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Tables of Contents for Insurance Coverage Litigation
Chapter/Section Title
Page #
Page Count
Preface
xxxv
Acknowledgements
xxxix
An Introduction to Standard-From General Liability Insurance
1
1
Introduction
3
4
Standardization
7
13
Revising and ``Saleability''
16
2
Effects of Standardization
18
2
The Drafting Process: Improvements and Clarifications
20
2
Origins of ``Comprehensive'' Coverage
22
9
Benefits and Selling Points of Comprehensive Coverage
25
5
Drafters of the Standard-Form Policy
30
1
Insurance Coverage for Gradual Injury
31
3
Insurance Coverage Under Multiple Insurance Policies
34
1
Broad Insurance Coverage for Bodily Injury
35
1
Broad Insurance Coverage for Loss of Use
36
1
The Sudden-and-Accidental Pollution Exclusion
37
1
Insurance Coverage for Business Torts
38
1
Post-1985 Comprehensive General Liability Insurance Policies
39
3
Anatomy of an Insurance Policy
42
23
The Declarations
42
1
Who Is an Insured
43
2
Additional Insureds
45
3
Exclusions
48
1
Anti-Indemnity Statutes
49
1
Causation and Negligence
49
1
The ``Other Insurance'' Problem
50
1
Certificates of Insurance
51
1
Coverage for Additional Insureds
51
1
Coverage Under Additional Insured Endorsements
52
5
Extent of Additional Insured's Coverage
57
1
Effect of ``Other Insurance'' Clauses
57
2
The Limits of Insurance
59
2
The Coverages
61
2
Exclusions
63
1
Definitions
64
1
Conditions
65
1
Self-Insurance
65
Captives
67
Rules of Insurance Policy Interpretation
1
1
Introduction: Insurance Policies as Contracts of Adhesion and Modern Contract Theory
3
18
The Textual Approach
7
2
Modern Contract Theory
9
12
The Purpose of Insurance
21
3
Plain and Ordinary Meaning
24
4
Ambiguity Construed Against the Drafter
28
8
The Reasonable Expectations Doctrine
36
13
Varied Applications
44
5
Use of Evidence Outside the Insurance Policy to Interpret the Meaning of an Insurance Policy Term
49
8
Evidence of Trade Usage, Course of Dealing, and Course of Performance
57
3
Trade Usage
57
2
Course of Dealing and Course of Performance
59
1
Varieties of Evidence
60
16
Regulatory History
67
1
Advertising and Promotional Materials: Elements of the ``Contract''
68
2
Inconsistent Positions
70
1
Other Documentary Evidence
70
3
Expert Testimony
73
3
Arguments for Relaxing the Contra Proferentem Doctrine
76
Rules for Interpreting Insurance Policy Terms Drafted by the Policyholder
77
1
The ``Sophisticated Policyholder'' Defense
78
Insurance Company's Duty to Defend and Pay Defense Costs and Duty to Settle
1
1
Introduction
3
6
The Duty to Defend and the Duty to Pay Defense Costs
4
3
Contents of This Chapter
7
2
The Potential-for-Coverage Standard
9
25
Groundless, False, or Fraudulent Claims
15
3
Multiple Claims, Some Covered, Others Not
18
7
Environmental Cases
25
5
Pre-Tender Defense Costs
30
4
Use of Extrinsic Facts to Determine an Insurance Company's Duty to Defend
34
6
Insurance Company's Duty to Investigate
40
5
Resolution of Doubts Regarding the Insurance Company's Duty to Defend
45
6
Disclaimers of Liability and Reservations of Rights
51
18
Reservation of Rights
53
3
Disclaimers of Liability
56
1
Effect of Failure to Assert Defenses with Specificity in Disclaimer
57
3
Timeliness of Disclaimer
60
5
Liability for Costs of Settlement or Judgment
65
3
Estoppel or Waiver When Insurance Company First Accepts, But Later Attempts to Disclaim, Coverage
68
1
Right to Independent Counsel
69
7
Effect of Insurance Company's Erroneous Refusal to Defend
76
13
Recoverable Damages
78
4
Loss of Rights Under the Insurance Policy
82
7
Duty to Defend upon Exhaustion of Indemnity Limits
89
12
The Unlimited Duty to Defend: Defense Clauses
89
1
Decisions Construing Pre-1966 Form Language
90
2
Decisions Construing 1966 Form Language
92
3
Showing of Prejudice Required
95
3
Cases Finding a Failure to Cooperate
98
1
Waiver of Right to Rely on Defenses if Coverage Denied
99
2
Effect of Coverage Defenses on the Insurance Company's Duty to Defend
101
9
Allegations of Fraud in the Procurement
104
3
Other Coverage Defenses
107
3
Direct-Action Statutes
110
7
Louisiana
111
2
Wisconsin
113
1
Puerto Rico
113
2
Guam
115
1
Use of Direct-Action Statues Against Reinsurers
116
1
Allocation of Defense Costs
117
13
Case Law Refusing to Prorate Defense Costs to the Policyholder
118
5
Case Law Apportioning Defense Costs to the Policyholder
123
3
Apportionment of Defense Costs Among Insurance Companies
126
4
Insurance Company's Duty to Settle
130
Basis of Duty in the Implied Covenant of Good Faith and Fair Dealing
131
3
Settlement of a Claim by the Insurance Company Without the Policyholder's Consent
134
2
Prejudice Requirement
136
8
Policyholder Need Not Prove Its Own Liability
144
4
Claims in Mass Tort Cases
148
2
Public Policy
150
1
A Policyholder's Checklist: Responding to Reservation of Rights
151
Trigger of Coverage
1
1
Background
Introduction: The General Rule and Coverage Under Multiple Policy Periods
5
1
Policy Language
6
3
Repeated and Progressive Injury Cases
9
6
Drafting History: Coverage Under Multiple Policies; Rejection of Alternative Trigger Theories
15
1
The 1966 CGL Program: Clarification of Coverage for Gradual Injury
16
4
Why the ``Occurrence'' Definition?
