Justia Insurance Law Opinion Summaries

Purchasers of a motor home claim that defects resulted in leakage, which caused mold growth, rendering the home uninhabitable and causing health problems. The manufacturer, which was self-insured on claims up to $500,000, went bankrupt shortly after the purchasers filed suit. Defendant provided insurance for liability above $500,000. The purchasers added defendant to their suit, invoking a Rhode Island statute allowing tort victims to recover damages directly from insurers of a bankrupt tortfeasor, within policy limits. The district court held that defendant's obligation had not been triggered, based on a provision in the policy stating that defendant's duty to pay arose only after the insure had paid the initial $500,000. The First Circuit reversed, emphasizing that it was not expanding the scope of defendant's coverage. Allowing the company to avoid liability would violate public policy; requiring defendant to assume additional defense costs does not violate public policy.

In 1995 Puerto Rico enacted a law mandating minimum liability insurance for drivers and created the Asociación de Suscripción Conjunta del Seguro de Responsabilidad Obligatorio to provide compulsory liability insurance to those otherwise unable or unwilling to obtain insurance; the Association insures about 80 percent of vehicles in Puerto Rico. In 2008 the Association challenged regulations that limit its distribution of profits to members (insurance companies) and require that other revenue be kept in a reserve. The district court dismissed a "taking claim" under 42 U.S.C. 1983. The First Circuit affirmed. Facial claims were time-barred; other claims were not properly raised.

The claim arose from an accident at a construction site. The company was insured under its own commercial general liability policy, issued by Acadia, and as an additional insured on a subcontractor's policy, issued by AIG. Both policies contained provisions that: This insurance is excess over: (1) Any of the other insurance, whether primary, excess, contingent, or on any other basis . . . (a) That is . . . coverage for "your work"; . . .(2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement. The company and Acadia sought declaratory judgment that AIG was obligated to defend the construction company and compensation of costs incurred by Acadia that defense. The district court granted judgment in AIG's favor. The First Circuit reversed, holding that the plain language of the policy requires that the Acadia policy be treated as excess over the AIG policy. The word "you" refers solely to the listed Named Insured in the policy Declarations or "qualifying as Named Insureds" under the policy.

The company is being sued for sending commercial fax messages without consent from the recipients in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227(b). Its insurers deny that coverage for "making known to any person or organization covered material that violates a personâs right of privacy" extends to liability under the Act. The First Circuit applied Massachusetts law and reversed the district court's declaratory judgment in favor of the insured company. The policy covers disclosure, not intrusion into privacy described by the Act.

The company purchased a disability benefits plan, regulated by the Employee Retirement Income Security Act. A part-owner and employee of the company received benefits for about four years before the insurer terminated benefits because her non-salary income was higher than her salary income had been. The plan defines "pre-disability earnings" as: "your monthly rate of earnings from the employer in effect just prior to the date disability begins" and "basic annual earnings" as the amount reported by the policyholder on a W-2, excluding commissions. The company argued that a provision allowing termination of benefits when "current earnings" reach a percentage of pre-disability earnings referred to earnings from all sources. The district court held that the employee was not entitled to benefits but denied the insurer reimbursement. The First Circuit reversed, in favor of the employee, finding that the insurer's interpretation of the plan was unreasonable.

The insured was treated as an outpatient for "mental or nervous disorder" in 2005-2007, allegedly incurring expenses of more than $125,000. In 2006 the company informed her that it had already paid $8,506 and would pay only $1,494 more toward the lifetime cap of $10,000. The district court held that the contract was not ambiguous and that the limit was not prohibited by New Hampshire law. The First Circuit affirmed. The policy limit for mental health benefits, stated as "the amount shown on page 3" is not ambiguous simply because that page refers to both the "Mental and Nervous Disorder Limit" of $10,000, and the "Maximum Benefit Limit Per Covered Person" of $1 million. A state law prohibiting unfair trade practices, including discrimination in insurance does not provide a private right of action until after the claimant obtains a favorable ruling from the insurance commissioner.