Justia Insurance Law Opinion Summaries

The United States District Court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. Jack Poole and his wife, Jennifer, were riding in a vehicle owned by Doris Knight, Jennifer's mother, when a drunk driver crossed the center line and struck them. The Pooles were both seriously injured in the collision; although Jack survived, Jennifer's catastrophic injuries resulted in her death several days later. In contrast with the substantial bodily injuries, the Pooles sustained minimal property damage because they did not own the vehicle. The at-fault driver's liability carrier tendered its policy limits. Farm Bureau, the insurer on Knight's vehicle, then tendered its underinsured motorist (UIM) policy limits for bodily injury to Jack individually and to Jack as the representative of Jennifer's estate. The Pooles then sought recovery from their own insurer, Government Employees Insurance Company (GEICO), which provided them a split limits UIM policy with bodily injury coverage of up to $100,000 per person and $50,000 for property damage. GEICO tendered the UIM bodily injury limits of $100,000 each for Jack and Jennifer's estate. The Pooles requested another $50,000 from the UIM policy's property damage coverage in anticipation of a large punitive damages award, but GEICO refused. GEICO then initiated a declaratory judgment action with the federal district court to establish that it was not liable to pay any amounts for punitive damages under the property damage provision of the UIM policy because the source of the Pooles' UIM damages was traceable only to bodily injury. The federal court asked the South Carolina Supreme Court whether, under South Carolina law, when an insured seeks coverage under an automobile insurance policy, must punitive damages be apportioned pro rata between those sustained for bodily injury and those sustained for property damage where the insurance policy is a split limits policy? The Supreme Court answered the question, "No." View "Government Employees Insurance Company v. Poole" on Justia Law

This appeal involved questions about the insurance coverage available to defendant Honeywell International, Inc. (Honeywell) for thousands of bodily-injury claims premised on exposure to brake and clutch pads (friction products) containing asbestos. The New Jersey Supreme Court granted certification to address two issues: (1) whether the law of New Jersey or Michigan (the headquarters location of Honeywell’s predecessor when the disputed excess insurance policies were issued) should control in the allocation of insurance liability among insurers for nationwide products-liability claims; and (2) whether it was error not to require the policyholder, Honeywell, to contribute in the allocation of insurance liability based on the time after which the relevant coverage became unavailable in the marketplace (that is, since 1987). The Supreme Court determined New Jersey law on the allocation of liability among insurers applied in this matter, and the Court set forth the pertinent choice-of-law principles to resolve this dispute over insurance coverage for numerous products-liability claims. Concerning the second question, on these facts, the Court also affirmed the determination to follow the unavailability exception to the continuous-trigger method of allocation set forth in Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994). View "Continental Insurance Company v. Honeywell International, Inc." on Justia Law

Plaintiff Brandon Forvendel was injured in a multi-vehicle accident in 2013. At the time of the accident, plaintiff was driving a Chevrolet Equinox owned by him and insured under a policy issued by State Farm Mutual Automobile Insurance Company (“State Farm”), which included uninsured motorist (“UM”) coverage. Plaintiff recovered the limits of his UM coverage under his State Farm policy. At the time of the 2013 accident, plaintiff lived in the household of his mother, Deborah Forvendel, who was also insured by State Farm. Plaintiff also sought to recover under his mother’s State Farm UM policy, which carried significantly higher policy limits. State Farm refused to allow him to recover under his mother's policy, citing the anti-stacking provisions of La. R.S. 22:1295(1)(c). In this case, the issue presented for the Louisiana Supreme Court’s review centered on whether the insurer waived its defenses to plaintiff’s current claim by paying on an earlier claim to him in error. The Court found the insurer did not waive its rights. Accordingly, the Court reversed the judgments of the courts below. View "Forvendel v. State Farm Mutual Automobile Insurance Co." on Justia Law

The Court of Appeals affirmed the judgment of the Appellate Division concluding that the claims asserted by plaintiff Ambac Assurance Corporation in its appeal from Supreme Court’s judgment in a suit against defendant Countrywide Home Loans, Inc. lacked merit.Ambac, a monoline financial guaranty insurer, agreed to insure payments of principal and interest owed to the holders of residential mortgage-backed securities sponsored by Countrywide. Many of the loans backing those securities went into default following a market downturn, causing substantial losses. Ambac filed suit against Countrywide, alleging that Countrywide breached several contractual representations and warranties and fraudulently induced Ambac to enter into the insurance agreements. The Court of Appeals held that the Appellate Division correctly determined that (1) justifiable reliance and loss causation are required elements of a fraudulent inducement claim; (2) Ambac may only recover damages on its fraudulent inducement claim that flow from nonconforming loans; (3) the remedy for Ambac’s contract claims was limited to the repurchase protocol provided for in the contract’s sole remedy provision; and (4) Ambac was not entitled to attorneys’ fees. View "Ambac Assurance Corp. v. Countrywide Home Loans, Inc." on Justia Law

Fiorentini is the owner and president of a small technology company. When cancer treatment left him unable to perform his job, he received total disability benefits under a Paul Revere policy. Five years later, after Fiorentini was back at work and exercising full control of the company, Paul Revere notified him that he no longer qualified for the benefits. Fiorentini argued that he still satisfied the policy’s requirements for total disability because, although he could perform most of his job duties, he was unable to do what it takes to generate new business. Paul Revere rejected that argument, encouraging him to apply for “residual disability benefits,” which would have required Fiorentini to show that he was either unable to perform “one or more of the important duties” of his occupation or could only perform his important job duties for “80% of the time normally required to perform them” and that he earned at least 20% less than he did predisability. Fiorentini instead sued for breach of contract. The Seventh Circuit affirmed summary judgment for Paul Revere. The total disability provision does not cover the insured who has a diminished ability to perform his occupation, but rather the insured who is unable to continue it. View "Fiorentini v. Paul Revere Life Insurance Co." on Justia Law