20
2
Coverage Under Multiple Insurance Policies/Manifestation and Other Trigger Theories Rejected
22
6
The Toxic Tort Crisis (1970s-1980s): Manifestation Again Rejected
28
3
Proposed Solution to the Multiple Policy Issue: The Claims-Made Policy
31
2
Continuous Trigger
33
24
Continuous Trigger of Coverage
33
2
Policyholders' Expectations
35
2
Courts' Concerns About Administrative Convenience
37
2
Application of Continuous Trigger
39
2
Trigger for Liability for Implantation of Silicone Gel Breast Implants
41
2
Application of the Continuous Trigger in Construction Defect Cases
43
3
Other Characterizations of the Trigger
46
2
Insurance Industry Arguments for a Continuous Trigger
48
2
Choice-of-Law Issues
50
1
Conclusion
50
1
Application of Continuous Trigger in Environmental Insurance Coverage Cases
51
6
Exposure Trigger
57
4
Exposure Trigger
57
1
Application of Exposure Trigger
58
2
Exposure Trigger in Environmental Insurance Coverage Cases
60
1
Injury-in-Fact Trigger
61
23
Injury-in-Fact Trigger
61
5
Application of Injury-in-Fact Trigger
66
8
Injury-in-Fact in Environmental Insurance Coverage Cases
74
3
Proof of Injury-in-Fact
77
7
Manifestation Trigger
84
15
Manifestation Trigger
84
3
Application of Manifestation Trigger
87
1
Date of Diagnosability
87
1
Assumption of Administrative Convenience
87
2
Application in Particular Contexts
89
6
Claims-Made Effect
95
1
Analogy to the ``Known Loss'' Theory
96
1
Conclusion
96
1
Manifestation Trigger in Environmental Insurance Coverage Cases
96
3
Triggers of Coverage Under Other Circumstances
99
17
Triggers of Coverage Applied in Other Fact Situations
99
1
Installation of a Defective Product
100
4
Installation of Asbestos
104
4
Negligent Installation
108
1
``Cause'' Trigger
109
2
Trigger of Coverage for a Polcyholder's Liability for Loss of Use
111
1
1966 Form
111
1
1973 Form
112
3
1986 Form
115
1
Allocation
116
40
Allocation: The Scope of Each Insurance Company's Duty to Indemnify
116
3
Applicable Policy Language
119
3
Insurance Industry's Contemporaneous Understanding of the Policy Language
122
4
Majority Rule: Joint and Several Liability
126
13
``Other Insurance'' Clause Does Not Change the Result
139
4
Minority Rule of Allocation: Proration
143
1
Pro Rata Decisions
144
4
Pro Rata Schemes
148
5
Complications Raised by Proration
153
3
``Anti-Stacking'' Arguments and ``Deemer Clauses''
156
7
``Anti-Stacking''
159
1
So-Called ``Deemer Clauses''
160
3
Survey of Law
163
Survey of Law on Trigger of Coverage
163
25
Survey of Law on Allocation
188
Notice of a Claim or Action
1
1
Introduction
3
3
Jurisdictions Following Modern Rule
6
19
Basis for the Modern Rule: Recognition of Insurance Policies as Contracts of Adhesion
8
3
Reasonable Expectations
11
1
Forfeiture Interpretation
11
1
Public Policy Considerations
12
2
Excess Insurance
14
1
Purpose of Notice Provisions
14
2
Two-Step Test
16
3
Did the Delay Constitute a Breach?
19
1
What Constitutes Prejudice?
20
5
Jurisdictions Following Old Rule
25
7
Is Timely Notice a ``Condition Precedent''?
