Insurance Journal's Academy of Insurance
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Dec 10, 2014 / Learn More
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Sometimes, a name says it all. There are slightly more than a handful of insurance industry cases that have become known by name. This seminar explores this phenomenon by looking at the cases which can be known by one name and providing a substantive discussion of the principles they represent.
Of course, the list begins with the Montrose decision, Montrose Chemical Corporation v. Admiral Insurance Company, 10 Cal. 4th 645, 42 Cal. Rptr. 2d 324, 913 P. 2d 878 (1995), since it spawned an endorsement known as the "Montrose" endorsement. The case involves the "known loss," or "loss in progress" doctrine. After Montrose was successful in triggering coverage for an allegedly ongoing pollution liability, the industry responded with a modification to the standard insuring agreement to buttress its position that in-progress or known-to-the-insured losses are not covered. This section of the seminar gives attendees fluency with the "Montrose" endorsement.
The second decision is San Diego Federal Credit Union v. Cumis Ins. Society, Inc., 162 Cal. App. 3d 358 (1984), which requires some degree of independence of counsel defending an insured when there is a reservation of rights. Attendees will learn what a "Cumis counsel" is and how it can have an impact on the processing of claims.
Part 1 concludes with a discussion of John Burns Construction Company v. Indiana Insurance Company, 727 N.E.2d 211 (Ill. 2000), and explains the concept of a "targeted" tender of defense and indemnification.
Part 2 of this series opens with a discussion of the oldest case of the group, Marx v. Hartford Accident and Casualty Indemnity Co., 157 N.W.2d 870 (Neb. 1968). Marx is generally considered to be the leading case with respect to what services constitute professional services (and would therefore be properly insured under a malpractice type of policy) and those which do not (and presumably would be properly insured under a BOP or CGL).
Jefferson Insurance Company of New York v. Superior Court of Alameda County, 475 P.2d 880 (Cal. 1970), is considered by FC&S to be the "seminal" case in defining fair market value and is an instructive story for attendees on the variations in state law and policy language in how to measure the value of a loss.
Rodman v. Farm Mutual Insurance Co., 208 N.W.2d 903 (Iowa 1973) is the case that first developed the now-controversial "reasonable expectations" doctrine or rule that will permit an insured's objectively reasonable expectation of coverage to defeat policy language that excluded a particular loss. Attendees will learn the genesis of the doctrine and how it has subsequently fared in other states.
Ballard v. Farmers Insurance Group is a Texas trial court decision in 2001. It is the only state trial court decision of the group, but it is significant not because of the legal principles, but the landmark verdict (tens of millions of dollars in compensatory and punitive damages) against a carrier related to mold. The case is an instructive story on how the industry responded to and continues to respond to mold claims.
The final case in the discussion is Harbor Ins. Co. v. Lewis, 562 F.Supp. 800 (E.D. Pa. 1983), which provides an answer to the question of whether "additional insured" status applies only to vicarious liability or applies even in instances in which the putative additional insured has some legal exposure. Attendees will develop an appreciation of the intricacies of the form documents generated as a result of this decision.