Auto-Owners Insurance Company provided automobile insurance to Frank and Nancy Csaszar and their daughter, Jennifer. But when that policy’s term came to a close, Auto-Owners informed Mr. and Mrs. Csaszar that, because of their daughter’s driving record, it would only renew their policy if it excluded her from coverage. The Csaszars agreed. The policy accordingly included an “excluded-driver” provision that stated the policy “shall provide no coverages” for “claims arising out of [Jennifer Csaszar’s] operation or use of any automobile. While this new policy was operative, an uninsured motorist rear-ended Jennifer while she was driving a vehicle not scheduled under her parents’ Auto-Owners policy. Jennifer filed a claim with Auto-Owners, requesting it pay her $500,000 in uninsured and underinsured motorist (UM/UIM) coverage. Auto-Owners denied the claim because it believed the excluded-driver provision barred Jennifer from such coverage. It then sought a declaratory judgment that Jennifer was not entitled to any coverage, including UM/UIM coverage, under her parents’ policy. In response, Jennifer filed a counterclaim seeking a declaration she was, in fact, entitled to this coverage. The district court granted Auto-Owners’ motion for summary judgment. Finding no reversible error in that judgment, the Tenth Circuit affirmed the district court. View "Auto-Owners Insurance Company v. Csaszar" on Justia Law

A policy exclusion for personal liability “under any contract or agreement” does not apply to relieve an insurer of its duty to defend its insured, an alleged builder-vendor, against a claim for negligent excavation brought by the home buyer because the negligence claim arose from the common law duty to construct the home as a reasonable builder would.After rockslides damaged his property, the home buyer sued the alleged builder-vendor, asserting breach of contract, negligence, and fraud-based claims and alleging that the rockslides were the result of improper excavation during construction. The builder-vendor’s insurer declined the tender of defense on grounds that there was no coverage under the relevant insurance policies. The builder-vendor sought damages and declaratory relief. The superior court granted summary judgment in favor of the insurer. The court of appeals reversed, concluding that the policy’s “contractual liability” exclusion did not apply. The Supreme Court affirmed, holding that the contractual liability exclusion did not relieve the insurer of its duty to defend the builder-vendor against the home buyer’s negligence claim. View "Teufel v. American Family Mutual Insurance Co." on Justia Law

Minnesota law provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse,” Minn. Stat. 524.2–804. If an insurance policyholder does not want that result, he may rename the ex-spouse as beneficiary. Sveen and Melin were married in 1997. Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his children from a prior marriage as contingent beneficiaries. The marriage ended in 2007. The divorce decree did not mention the insurance policy. Sveen did not revise his beneficiary designations. After Sveen died in 2011, Melin and the Sveen children claimed the insurance proceeds. Melin argued that because the law did not exist when the policy was purchased, applying the later-enacted law violated the Contracts Clause. The Supreme Court reversed the Eighth Circuit, holding that the retroactive application of Minnesota’s law does not violate the Contracts Clause. The test for determining when a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship,” considering the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in a “reasonable” way to advance “a significant and legitimate public purpose.” Three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. The law is designed to reflect a policyholder’s intent and to support, rather than impair, the contractual scheme. The law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage. The law supplies a mere default rule, which the policyholder can easily undo. View "Sveen v. Melin" on Justia Law

Minnesota law provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse,” Minn. Stat. 524.2–804. If an insurance policyholder does not want that result, he may rename the ex-spouse as beneficiary. Sveen and Melin were married in 1997. Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his children from a prior marriage as contingent beneficiaries. The marriage ended in 2007. The divorce decree did not mention the insurance policy. Sveen did not revise his beneficiary designations. After Sveen died in 2011, Melin and the Sveen children claimed the insurance proceeds. Melin argued that because the law did not exist when the policy was purchased, applying the later-enacted law violated the Contracts Clause. The Supreme Court reversed the Eighth Circuit, holding that the retroactive application of Minnesota’s law does not violate the Contracts Clause. The test for determining when a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship,” considering the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in a “reasonable” way to advance “a significant and legitimate public purpose.” Three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. The law is designed to reflect a policyholder’s intent and to support, rather than impair, the contractual scheme. The law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage. The law supplies a mere default rule, which the policyholder can easily undo. View "Sveen v. Melin" on Justia Law

Exercising jurisdiction over Defendant-insurer under the circumstances of this case was permitted by Connectictut’s corporate long arm statute, Conn. Gen. Stat. 33-929(f)(1), and comported with the due process clause of the Fourteenth Amendment.Defendant issued an automobile insurance policy covering a vehicle driven by Insured. The policy was written in New York at Defendant’s principal place of business, and Defendant did not direct or participate in any business transactions in Connecticut at the time. The coverage territory of the policy included Connecticut. Insured’s vehicle later collided with a vehicle occupied by Plaintiffs. A judgment was rendered against Insured in favor of Plaintiffs. Defendant failed to defend Insured or to indemnify him for the judgment rendered against him. Plaintiffs then brought this action against Defendant. Defendant moved to dismiss the action for lack of personal jurisdiction. The trial court granted the motion to dismiss. The Supreme Court reversed, holding that Defendant’s agreement to defend and indemnify Insured established personal jurisdiction under the long arm statute and that subjecting Defendant to the jurisdiction of this state comported with the due process clause of the Fourteenth Amendment. View "Samelko v. Kingstone Insurance Co." on Justia Law