26
2
Reasonableness of Policyholder's Notice
28
4
State-by-State Survey of the Notice Issue
32
19
The Duty to Cooperate
51
5
Difference in the Standard for Notice Under Excess Insurance Policies
56
33
Reasonableness Standard Under the Notice Provisions in Excess Insurance Policies
57
6
Notice-Prejudice Rule and Prejudice-Presumption Rule
63
3
Per Se Notice Rule
66
4
Notice Law in New York
70
2
Timeliness of Notice as Question of Fact
72
3
New York's Modern Rule for Insurance Companies
75
2
Insurance Industry Customs and Practice Recognizing That Notice to Umbrella dn Excess Insurance Companies Is Different
77
6
Waiver of a Notice Defense by Excess Insurance Companies
83
6
``Loss Payable'' Clauses
89
A Policyholder's Checklist: Responding to Reservation of Rights and Nonwaiver Agreements
95
Choice of Law
1
1
Introduction
3
2
Threshold Issues for Choice of Law
5
14
Choice-of-Law Analysis Usually Is Considered Necessary Only as to Issues Upon Which Actual Conflicts Exist
5
7
Addressing Choice of Law on an Issue-by-Issue Basis Rather Than on a ``Global'' Basis
12
1
Issue-by-Issue Basis
12
5
Global Choice of Law
17
2
Choice-of-Law Provisions
19
18
Ambiguity Created by Lack of a Choice-of-Law Clause in Most General Liability Insurance Policies
19
6
``Service of Suit'' Clause as a Choice-of-Law Provision
25
3
Use of London Insurance Companies' Contemporary Drafting History of the Service of Suit Clause
28
6
Rules of Contract and Insurance Policy Construction on the Service of Suit Clause
34
3
Approaches to Choice of Law
37
43
Lex Loci Contractus
37
10
Restatement (Second) of Conflict of Laws
47
1
Evaluation of Contacts Under Restatement Second Section 188
47
1
Place of Contracting
48
1
Place of Negotiation of the Contract
49
1
Place of Performance
50
1
Location of the Subject Matter of the Contract
51
2
Domicil, Residence, Nationality, Place of Incorporation, and Place of Business of the Parties
53
1
Evaluation of Conflicts Principles Under Section 6 of Restatement (Second)
54
1
Needs of the Interstate and International System
55
1
Relevant Policies of the Forum
56
1
Relevant Policies of Other Interested States and the Relative Interests of Those States in the Determination of the Particular Issue
57
3
Protection of Justified Expectations
60
4
Other Approaches Similar to That of Restatement (Second)
64
1
Government Interest Analysis
64
2
Choice-Influencing Considerations Analysis
66
1
Site-Based Choice of Law in Environmental Coverage Actions
66
1
Section 193 of the Restatement (Second)
66
3
The Interest of the State of the Site
69
11
Miscellaneous Issues Affecting Choice of Law
80
Provisions of Some Case Management Orders Setting Separate Discovery and Briefing Phases for Choice of Law
80
1
Why Courts May Enter CMOs
80
1
CMO Provisions Relating to Choice of Law
81
3
Cases Rejecting Phasing of Choice of Law
84
2
Change of a Policyholder's Principal Place of Business in the Middle of the Period of Insurance Coverage
86
Insurance Coverage for Negligent and Intentional Injury
1
1
Introduction
3
3
Burden of Proving That the Policyholder Expected or Intended the Injury
6
1
Standards
7
2
Historical Evidence That the Insurance Industry Intended That a Subjective Standard Apply
9
7
History of Exclusion (a)
10
2
Rejection of Foreseeability Standard
12
3
Required Proof of Intent to Cause Injury by High-Level Management
15
1
Decision Applying Subjective Standard
16
3
Courts That Have Followed So-Called Objective Standards
19
2
Separate Standard for ``Expected''
21
2
Decisions Regarding Intenational Acts
23
9
Negligent or Reckless Conduct
25
2
Morally Culpable Conduct and Public Policy
27
5
Standard on Expect/Intended Issue in Environmental Insurance Coverage Cases
32
7
Standard in Products Liability Cases
39
4
Cases in Which the Policyholder Is Held Liable for the Actions of Third Parties
43
Insurance Coverage for Punitive Damages Assessed Against a Policyholder
1
1
Introduction
3
3
Overview of the Issue of the Insurability of Punitive Damages
6
1
Choice-of-Law Considerations
7
4
Insurance Policy Construction Test
11
5
Public Policy Relating to Insurance Coverage for Punitive Damages
16
8
Availability of Insurance Coverage for Punitive Damages as a Matter of Public Policy
17
1
Reasonable Expectation of Coverage
17
2
Intenational Torts
19
1
Insurance Company Arguments That Coverage of Punitive Damages Violates Public Policy
20
1
The McNulty Rule
20
1
vicariously Assessed Punitive Damages
21
3
Jurisdictional Survey
24
The Number of Occurrences in Case Involving Continuous or Repeated Bodily Injury or Property Damage
1
1
Introduction
3
3
Policy Language and Drafting History
6
6
Insurance Industry Intent
9
3
Deductibles Issue
12
1
``Cause'' Test
12
20
Court Decisions Finding One Occurrence
13
5
