Insurance Online : No Coverage for Additional Insured

    Two insurers disputed who was responsible for coverage the additional insured contractor. Endurance Am. Spec. Ins. Co. v. Century Sur. Co., 2015 U.S. App. LEXIS 19194 (2nd Cir. Nov. 4, 2015). The district court granted summary judgment to Endurance, finding there was coverage for the additional insured general contractor after being sued by an employee of a subcontractor.    Century's policy included an Action Over Exclusion clause, which excluded insurance coverage for injury to certain employees as follows: Exclusions: . . .  e. Employer's Liability "Bodily injury" to: (1) an "employee" of the named insured arising out of and in the course of:     (a) Employment by the named insured; or     (b) Performing duties related to the conduct of the named insured's business. The named insured was Pinnacle Construction & Renovation Corp.    Coverage was sought for the defense of the general contractor, Hayden Building Maintenance Corporation, for injury to an employee of the subcontractor/insured, Pinnacle. The policy, however, unambiguously excluded coverage for Hayden due to injuries to Pinnacle's employee.    Endurance argued that the Separation of Insureds provision required the court to read the Action Over Exclusion provision from the perspective of the particular insured seeking coverage. The Separation of Insureds provision stated that: [T]his insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom a claim is made or "suit" is brought. Therefore, Endurance argued that "the named insured" in the Action Over Exclusion provision should be replaced with "Hayden," because "this insurance applies . . . [s]eparately to each insured." Because the injured victim was not an employee of Hayden, Endurance contended that the policy would not exclude coverage to Hayden for the employee's injuries.    The court determined that this logic would apply if the Action Over Exclusion clause used the language "the insured" rather than "the named insured." Then, the provision would be read to replace "the insured" with "Hayden," because Hayden was seeking coverage. But here, the Action Over Exclusion clause stated "the named insured." Therefore, the district court erred in reading "Hayden" into the words "the named insured" in the Action Over Exclusion. The judgment of the district court was reversed.    

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Insurance Online : Stacking of Service Interruption and Contingent Business Interruption Coverages Permitted

   The court found that stacking of interruption coverages was allowed based up the language of the policy. Lion Oil Co. v. Nat'l Union Fire Ins. Co., 2015 U.S. Dist. LEXIS 148261 (W.D. Ark. Nov. 2, 2015).     The insured's oil line was ruptured, causing an interruption of crude oil delivery service. The insured held policies issued by National Union.    The policies included multiple time element extensions. One extension related to Service Interruption which promised to insure against loss for: Service Interruption: electrical, steam, gas, water, sewer, incoming or outgoing voice, data, or video, or an other utility or service transmission lines and related plants, substations and equipment situated on or outside of the premises. Both parties agreed that the service interruption provision was unambiguous and that the court should give effect to the plain language of the policy.     None of the terms found in the service interruption provision, however, were defined by the policies. The insured argued that the ordinary meaning of the term "transmission line" included a crude oil pipeline and that the ordinary meaning of the term "service" included the delivery of oil. Therefore, the rupture triggered the service interruption provision because its losses resulted from the interruption of crude oil delivery service via the transmission line.    The court agreed with the proposed meaning of "transmission line." A crude oil pipeline transmitted oil from one place to another. Thus, the plain and ordinary meaning of "transmission line" included a crude oil pipeline. The plain and ordinary meaning of "service," however, was more complex. "Service" could mean "useful labor that does not provide a tangible commodity," which would support the insured's interpretation of the service interruption provision. "Service" could also mean "a facility supplying some public demand," which would support National Union's interpretation. Because the term "service" was susceptible to more than one reasonable interpretation, the Court found that the service interruption provision's language was ambiguous.     Accordingly, the terms "transmission lines" and "service" included a crude oil pipeline and the delivery of oil. Thus, the service interruption provision covered losses resulting from the interruption of crude oil delivery service to the insured's refinery.    Turning to the stacking issue, in addition to the time element extension that covered service interruption, the policies also provided an extension that covered contingent business interruption. The issue was whether the policies, which provide service interruption coverage of $25 million and contingent business interruption coverage of $25 million, provided an aggregate coverage of $50 million or a coverage limited solely to $25 million.    The policies did not contain an anti-stacking provision. There was no language that restricted the number of coverage grants or sub-limits that applied to a given occurrence. National Union argued that stacking the two coverages would allow a double recovery for the same damages. But the insured suffered a net margin loss that was more than $50 million. Thus, stacking the two coverages would not allow a double recovery because the insured was not seeking to recover an amount that was greater than its actual loss.    The court was unaware of any case from Arkansas or any other jurisdiction that addressed the propriety of stacking coverages in an all-risk policy. National Union could have prevented the stacking of coverages by including an anti-stacking provision in the policies, but did not do so.     Therefore, the service interruption coverage and contingent business interruption coverage in the policies could be "stacked" to provide an aggregate coverage of $50 million.

