The New Jersey Superior Court, Appellate Division, has held that an attorney applying for legal malpractice coverage on behalf of his firm had a duty to inquire as to whether his fellow attorneys were aware of potential malpractice claims. Imperium Ins. Co. v. Porwich concerned attorney Philip Feintuch’s application for legal malpractice coverage on behalf of a firm consisting of Mr. Feintuch, his son, and another attorney, Alan Porwich. While Mr. Feintuch operated the firm as a “sole proprietorship,” Mr. Porwich was listed as a partner on the firm’s website. At the time Mr. Feintuch completed the application for malpractice
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Archives for Insurance Law
New Jersey Appellate Court Holds That Spouse Does Not Have “Presumptive Right” to Life Insurance Benefits
The New Jersey Superior Court, Appellate Division, has rejected the argument that an insured’s spouse has a “presumptive right” to the policyholder’s life insurance benefits. Fox v. Lincoln Financial Group concerns a life insurance policy that initially named the policyholder’s first spouse as a beneficiary. After the policyholder divorced, he designated his sister as sole beneficiary. Several years later, the policyholder married a Brazilian citizen. In support of his spouse’s application for American citizenship, the policyholder executed an affidavit in which he agreed to support his spouse at 125 percent of the poverty level. Under the terms of the affidavit,
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New Jersey Supreme Court Issues Two Notable Insurance Bad Faith Opinions
The New Jersey Supreme Court has released two significant insurance bad faith opinions, both in the context of uninsured motorist claims. In Badiali v. New Jersey Manufacturers Ins. Co., the Court acknowledged that an insurer’s reliance upon unpublished appellate decisions does not constitute bad faith. In Wadeer v. New Jersey Manufacturers Ins. Co., the Court recognized that res judicata precludes a claimant from pursuing a bad faith action when the insurer’s alleged bad faith was at issue in a prior coverage action. In both decisions, the Court upheld the well-established “fairly debatable” standard for determining whether an insurer’s claims handling
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New Jersey Appellate Court Upholds Defense Verdict in Case Alleging Unauthorized Modification of Policy Limits
The New Jersey Superior Court, Appellate Division, has upheld a defense verdict in a matter contending that an automobile insurer improperly lowered liability and personal injury protection coverage limits without the consent of the named insureds. Brown v. Government Employees Ins. Co. concerned changes made to a policy over two years after the policy had been purchased. The policy listed a married couple as the named insureds. The insurer’s records reflect that an individual who was believed to be the plaintiff’s spouse had contacted the insurer to request that her adult stepdaughter be added to the policy. At the same
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New Jersey Court Upholds Application of Named-Storm Deductible to Sandy Claim
A New Jersey trial court has declined to reconsider its previous determination that a $22 million “named-storm” deductible applied to a $54 million property insurance claim for damage arising from Superstorm Sandy. The claim and subsequent lawsuit was brought by insured supermarkets seeking compensation for spoiled food, property damage, business interruption, and other losses following Sandy. The policy defined a “named storm” as a storm declared by the National Weather Service to be a hurricane, tropical cyclone, tropical storm, or tropical depression. The policyholders contended that the deductible did not apply because Sandy was classified as a post-tropical cyclone at
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New York Court Holds That Guilty Plea for Assault & Battery Does Not Preclude Liability Coverage for Incident
The Supreme Court for New York County has held that a policyholder’s guilty plea for assault does not authorize the denial of liability coverage for a lawsuit arising from the same incident. In United Servs. Auto. Ass’n v. Iannuzzi, the insurer sought a declaratory judgment that it had no duty to defend and indemnify a policyholder for a lawsuit arising from an altercation. The insurer’s argument was based upon policy language limiting liability coverage to claims arising from “occurrences,” which is in turn defined as an “accident.” The insurer argued that as the policyholder had pled guilty for criminal assault
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Pennsylvania Superior Court Holds That Fraudulent Acts Exclusion Precludes Liability Coverage for ERISA Class Action
The Pennsylvania Superior Court has held that pursuant to a fraudulent acts policy exclusion, a policyholder was not entitled to liability coverage for a class action verdict arising from the policyholder’s misleading description of an ERISA benefits plan. In Cigna Corp. v. Executive Risk Indem., Inc.,the policyholder sought coverage for a class action challenging the policyholder’s 1998 conversion of its defined benefit pension plan to a cash balance plan. This conversion had the effect of freezing or reducing the benefits of some participants. While a trial court determined that the conversion did not violate ERISA, the court also found that
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New Jersey Appellate Court Upholds Denial of Coverage and Enforces Anti-Concurrent Cause Language
In Ashrit Realty LLC v. Tower National Ins. Co., the Appellate Division of the New Jersey Superior Court held that an insurer properly denied coverage for a building collapse resulting from soil erosion, following the collapse of a pipe. The Court’s decision reflects its willingness to enforce the plain language of a standard anti-concurrent/anti-sequential causation clause to exclude coverage arising from a non-covered cause, even if a covered cause contributed to the loss. A rain storm caused damage to a pipe running below the insured property that was followed by Hurricane Irene, which caused the pipe to collapse. As a
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New Jersey Appellate Court Examines Impact of Claimant’s Settlement With Tortfeasors Upon Insurer’s Subrogation Rights
In Nucci v. American Ins. Co., the New Jersey Superior Court, Appellate Division, examined whether a policyholder’s settlement with alleged tortfeasors precludes an insurer from pursuing subrogation claims against the tortfeasors. While the Court did not issue any precedential decision at this time, the opinion indicates that it may ultimately determine whether tortfeasors who settle a claim with the primary insured while on notice of an insurer’s intent to seek subrogation remain exposed to subrogation claims by the insurer, even if the insurer is challenging coverage and has not paid the claim at the time of settlement. Nucci concerned a
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Third Circuit Says No Coverage for Damage Caused By Decomposed Body
In Certain Underwriters at Lloyd’s, London Subscribing to Policy No. SMP3791 v. Creagh, 563 Fed. Appx. 2009 (3d Cir. 2014), a case of first impression, John M. Clark and Georgia S. Foerstner, convinced the United States Court of Appeals for the Third Circuit that coverage for property damage caused by a decomposed body was excluded per the policy’s Microorganism and “Seepage” exclusions. In August 2011, Underwriters’ insured, Williams Creagh, made a claim for property damage in the amount of $180,000 for damage caused by the decomposed body of a tenant. Fluids seeped from the body causing damage to several rooms
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