Discrimination Claims
18
2
Child Molestation Cases
20
1
Fraudulent Acts
21
1
Products Liability Cases
22
5
Criticism of the Cause Test
27
1
Court Decisions Finding Multiple Occurrences
27
5
Number-of-Occurrences Test Focusing on the Liability-Triggering Event
32
4
Application of the Liability-Triggering Event Test
32
4
Case Law Using Similar Reasoning
36
1
``Unfortunate Events'' Test Applied by Some New York Courts
36
3
English Rule: Accident or Occurrence May Be Viewed from the Perspective of the Victim
39
3
Number of Occurrences in First-Party Insurance Cases
42
1
Number of Deductibles
43
Coverage for the Costs of Loss Mitigation
1
1
Introduction
3
2
Insurance Industry Documents Discussing Insurance Coverage for Costs Paid by a Policyholder to Mitigate Damages
5
4
Case Law Addressing Coverage for Loss Mitigation Costs Spent to Reduce the Amount of Damages
9
13
Globe: Bases for Coverage of Loss Mitigation Costs
9
2
The Hauenstein Doctrine
11
2
Equity and Policy Interpretation
13
2
Rejection of Equitable Considerations
15
4
Distinctions between ``Prophylactic'' Measures and Mitigation Costs
19
3
Case Law Addressing Coverage Costs to Replace Defective Products or Work
22
7
Asbestos-Related Property Damage
23
4
Refusal of Coverage
27
2
Case Law Addressing Loss Mitigation Costs in the Environmental Context
29
13
Response Costs versus ``Prophylactic'' Costs
30
5
New Jersey Law on Coverage for Cleanup of Groundwater
35
1
New Jersey Case Law
36
5
Trend in the New Jersey Courts
41
1
Refusal of Coverage
41
1
Case Law Addressing the Policyholder's Reasonable Expectation of Coverage for Loss Mitigation Costs
42
2
``Mitigation Clauses'' in General Liability Insurance Policies
44
6
Scope of Mitigation Clause
44
2
Absence of Mitigation Clause
46
1
Insurance Industry Drafting History of the ``Mitigation Clause''
47
3
Concluding Remarks
50
Bad Faith Regarding Conduct of Insurance Companies
1
1
Introduction
5
3
Insurance Companies' Duty of Good Faith and Fair Dealing
8
1
Breach-of-Contract Actions for Insurance Company Bad Faith
9
3
Tort Cause of Action for Bad Faith for Third-party Insurance Claims
12
4
Special Nature of Insurance Contracts
16
10
Insurance Companies' Fiduciary Duties to Policyholders
26
8
Tort Cause of Action for Bad Faith for First-Party Insurance Claims
34
11
Public Policy Considerations in Favor of the Bad-Faith Tort
35
1
Unequal Bargaining Power in Favor of the Insurance Company
36
8
The Minority Rule: Refusal to Recognize Tort in First-Party Context
44
1
Standards for Proving Bad Faith in a First-Party Action
45
5
``Negligence'' Standard
46
1
Hybrid Standard
46
2
``Evil Mind'' Standard
48
2
Weather a Finding of Coverage Under the Insurance Policy Is Necessary
50
3
Specific Types of Insurance Company ``Bad Faith''
53
17
Failure to Settle
53
4
Failure to Investigate
57
4
Other Examples of Bad-Faith Conduct by Insurance Companies
61
4
The Law of Contract
65
2
The Duty of Good Faith and Fair Dealing
67
1
The Reasonable Expectations Doctrine
68
2
Fraudulent Misrepresentation
70
1
Insurance Company's Continuing Duty of Good Faith During Litigation
70
6
Duty of Good Faith and Fair Dealing of a Primary Insurance Company to Excess and Umbrella Insurance Companies
76
4
Damages Available for Bad Faith
80
28
Extra-Contractual Damages
80
1
Recoverability of Attornys' Fees in Insurance Coverage Cases Generally
81
3
Recoverability of In-House Legal Costs
84
2
Pittsburgh Plate Glass and Its Progeny
86
2
Pitfalls to Policyholders' Recovery
88
2
Continental Casualty Co. v. Cole
90
1
Punitive Damages
91
1
Public Policy Issues
92
2
Evil Intent
94
1
Reasonableness of Failure to Pay
95
1
Other Standards
95
2
Failure to Investigate
97
1
Failure to Settle
97
1
Recovery of Consequential Damages
98
1
Standards for Recovery of Consequential Damages from Insurance Companies
99
8
Death-of-a-Company Damages
107
1
Types of Discovery Available in Bad-Faith Actions
108
4
Work-Product Doctrine
108
3
Attorney-Client Privilege
111
1
Statutory Bases for Insurance Company Liability for Bad Faith
112
Unfair Claims Practices Acts
113
2
Private Right of Action
115
1
General Business Practice Requirement
116
2
Remedies
118
1
Potential Preemption of Common-Law Cause of Action
118
1
Violation of Statue as Evidence of Bad Faith if Pleaded Through Another Statute
119
1
State Consumer Protection States
120
1
Private Right of Action Under State Consumer Protection Laws
121
1
No Cause of Action for Business Consumers
122
1
Cause of Action Available to Business Consumers
122
3
Deceptive and Unfair Acts or Practices
125
2
Statutes of Limitations
127
Estoppel and Alternative Causes of Action
1
1
Introduction
3
1
Estoppel and Related Theories
3
37
Judicial Estoppel
5
1
Preservation of Judicial Integrity
6
2
Application of Doctrine
