school tennis court.?á The district court granted summary judgment for Amerisure, concluding that despite allegations of negligence, the underlying claims against Ewing were only contractual in nature.?á Moreover, Ewing?ÇÖs entry into a contract to build the underlying tennis court constituted the… Continue Reading
A variety of businesses from hospitals and hotels to agricultural producers and restaurants may from time to time be faced with the threat of viral or bacterial outbreaks and related claims from third parties. When such outbreaks result in injury to persons or property, insured businesses may look to their commercial general liability (CGL) and other liability policies for coverage.?á An insured facing a claim arising out of a microbial infection or epidemic should carefully review the subject policy?ÇÖs pollution exclusion, in addition to reviewing any bacteria/mold exclusions, when negotiating and pursuing liability coverage.?á Insureds should be particularly wary of any pollution exclusion which defines ?Ç£irritant or contaminant?Ç¥ to include ?Ç£biological agents or materials.?Ç¥?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á?á The ISO form pollution exclusion was adopted in the 1970s to address the increasing number of claims for large scale industrial pollution, which appeared to be covered by most policies at the time.?á The original intent… Continue Reading
The Government Shutdown: Can ?Ç£Contingent Business Interruption?Ç¥ Or ?Ç£Civil Authority?Ç¥ Coverage Mitigate Business Losses?
Whether you call it a ?Ç£shutdown?Ç¥ or a ?Ç£slowdown,?Ç¥ the lack of a fully-funded federal government is impacting more than the 800,000 federal workers furloughed since October 1.?á According to economic consulting firm, IHS Global Insight, the federal budget debacle will cost $1.6 billion per week in lost gross domestic product.?á?áGovernment contractors and other businesses, in industries from defense, health care, construction and hospitality, may face significant financial losses and even layoffs if the federal funding freeze continues. For those contractors and other businesses whose operations have been slowed or stopped by the ?Ç£shutdown,?Ç¥ ?Ç£contingent business interruption?Ç¥ insurance coverage may provide some recourse or relief.?á Contingent business interruption (?Ç£CBI?Ç¥) coverage is often a part of commercial property insurance policies and is intended to insure the losses sustained by a business when a significant customer?ÇÖs or supplier?ÇÖs operations are interrupted by covered loss or damage.?á See, e.g., Zurich Am. Ins. Co.… Continue Reading