31
Aug
2017

Insurance Law - Some Important Cases to Know

The Cooperator New York

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Insurance liability is a very important issue for a condo or HOA association or a condo board. Most have built up a good relationship with their insurance agents or brokers, and many are content to leave the details to the pros.

However, the world of insurance liability isn’t static—new laws are proposed and enacted, and court decisions can have a huge impact on what will happen in any given lawsuit or insurance claim. That’s why it’s important to know the basics of what’s new on the insurance-related legislative and legal scene, and how these laws and decisions will affect their exposure to risk and loss.

New York attorney, Joshua Gold of Anderson Kill P.C. in Manhattan, speaks about a trend that has been reflected in court decisions in several states and could have a serious effect on boards. The issue involves “excess insurance,” or a secondary policy. For example, a condo or co-op may take out their main policy to cover claims in the amount of $1 to $100, then might buy “another layer” that will cover claims for $100 to $200. There are any number of reasons that a board may buy excess insurance from a second insurance company—for example, that company may offer them better rates.

“What we’re seeing over the years,” says Gold, “is that based on some language from excess insurance company policies, they will claim that you will not have a right to get paid by your excess insurance company unless the primary company pays out 100 cents on the dollar.” One situation in which this could be a problem, he continues, is when the board’s primary insurance company goes out of business, and the excess insurance company, claiming an “exhaustion defense,” says they don’t have to pay a penny.

Gold says there have been many decisions related to this situation, including Comerica v. Zurich American Insurance Co. (2007), a Michigan federal case; Qualcomm Inc. v. Certain Underwriters at Lloyd’s of London (2008), a California state case, and others, including some in New York courts. These decisions make it imperative for boards to work with an experienced insurance broker who can navigate through the policy language. “It’s much easier to do this at the point of purchase than to get out of bad clauses in your policies later on,” he says.

To read the full article:  Insurance Law - Some Important Cases to Know

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