8
3
Broad View of Doctrine: ``Success'' of Prior Statement Not Required
11
2
Narrower View of Doctrine: Prior Statement Must Have Been ``Successful''
13
1
Interpretation of ``Success''
14
1
Public Policy Arguments in Favor of the Broader View
15
2
Equitable Estoppel
17
1
Reasonable Expectations
18
7
Promissory Estoppel
25
1
Regulatory Estoppel
26
1
Morton and Related Cases
26
5
Roots of Regulatory Estoppel Doctrine in Patent Cases
31
1
Quasi-Estoppel
32
1
Elements of the Doctrine
32
2
Application of Doctrine
34
1
Mend-the-Hold Doctrine
35
3
Procedural or Substantive Rule
38
1
Comparison to Judicial Estoppel
39
1
Inconsistent Positions as Admissions Against Interest
39
1
Alternative Causes of Action
40
Breach-of-Implied-Warranty Theories
43
1
C&J Fertilizer
44
2
Other Case Law
46
1
Congressional View
47
1
Insurance Industry Representations
48
1
Expectation of Coverage
49
1
UCC Applicability
50
1
Conspiracy to Conceal Facts
51
2
Other Attempts
53
Issues Arising Under Umbrella and Excess Insurance Policies
1
1
Introduction
5
1
Structure of a Multilayer Insurance Program: Characteristics of Primary, Umbrella, and Excess Insurance
5
2
Primary Insurance Underlying Excess Layers
7
3
Distinctions Between Umbrella and Excess Insurance
10
10
Umbrella Insurance Coverage
11
1
Ultimate Net Loss
12
4
Limits of Liability
16
1
Other Features
17
1
Excess Insurance Coverage
18
2
Need to Examine Insurance Policy to Determine Whether It Is an Umbrella or an Excess Policy
20
1
Development of Umbrella and Excess Insurance
21
4
Characteristics of Umbrella and Excess Insurance Policy Forms: Follow-Form and Stand-Alone Insurance Policies
25
14
Use of Standard-Form Language in Umbrella and Excess Insurance Policy Forms
25
4
Follow-Form Provisions in Excess Insurance Policies
29
2
Clear Identification of Underlying Policy
31
3
Amendment or Deletion of Terms
34
4
Stand-Alone Excess Insurance Policy Forms
38
1
Exhaustion of Underlying Layers and Attachment Point of Umbrella and Excess Insurance Policies
39
10
Aggregate Limits
40
1
Ambiguous Provisions
40
4
Exceptions in Follow-Form Provisions
44
1
Issues of Potential Dispute Under Excess Insurance Policies Regarding Exhaustion of Underlying Coverage
45
4
Payment of Defense Costs by Umbrella and Excess Insurance Companies
49
23
Coverage for Defense Costs Under Umbrella and Excess Insurance Policy Forms
50
1
Limitation of Defense Obligations to Be Explicit
51
2
Defense Costs Within or in Addition to Limits of Liaility
53
1
``Assume Charge'' Clause
54
5
``Consent'' Provision
59
2
Follow-Form Provision
61
1
Assigning Defense Obligations to Primary and Excess Insurance Companies
61
3
When Duty to Pay Defense Costs Attaches
64
5
Equitable Allocation of Defense Costs
69
3
Resolving the Issues
72
1
Standard for Notice Under Umbrella and Excess Insurance Policy
72
1
Excess Insurance Company's Right to Sue for Failure to Settle an Action
73
7
Equitable Subrogation
74
2
Triangualr Reciprocity
76
4
Duties of an Excess Insurance Company When an Underlying Insurance Company Becomes Insolvent
80
12
Underwriting Cycles
82
2
Deregulation of Financial Services Industry
84
1
Increased Interest Rates
85
1
Increased Competition
85
1
Increase in Amounts of Liability Insurance Purchased
86
1
Cases Requiring an Excess Insurance Company to ``Drop Down'' in the Place of an Underlying Insolvent Policy
87
2
Cases Holding That an Umbrella or Excess Insurance Company Has No Duty to Drop Down in the Place of an Underlying Insolvent Insurance Company
89
1
Unambiguous Lack of Intent to Drop Down
89
2
No Duty to Drop Down Even When Language Is Ambiguous
91
1
``Other Insurance'' Clauses
92
12
Pro Rata Other Insurance Clause
93
1
Excess Other Insurance Clause
94
1
Escape Other Insurance Clause
95
1
Excess Other Insurance Clause versus Excess Insurance Policy
96
1
Legal Standards Applicable to Other Insurance Clauses
97
1
Not Applicable to Preclude Duty to Defend
97
3
Mutually Repugnant Other Insurance Clauses
100
1
Applicable Only to Other Concurrent Insurance
101
1
Applicable Only to Other ``Valid and Collectible'' Insurance
102
1
Practice Pointers
103
1
Noncumulation Clauses in Excess Insurance Policies
104
8
Cases Holding That Noncumulation Clauses Are Ambiguous and Should Be Given No Effect
106
2
Cases Giving Effect to a Noncumulation Clause
108
4
Justiciability of Claims Against Excess Insurance Companies
112
4
State Statutes Requiring Nonadmitted, Excess Insurance Companies to Post Pre-Answer Security
116
12
Model Act
118
1
Constitutionality of Bond-Posting Requirement
119
1
Minimal Contacts Requirement
120
1
Requirements for Policyholder
120
3
Foreign Insurance Companies in Liquidation Are Not Exempt from Bond Requirement
123
2
Narrowly Construed Exemptions to the Unauthorized Insurers Process Act
