A Look Back: Key Developments in Insurance Recovery

Policyholder Advisor & Alert

PUBLISHED ON: March 5, 2010

Here are a few among the many of 2009’s developments in insurance recovery at Anderson Kill:

Environmental Insurance. On March 9, 2009, the California Supreme Court ruled in favor of the State of California regarding the State’s insurance coverage for environmental clean-up of the Stringfellow waste site. State of California v. Allstate Ins. Co., 45 Cal. 4th 1008, 201 P.3d 1147 (Cal. March 9, 2009). The court ruled that if a loss is caused by covered and uncovered events, and the policyholder cannot prove exactly how much is covered, the insurance company must pay for the whole loss up to policy limits. The decision limited the use of the onerous “anti-concurrent causation clause.” The California Supreme Court also held that policyholders do not lose insurance coverage just by putting their waste in sites that are meant to contain them. An insurance company must prove that the policyholder expected or intended that the waste would be released from the site into the environment to deny coverage.

Food Borne Illness Insurance. On June 18, 2009, in a decision that will cheer the food-service industry, the Superior Court of New Jersey granted partial summary judgment in favor of franchisees of Taco Bell Restaurants against Underwriters of Lloyds, which sold Trade Name Restoration, Loss of Business Income and Incident Response Insurance for Food Borne Illness (TNR) policies to the franchisees. Quick Service Management, Inc., v. Underwriters of Lloyds, et al.

Asbestos Insurance. On June 20, 2009, a Texas state court denied an insurer’s motion for partial summary judgment, enabling ASARCO LLC to pursue a claim for recovery of millions of dollars in legal expenses stemming from asbestos claims against Fireman’s Fund Insurance Company (FFIC). ASARCO LLC, et al. v. Fireman’s Fund Ins. Co., et al. In a March 11 ruling in the same case, the court also ruled that the “asbestosis” exclusion bars coverage only for asbestosis claims and does not bar coverage for any other asbestos-related disease.

Mortgage Insurance. A significant number of clients with exposure to real estate-related businesses are facing wrongful denials, or even attempted improper recession, of mortgage insurance, credit insurance and similar policies. These disputes are in their nascent stages and are of crucial importance to policyholders in these industries. Mortgage insurance companies reportedly are seeking to recoup a portion of the losses engendered by their poor underwriting during the housing bubble by seeking to rescind as many as 25% of all policies — a figure nearly quadruple the industry average.

Toxic Tort Insurance. We represented a major policyholder in resolving a multi-party, multi-state toxic tort case while obtaining primary and excess insurance.

Disability Insurance. We secured 14 years worth of past benefits and interest due under a disability policy for a claim first denied in 1995. The Second Circuit Court of Appeals reversed the decision of the District Court and directed entry of summary judgment in favor or our client. On remand, the District Court held that the attempt to limit the policyholder’s recovery based on the policy’s recurrent disability provision would be both substantively and procedurally unconscionable, leading to settlement.