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Insurance Online : Cyber Risk Insurance for Accountants

Like most businesses, accountants have cyber exposure, and should be buying Cyber Risk Insurance (also called Cyber Liability Insurance, Data Breach Insurance, Network Security Insurance or Privacy Insurance). Accountants also have a more significant exposure than many other businesses because the information they retain includes detailed personal financial information that can have high value to cyber criminals. A recent article by the AICPA (see here) not only highlights the need for Cyber Risk Insurance, but also is an example of the type of information insurance buyers are seeing outside of the normal insurance industry marketing messages on Cyber Risk exposures. It notes that a CPA firm’s central concern is the loss of client data, and that a Cyber Risk Insurance...

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Insurance Online : Eight Years of Blogging in the Books

    This month we hit eight years at this blog. We started in December 2007, 936 posts ago. 101 posts for the past year.     Two Damon Key blogs pre-date and continue to set the standard for this blog. Robert Thomas has long maintained http://ift.tt/1QqCkiX]. And Mark Murakami  started at http://ift.tt/1jJBMYx] a couple of months before us. Anna Oshiro blogs on construction related issues at http://ift.tt/1f6lGQv [here].   Thanks to you the readers for your support again this year. The blog serves as an educational exercise for me, keeping abreast of insurance-related developments in Hawaii and beyond. And hopefully our readers are kept informed, as well. We will keep plugging away in 2016.

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Insurance Online : No Coverage for Restoring Aesthetic Uniformity

       The court found there was no coverage regarding aesthetic uniformity between new materials installed after water damage occurred and the rest of the building. Great Am. Ins. Co. of New York v. The Towers of Quayside No. 4 Condominium Assoc., Case No. 15-CV-20056-King (U.S. Dist. Ct., S.D. Fla., Nov. 5, 2015).        The insured's high rise condominium suffered water damage when a valve on the air conditioning unit damaged the drywall, carpeting, baseboards, insulation and wallpaper in the east hallways of the eleventh floor and the floors below. Floors three through twenty-five had a uniform appearance by design with respect to the carpet, wallpaper, and woodwork in the common area hallways.        The insured submitted a claim under its property policy with Great American. A payment of $170,291.84 was made for damage to the east hallways of the eleventh floor and the floors below. The insured sought coverage to repair or replace undamaged carpeting, wallpaper, baseboards, and woodwork in (1) the west hallways and elevator landings of the eleventh floor and the floors below and in (2) floors twelve through twenty-five.The insured contended that the loss of aesthetic uniformity devalued the building and constituted a loss to the building.       Great American's policy promised to pay for "direct physical loss from a Covered Cause of loss . . ." Coverage for consequential loss, defined as "delay, loss of use, loss of market, or any other consequential loss," was excluded.       Great American moved for summary judgment. The court determined that the policy only provided coverage for "direct physical loss," specifically excluded coverage for consequential loss, and made no mention of "matching" or "aesthetic uniformity." While coverage for matching, for the purpose of achieving aesthetic uniformity, was appropriate where repairs concerned the continuous run of an item or adjoining area for materials such as wallpaper, baseboards, woodwork, and carpeting, matching was not otherwise required under the policy.    Therefore, the court found that Great American was entitled to a declaration that it had no obligation to provide coverage to replace: (1) undamaged components on floors twelve through twenty-five or (2) undamaged carpeting in the west hallways of floors three through eleven. It was unclear, however, whether the wallpaper, baseboards, and woodwork on floors three through eleven formed a continuous run from one end of the building to the other, or whether these components were separated from each other in the same manner the carpeting in the east and west hallways was separated by the central elevator lobby on  each floor. Therefore, Great American had failed to establish it was entitled to summary judgment with respect to whether it had to provide matching coverage for these components.

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