125
3
Equitas as Agent for Lloyd's Syndicates
128
The Run-Off Agreement
130
5
A Policyholder's Direct Right of Action Against Equitas
135
2
Case Law Upholding a Policyholder's Direct Action Against Equitas
137
2
Personal Jurisdiction over Equitas
139
Coverage for a Policyholder's Liability for its Products or Work
1
1
Introduction
5
1
History and Development of Products Liability Insurance Coverage
6
13
Background and Development of Coverage for Products Liability
7
1
History of Insurance
7
1
Products Liability Insurance
8
2
Early Revisions to the General Liability Insurance Policy Forms
10
2
Products Liability Coverage Under the 1966 Form
12
3
Products Liability Coverage Under the 1973 Form
15
1
1986 Revisions of the CGL Policy
16
3
Policy Provisions Providing Products Liability Coverage
19
1
Insurance Industry Analyses Confirming Coverage for Incorporation of Defective Products and Loss of Use
20
20
1973 Form
27
3
1986 Form
30
1
Use of Word ``Physical'' in 1973 Property Damage Definition
31
2
Two Prongs of Property Damage in the 1973 CGL Form
33
4
Coverage for Consequential Damages
37
1
Analysis of the Property Damage Definition by the Courts
37
3
Coverage for Property Damage due to Products Liability
40
25
Whether the Policyholder's Liability Is for Covered Property Damage
40
7
Denial of Coverage
47
3
Coverage for Economic Losses, Consequential Damages, and Diminution in Value
50
2
Diminution in Value
52
3
Diminution in Value as Property Damage Itself
55
1
Diminution in Value as Measure of Property Damage
56
1
Case Law Denying Coverage for Diminution in Value
57
1
Ambiguity in Policy
58
1
Coverage for Breach of Warranty
59
1
Case Law
60
4
Coverage for Repair and Removal Costs Paid by a Policyholder to Mitigate Damages
64
1
Incorporation Doctrine: Coverage for Liability due to Incorporation of an Allegedly Defective Product into the Property of Others
65
24
Incorporation Doctrine Under 1966 Form
67
3
Incorporation Doctrine Under 1973 Form
70
2
``Physical Contact'' Test
72
6
Application of Doctrine to Creation of New Products
78
2
Case Law Related to Coverage for Loss of Use
80
1
Lost Profits
81
1
Defective Components
82
2
Minority Position Rejecting Coverage for Loss of Use Under 1966 Form
84
1
Loss of Use and Consequential Damages Under 1973 Form
85
1
Pure Economic Loss
86
1
Business Investment Loss
87
1
Diminution in Value
87
2
Loss of Productivity
89
1
Products Liability Exclusions
89
35
``Own-Product'' and ``Own-Work'' Exclusions
91
1
Insurance Industry Analyses
92
2
Case Law Regarding Own-Product or -Work Exclusion
94
2
Removal of a Policyholder's Defective Product
96
1
Denial of Coverage
97
2
``Sistership'' Exclusion
99
2
Insurance Industry Analyses
101
3
Case Law
104
1
Asbestos-Related Property Damage
104
2
Actual Property Damage
106
1
Recall by Third Party
106
1
Classic Recall Case
106
1
``Loss-of-Use'' or ``Failure-to-Perform'' Exclusion
107
1
Insurance Industry Analyses
108
4
Case Law
112
1
``Design Defect'' or ``Business-Risk'' Exclusion
113
3
Active Malfunctioning Exception
116
2
Insurance Industry Analyses
118
6
The ``Impaired Property'' Exclusion
124
7
Application of ``Impaired Property'' Exclusion
126
1
Case Law Addressing the Exclusion
127
4
Use of ``Absolute'' or ``Total'' Polluter's Exclusions in Product Liability Claims
131
Insurance Industry Representations Limiting Polluter's Exclusions to Industrial Pollution
133
1
Insurance Industry Intent
133
3
Louisiana Department of Insurance Advisory Letter
136
3
Case Law Rejecting Use of the Pollution Exclusion to Preclude Insurance Coverage for Products Liability
139
1
``Absolute'' or ``Total'' Pollution Exclusions
140
6
The ``Sudden and Accidental'' Polluter's Exclusion
146
1
Case Law Applying Polluter's Exclusions to Preclude Coverage for Non-Industrial Pollution Claims
147
Insurance Coverage for Environmental Liability
1
1
Introduction
5
3
Heat and Rhetoric in Environmental Insurance Litigation
7
1
Coverage for Environmental Liability Under Pre-1970 General Liability Insurance Policies
8
4
The Scope of CERCLA and Parallel State Statutes
12
2
Damages
14
23
The Damages Issue Generally
14
2
History of the Term ``Damages'' in Standard-Form General Liability Insurance Policies
16
3
The Advent of CERCLA
19
2
Courts That Have Applied Rules of Interpretation to the Damages Issue
21
1
Ordinary Meaning
21
3
Technical or Legal Meaning
24
4
Ambiguity or Uncertainty
28
1
Reasonable Expectations of Insured
29
1
Broad Reading of Term
30
1
Damages in Equity or at Law
30
5
Whether Environmental Damage Satisfies the CGL Requirement of Property Damage
35
2
The ``Suit'' Issue
37
10
PRP Letters as Legal Proceedings Equivalent to a ``Suit''
37
1
Are Administrative Actions Equivalent to Actions at Law?
