Insurance Coverage and Extra-Contractual Liability

Advisors and advocates, we’ve got you covered

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Reach & Depth

Our insurance coverage team members are advisors and advocates for over two dozen carriers throughout the country including major national carriers such as Allianz, Argo, Fidelity National, Hartford, Travelers, Nationwide, Colony and the Berkley Companies. We have earned the trust of our clients through our consistent efforts to develop well-reasoned outcomes for insurance carriers in state and federal courts. Our team has handled insurance coverage and bad faith litigation ranging from relatively minor declaratory judgment actions, to major inter-company disputes, to the defense of multi-million dollar bad faith claims. Each member of our team has actual litigation experience outside of the coverage world, so we know what it is like to face high-dollar claims in the defense of product liability, professional liability and personal injury claims. This practical, real-world experience helps us temper our advice with a dose of reality, which gives us an added edge in resolving claims that involve disputed liability as well as coverage questions.

Insurance law operates at the crossroads of risk transfer concepts and the reality of litigation. Insurance professionals need reliable and trusted advocates that have both the intellectual rigor to understand the insurance issues presented by their cases and the experience to guide them through litigation that may be necessary to protect their rights. We welcome the opportunity to serve as your guide.

Collegiate Licensing Co. v. American Casualty Company of Reading, Pa., addressing the “First Filed Rule” to competing declaratory judgment actions in a complex insurance coverage matter

Cotton States Insurance Company v. Brightman, in which the Supreme Court of Georgia set forth the parameters of a “failure to settle” claim including the requirement that there be a demand within policy limits

Hoover v. Maxum Indem. Company, in which the Supreme Court of Georgia considered a bad-faith failure to settle claim involving preservation of coverage defenses

Scottsdale Insurance Company v. Great American Assurance Company, which addressed coverage for indemnity agreements under the “insured contract” exception to the contractual liability exclusion in CGL policies

Maxum Indemnity Company v. Jimenez, which involved whether a contractual liability for a subcontractor’s pipe instillation was a covered “occurrence” under a CGL policy

North American Specialty Insurance Company. v. Pen Pals Productions, LLC, which applied the “mobile equipment” exclusions in a CGL policy issued to a movie production company

Nationwide Mutual Fire Insurance Company v. Dillard House, Inc., which resolved whether an exposure to Legionnaire’s disease was a covered occurrence under a CGL policy

Our attorneys have decades of experience in insurance law and are leaders in the field. They are active members in the Insurance Law Committee of DRI – The Voice of the Defense Bar as well as PLUS, and they regularly publish articles and speak on insurance topics to stay abreast of the latest developments in coverage law and insurance products. One of our attorneys even holds a CPCU designation. Some of our recent articles have addressed whether (and when) insurers should split files between coverage and defense; the substantive and procedural requirements for preserving coverage defenses when defending under reservation of rights; and the evolving standards of the bad faith failure to settle claim.

Successes

Albert Alikin and Nicholas Directo obtained the dismissal of their client, an insurance carrier, in Nevada federal court in a lawsuit brought by the client’s insured seeking benefits under an occupational accident medical expense policy. The insured filed suit against the client alleging breach of contract and bad faith after the client denied the insured’s insurance claim seeking coverage for medical expenses resulting from a work-related accident that occurred over three years before the insured gave the client notice of the accident or his claim for benefits under the policy. The client’s policy contains a “sunset” provision which states that no claim is “considered valid and collectible unless full details of such claim are presented to” the client within three years of the date of the accident from which the claim arises. FMG filed a motion for judgment on the pleadings on the basis that the policy’s “sunset” provision is strictly enforceable because, unlike the usual “notice” provision in an insurance policy that requires a showing of prejudice to be enforceable, the “sunset” provision provides an explicit time limitation for the insured to tender a claim. FMG also argued that the policy’s “suit against us” provision barred the insured’s lawsuit. After a spirited debate on the issues between counsel, we convinced the insured’s counsel to dismiss our client with prejudice in lieu of opposing our motion and showing their “cards” to the other defendant carriers.

Freeman Mathis & Gary LLP recently obtained a seven figure plus settlement on behalf of an insurer client in connection with a Negligence and Breach of Contract action against one of the Insurer’s Binding Agents. The Binding Agent was authorized to bind and write contracts of insurance for certain classes and lines of business and types of risks on behalf of the Insurer, including excess/umbrella coverage. The insurer retained FMG to file an action against the Binding Agent for improperly underwriting, processing, handling, and billing a request for umbrella/excess coverage and issuing an insurance policy that failed to include language limiting coverage to that which was requested and paid for by the insured.

In April 2014, the Binding Agent was approached by an insurance broker seeking a competitive quote with respect to an application for Umbrella/Excess Insurance for a transportation client (the “Insured”). Through aggressive discovery requests and detailed deposition questioning, we were able to elicit documentary evidence and testimony showing the broker indisputably sought umbrella/excess coverage for only eleven specific vehicles owned or operated by the Insured. However, throughout the underwriting process, including the quoting process, the binding process, and the policy issuing process, the Binding Agent negligently failed to include appropriate language to limit the subject policy to the eleven specific vehicles set forth on the vehicle list provided by the Insured.

Indeed, we obtained damaging testimony from the Binding Agent’s Underwriter that he could have included a Designated Operations Limitation provision into the policy, which would have limited the policy’s coverage to the intended eleven vehicles. Rather than include the Designated Operations Limitation, the Underwriter included a Follow Form provision, which incorporated the coverage from the underlying policy, which in this case, covered the Insured’s entire fleet of over 140 vehicles. The Binding Agent’s cumulative failures ultimately resulted in the issuance of a policy covering many more vehicles – over 140 vehicles – then the eleven specified by the Insured, even though the Binding Agent only assessed the Insured a premium for eleven vehicles and billed the insured for eleven vehicles.

Compounding the Binding Agent’s failures further, during the underwriting process, and before the insurance policy was issued by the Binding Agent, a vehicle operated by the Insured was involved in a serious accident resulting in several individuals being significantly injured and three others killed. Although the Binding Agent was aware the vehicle involved in the accident was not designated by the Insured as one of the eleven for which the Insured sought excess coverage, the Binding Agent failed to bring this to the attention of the Insurer for over two years.

As a result of the Binding Agent’s negligence, the Insurer was required to provide insurance coverage to the Insured for the losses arising out of the aforementioned fatal accident, and for the compensatory damages in the litigation filed as a result of the accident. When the Insurer demanded reimbursement from the Binding Agent, after tendering the policy limits of the Umbrella/Excess Insurance policy to the injured plaintiffs and the estates of the deceased plaintiffs, for the costs incurred as a result of the Binding Agent’s errors, the Binding Agent rejected the demand, causing the Insurer to seek redress through litigation.

At the Settlement Conference in federal court, facing the plethora of facts we elicited in discovery showing its failures in underwriting the subject policy, the Binding Agent acknowledged its errors and omissions, and agreed to offer a significant portion of the damages sought in order to resolve the matter.

Paul Piantino, Partner and Chair of the Newark Office and Zachary Danner, Senior Counsel from the Cherry Hill Office, handled the litigation for FMG.

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