Construction Insurance

June 06.2011

Harsh Result In Dispute Over Appointed Counsel

Even when carriers agree to defend an insured, policyholders and carriers can still get locked into disputes about who will provide such a defense. Policyholders often want to choose their own counsel while a carrier has its own idea about who should defend the case. The dispute in Travelers Property v. Centex Homes, C10-02757 (N.D. Cal. April 1, 2011) illustrates this problem and shows how a dispute over defense counsel can potentially lead the carrier to argue that the policyholder has breached its duty to cooperate and that such a breach relieves the carrier of both its duty to defend...

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February 22.2011

Section 533 Does Not Bar Coverage for Innocent Co-Insureds

The California Supreme Court recently issued a decision in Century-National Ins. Co. v. Jesus Garcia, No. S179252, holding that California Insurance Code section 533, which bars coverage for intentional conduct, does not apply to coverage for innocent co-insureds. The Court examined this issue in the context of a fire insurance policy. The insureds, Jesus and Theodora Garcia, suffered substantial property damage to their home when their adult son – who was also an insured under the policy – set fire to his bedroom. Century-National denied coverage for the Garcias’ claim citing the policy’s exclusion for claims based on the intentional...

Read the Article | Comments (0) | TrackBack | Posted in Bad Faith, Construction Insurance, General Liability Policies, Property Insurance

July 12.2010

California Appellate Court Rejects Insurer’s Attempt to Apply Multiple Self-Insured Retentions To a Single Lawsuit

In Clarendon America Insurance Company v. North American Capacity Insurance Company, E048176, 4th Dist. Ct. App. (Super. Ct. No. CIVRS701868), a new California Court of Appeal decision, the Fourth Appellate District has rejected an insurer’s attempt to apply multiple self-insured retentions to a single lawsuit. Clarendon America Insurance Company (“Clarendon”) and North American Capacity Insurance Company (“NAC”) issued general liability insurance policies to a home builder (“Tanamera”) for two successive one-year policy periods. Tanamera was sued by a group of individual homeowners for various alleged construction defects in one of its housing developments. Of the 43 homes involved in the...

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March 16.2010

Preparing for a Mediation Involving Coverage Issues

Adequate preparation is essential for any mediation, and mediations involving insurance coverage issues are no exception. Whether the focus of the mediation is the insurance coverage dispute itself, or whether the insurer is attending a mediation of the underlying action (with an expectation that it will fund any settlement), the insured can and should take certain steps to ensure a more productive session. 1) Select the right mediator Only the attorneys handling the case can judge which mediator has the right style and temperament to handle their specific matter. An additional consideration, however, should be whether the mediator has some...

Read the Article | Comments (4) | TrackBack | Posted in Construction Insurance, D & O, General Liability Policies, Intellectual Property Claims, Pollution Claims, Property Insurance, Risk Management

September 23.2009

Narrow Victory For Insurers In 21st Century v. Superior Court: “Made-Whole” Rule Does Not Apply To Insured’s Litigation Costs

A recent California Supreme Court decision, 21st Century Insurance Co. v. Superior Court (Quintana), S154790 (Aug. 24, 2009), clarifies the rules governing an insurer’s right to reimbursement for payments to its insured, after the insured obtains a recovery from the responsible third party. The Court held that while the insured has right to be “made whole” before the insurer can assert its reimbursement rights, the made whole rule only applies to the insured’s non-covered damages, not his attorney’s fees. While the decision is favorable to insurers, it only applies to auto insurers seeking to recover small payments made pursuant to...

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May 11.2009

“That Particular Part” Shouldn’t Be That Confusing

Construction defect coverage litigation has been declining over the years. The building booms of the late 80s and 90s resulted in a boom of construction defect litigation too. Coinciding nicely with the introduction of the 1986 ISO form policy with new wording, insurers found themselves paying for a lot of defective construction claims. Since then, coverage for construction has gotten harder to get, and a lot narrower. Insurers tightened down by introducing new – and more restrictive – versions of additional insured endorsements, by adding very restrictive versions of “Montrose” endorsements, and by ultimately by refusing to sell insurance to...

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February 09.2009

New Additional Insured and Defense Obligations Under Assembly Bill 2738 Effective January 1, 2009

In residential construction projects, the builder usually hires a number of specialty subcontractors and typically requires that the builder be named as an additional insured on their general liability policies. While builders may not expect to obtain defense or indemnification from a subcontractor for claims that do not arise from a subcontractor's work, nevertheless California law has provided a broad obligation for subcontractor insurance carriers to provide such a defense. In 2001, the California Court of Appeals in Presley Homes, Inc. v. American States Insurance Company, held that an insurer's defense obligation under an additional insured endorsement covered all claims...

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January 07.2009

Limitations on Additional Insured Coverage

In a prior post, I discussed the widespread confusion over the meaning and use of certificates of insurance, and the importance of obtaining an additional insured endorsement. Another problem faced by additional insureds is the scope of coverage under such endorsements. Up until the early 1990’s, additonal insured endorsements were generally available which expressly covered “completed operations.” The “completed operations” coverage meant that the coverage applied to damage that occurred after all the work at a job site was completed. Thus, it would apply to the typical construction defect suit. Starting in the eary 1990’s, carriers began to modify the...

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January 06.2009

Additional Insured Coverage—Certificates of Insurance

Every time I give a presentation that includes Additional Insured coverage, people get excited. Not because of what I have to say, but because they are upset about certificates of insurance. As one audience member recently asked “Are they worth the paper they are written on?” This is an understandable question, because certificates are widely used but poorly understood. A certificate of insurance is used where one party is contractually obligated to name another party as an “additional insured” on its policy. This is common, for example, with general contractors and their subs. The certificate will typically state that the...

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