38
1
Non-Environmental Cases
38
2
Environmental Insurance Cases
40
4
Application of the Rules of Insurance Policy Interpretation to to ``Suit'' Issue
44
3
1970 Pollution Exclusion
47
49
Addition of the 1970 Pollution Exclusion to the Standard-Form Policy
47
1
Role of the 1970 Pollution Exclusion in Clarifying Existing Insurance Coverage for Environmental Liability
48
1
Regulatory History
48
5
Private Representation
53
1
History Regarding ``Intetional Polluters''
54
3
Post-1970 Insurance Company Admissions Regarding the Pollution Exclusion
57
3
Court Decisions Discussing the Regulatory History of the 1970 Pollution Exclusion
60
3
Application of Estoppel Principles Against Insurance Companies with Regard to Insurance Industry Representations Regarding the 1970 Pollution Exclusion
63
5
Decisions Focusing on the Phrase ``Sudden and Accidental''
68
1
Finding Coverage for Gradual Environmental Damage
68
8
Barring Insurance Coverage for Gradual Damage
76
3
What Constitutes a ``Release'' or ``Escape'' in Waste Disposal Cases
79
2
Proximate Cause Analysis
81
2
``Active Polluters''
83
2
Decisions Where Policyholder Is in Pollution Business
85
3
States in Which 1970 Pollution Exclusion Was Not Approved
88
1
The London Standard-Form Counterpart of the 1970 Pollution Exclusion
88
5
Estoppel Principles
93
3
Post-1985 Pollution Exclusions
96
37
Coverage Under Products and Complete Operations Provisions
100
6
Ambiguity in the Post-1985 Pollution Exclusions
106
2
Regulatory Findings on the Post-1985 Pollution Exclusions
108
1
Decisions Interpreting the Post-1985 Pollution Exclusion
109
5
Industrial Pollution Only?
114
1
Substances Other Than Industrial Pollutants
115
1
Asbestos
115
1
Carbon Monoxide
116
1
Insecticides
117
2
Lead Poisoning
119
1
Other Substances
120
5
Duty to Defend
125
3
States That Have Refused to Approve Use of a Pollution Exclusion
128
2
Vermont's Change in Position on the Pollution Exclusion
130
1
Validity of Pollution Exclusion in Vermont
131
2
The ``Expected/Intended'' Defense
133
1
Coverage for Cost to Mitigate Environmental Damage
134
1
The So-Called Known-Risk Doctrine
134
3
Owned-Property Exclusion
137
10
Decisions Holding That Owned-Property Exclusion Does Not Bar Insurance Coverage for Cleanup Costs
138
3
Future Damage or Injury
141
3
Groundwater
144
2
Decisions Applying Owned-Property Exclusion to Bar Insurance Coverage for Cleanup Costs
146
1
Coverage for Environmental Liability Under Personal Injury Provision
147
5
Limits of Liability
152
Limits of Liability Available for Claims of Environmental Liability: Lack of ``Aggregate''
152
1
Insurance Policy Provisions and Analyses Regarding Application of Aggregate Limits in General Liability Insurance Policies
153
6
Court Decisions Regarding the Application of Aggregate Limits in General Liability Insurance Policies
159
4
Existence of Single Occurrence
163
1
Completed Operations Hazard
164
2
Effect of Calculation of Policy Premium
166
Insurance Coverage for Business Torts and Employment Discrimination Claims
1
1
Introduction
5
4
Advertising Injury Coverage
9
6
Advertising Injury Policy Provisions
10
2
Insurance Industry Drafting Analyses of Advertising Injury Coverage
12
3
Threshold Issues for Advertising Injury Coverage
15
18
Advertising Activities
15
1
Definitions of ``Advertising''
15
1
Interpretations of ``Advertising''
16
6
Court Decisions Interpreting Advertising Activity Under Policy Exclusions
22
3
Solicitation Letters as Advertising Activity
25
4
Activity Involving the Selling of a Product
29
2
Causation
31
2
Misappropriation Claims
33
3
Infringement Claims
36
21
Infringement of Copyright, Title, or Slogan
36
7
Trademark and Trade Dress Infringement Claims
43
1
Threshold Issues in Trademark and Trade-Dress Infringement Issues
44
2
Trademark and Trade-Dress Infringement as a Covered Offense
46
4
Patent Infringement
50
7
Unfair Competition
57
16
Policy Provisions
57
1
Insurance Industry Analyses
57
3
Interpretations of ``Unfair Competition''
60
1
Overview
60
2
Bank of the West
62
2
Broad Interpretations of ``Unfair Competition''
64
5
Policy Exclusions
69
1
``Prior Publication'' Exclusion
69
2
``Knowledge'' Exclusion
71
2
Coverage Under Personal Injury Provisions
73
19
Coverage Under ``Group A'' Torts
76
1
False Arrest and False Imprisonment
76
2
Voting Rights Case
78
1
Sexual Harassment Claim
79
1
Malicious Prosecution
80
1
Antitrust Claim
81
1
Coverage Under ``Group B'' Torts
82
1
Right to Privacy
82
2
Defamation and Misrepresentation
84
1
Antitrust Action
84
2
Disparaging or Defamation Act
86
1
Sexual Harassment Claim
87
1
Defamation Claim
87
1
Patent Infringement Claim
88
1
Coverage Under ``Group C'' Torts: Scope of ``Right to Private Occupancy''
89
1
``Knowledge'' and ``Penal Statute'' Exclusions
90
2
Coverage for Employment Discrimination Claims
92
2
Coverage Issues Under the CGL Coverage Part
94
27
Coverage for Allegations of a ``Bodily Injury''
94
6
Coverage of an Insured ``Occurrence''
100
1
``Accident'' Provision
100
2
``Neither Expected nor Intended'' Provision
102
1
Majority Standard for ``Expected or Intended''
102
2
Minority Standard
104
2
Coverage for Claims of ``Disparate Treatment'' as Opposed to ``Disparate Impact''
106
1
``Disparate Impact'' Discrimination
107
1
``Disparate Treatment'' Discrimination
108
1
Public Policy
108
3
Vicarious Liability
111
1
Proof of Intent
112
1
Reasonable Expectations
112
3
Coverage for Claims of Disparate Impact
115
1
``Disparate Impact'' as an ``Occurrence''
115
3
Public Policy Arguments
118
2
Duty to Defend Both ``Disparate Treatment'' and ``Disparate Impact'' Discrimination Claims
120
1
Coverage Under the Personal Injury Coverage Part
121
3
``Personal Injury'' Policy Provisions
122
1
No ``Expected or Intended'' Defense to ``Personal Injury'' Coverage
123
1
The Employee Liability and Employment Practices Exclusions
124
2
Other Insurance Protection Against Claims of Employment Discrimination
126
Workers' Compensation Insurace
126
1
Employment Practice Liability Insurance
127
2
Emerging Coverage Issues
129
1
Definition of Claim
129
1
``Consent to Settle'' Clauses
130
1
Intentional or Malicious Acts Exclusions
131
1
Application Defenses
132
2
Choice of Forum and Choice of Law Provisions
134
1
Mandatory Arbitration Provisions
134
1
Coverage for Punitive Damages
135
Contractual Liability Exclusion and Contractual Liability Coverage
1
1
What Is ``Contractual Liability''?
3
2
1973 Contractual Liability Exclusion
5
5
Contractual Liability Coverage Under Endorsement to the 1973 Policy
10
2
Contractual Liability Coverage/Exclusion Under the 1986, 1988, 1993, and 1996 CGL Policies
12
3
Coverage of Indemnitor's Defense Obligations
15
4
Liability ``Assumed'' Other Than by Hold-Harmless Agreement
19
1
Contractual Liability Coverage May Circumvent Anti-Indemnity Statutes
20
Coverage for Cyberspace and Computer Liabilities
1
Introduction
5
1
Insurance and Risk Management Strategies for High-Tech Risks
5
2
Threshold Issues
5
1
Helping to Minimize the Risks
6
1
Potential Sources of High-Tech Liability and Loss
7
14
Intellectual Property
7
1
Copyright and Trademark Infringement
7
1
Domain Name Hijacking
8
1
Legal Issues Related to Insurace Coverage for Intellectual Property Infringement
9
2
Property Damage
11
1
Defective Hardware and Software
12
1
Privacy
13
2
Advertising Violations
15
1
Security Breaches
15
1
Publishing Risks
16
1
Copyright Violations
16
1
Privacy/Publicity Torts
16
1
Defamation
17
1
Employee Discrimination and Harassment
17
1
Unfair Trade Practices and Fraud
17
1
International Risks
18
1
Laws in Different Countries
18
2
Suits Against Foreign Citizens
20
1
Coverage of High-Tech Claims Under Traditional Insurance
21
12
CGL Insurance and Internet Liability
21
2
E&O Insurance
23
1
Advertising and Publishing Liability Insurance
24
1
Potential Issues Under Advertising Injury Coverage in CGL Insurance Policies
24
2
Disappearing CGL Coverage?
26
1
Directors' and Officers' (D&O) Liability Insurance
27
1
Employment Practices Liability Insurance (EPLI)
28
1
Inland Marine Insurance
29
1
Business-Interruption Insurance
29
2
Fidelity Insurance and Bonds
31
1
Electronic Funds Transfer (EFT) Insurance
32
1
New Cyberspace Insurance
33
4
Introduction
33
1
List of Insurers Offering New Cyberspace Policies
33
2
Multi-Company Products
35
2
Risk Management Strategies for Companies Engaged in E-Commerce
37
3
Threshold Issues in E-Commerce
37
1
Other Risks Along the Information Superhighway
38
1
Importance of Managing Technology-Related Risks
39
1
Coverage for Year 2000 Claims
40
24
D&O Insurance Coverage
41
1
``Wrongful Acts''
41
1
Defense Costs
42
1
Insurance Companies' Allocation Attempts
43
1
D&O Policy Exclusions
44
1
Errors & Omissions (E&O) Insurance Coverage
45
2
CGL Insurance Coverage
47
1
Property Insurance
48
2
Burden of Proof Under an All-Risk Property Insurance Policy
50
1
Fortuity
51
1
``Physical'' Loss or Damage
52
2
Property Policy Exclusions
54
1
``Design'' Exclusion
54
1
Faulty Workmanship Exclusion
54
1
Programming Errors Exclusion
55
1
Fiduciary Liability Insurance
55
1
Other Insurance Coverage
56
1
Year 2000 Exclusions
56
1
The Text of Year 2000 Exclusions
56
4
Approval
60
2
Regulatory Issues
62
2
Recommendations for Securing and Maximizing Insurance Coverage for High-Tech Losses and Liabilities
64
Give Notice Promptly
64
1
Breadth of Duty to Defend
65
1
Narrow Construction of Exclusions
65
1
Other People's Insurance Coverage
65
1
Resrvation-of-Rights Letters
66
1
Choice of Defense Counsel---Dual Representation
67
Appendix A Sample Forms
A-1
1
Table of Cases
TC-1
1
Index
Index-1