What Board Members Need To Know...

Insurance Companies Hate to Cover You

Its easy to issue your association insurance like D&O insurance, general liability, etc. and to collect your premiums, but when called upon to cover you, watch out.  Insurance companies all over the country and globe try to find ways not to cover you and to leave you on you own.  If that happens, you, as a board member, may be on your own to defend yourself.  Sure, they’ll tell you that your association may be required to defend you, but try to get a board to decide to do that.  Imagine paying to hire lawyers for each board member.

Insurance companies try to avoid coverage all the time.  I’ve taken the time to amass different examples from around the country to demonstrate this point.  Hopefully you’ll realize that when you become a board member, just relying upon insurance to cover you is a huge mistake.

Suing Your Insurance Company for Coverage Can Be Very Expensive

Just ask homeowners in New Jersey who had to sue Selective Insurance Co. of America for breach of contract accusing the company of failing to pay benefits owed under flood insurance policies for water damage.  The legal fees are extraordinary and the premium increase is going to be incredible; assuming anyone will be willing to insure them again.

Insurers Suing Each Other To Figure Out Defense Obligations Hurts Community Associations

There have been a lot of lawsuits between insurance companies over which has primary defense obligations when insureds like community associations file insurance claims. It goes something like this.  Board gets sued and looks to its D&O or General Liability insurance carriers (assuming it has insurance) to defend it in the lawsuit.  The D&O carrier looks to the GL carrier or visa-a-versa and neither steps up to the plate.  They sue each other and the community association has to defend itself until the company steps up or a court decides.  This can happen to you and the court decisions in Connecticut, Texas and other places is making it easier for insurers to do this and making insurance very uncertain.

Insurance Company Doesn’t want to Cover Apartment Defect Suit

Crum & Forster Specialty Insurance Co. is trying to tie up a $55 million South Carolina lawsuit over a defect-ridden apartment conversion project arguing that a Texas suit with same types of damage should go forward.  What about the damaged insured parties.  Insurers just don’t care.

Insurers Just  Don’t want to Cover Claims

The NY federal appeal court stuck it to two insurers suing to avoid coverage of two railroad companies liable for damaged freight from an April 2006 train derailment in Texas, finding the railroads are entitled to pass liability on to their insurers.

You Can’t Sue Your Insurance Company if they are Negligent

The Vermont Supreme Court decided that insurance policyholders generally can’t pursue negligence actions against insurers based on an independent duty of care, tossing negligence and bad faith claims against Patriot Insurance Co. in a property damage coverage fight.

National Insurance Company Keeps Fighting Not to Cover and Defend Under Insurance Policy

Two insurers must still fight their coverage dispute with National Fire & Marine Insurance Co. over  defense costs in construction defect litigation stemming from a project developed by Centex Homes.  The Courts all over the country are filled with lawsuits by and against insurance companies claiming not to have to cover their insureds under policies; some of which cost a lot in premiums.

Nature Documentary Maker Sues Insurer for Coverage Denial

Documentary producer MacGillivray Freeman Films Inc. slapped OneBeacon Insurance Co. with a lawsuit , alleging the insurer is attempting to weasel its way out of its insurance policy.

Insurers Want Court to Order Personal Injury Claims Not Covered

Insurers Liberty Mutual Group and AIG have asked a Texas appeals court to reverse a $4 million judgment Exxon Mobil Corp. obtained against the insurers to cover personal injury claims.

Liberty Mutual Fights Not to Defend Homeowner Property Damage Claims

Liberty Mutual battled in the Arizona federal court not to have to defend Del Webb Corp. against 900 Arizona homeowners who blame the builder for property damage. After a ton of legal fees spent by all, the insurer lost.

Insured Claims Zurich Insurance Company is Dishonest

Pipe manufacturer Shaw Group Inc. charges Zurich American Insurance Co.with a pattern of “dishonesty,” while urging a Louisiana federal court to reject the insurer’s efforts to defeat a bad faith claim in coverage litigation.

Bad Faith Claim Against National Union Insurance Company Proceeds

A New York federal judge decided National Union Fire Insurance Co. of Pittsburgh, Pa. can’t dodge a bad-faith claim brought by MGA Entertainment Inc. over reimbursement of attorneys’ fees.

Insurers Sue Insurers While Insured Stuck in Condo Defect Lawsuit

An Oregon federal court decided against AIG aka Chartis Speciality Insurance Company holding that Chartis can’t pin a $3.5 million underlying settlement on the other insurer in a condominium construction defect case.   

Insurers Fight NJ City Hall Not to Cover Under Policy

The city of New Brunswick and its municipal insurance fund have sued Star Insurance Co. in New Jersey for breach of contract, saying the insurer refuses to pay for the defense and settlement.

Amtrak has to Sue Nearly 24 Insurance Companies for Coverage

Amtrak sued nearly two dozen insurers in District of Columbia seeking coverage for claims over its environmental cleanup obligations and liability for exposing individuals to asbestos and other health hazards, just three days after a group of insurers sued Amtrak to avoid coverage.

Colony Insurance Company Settles Huge Coverage Lawsuit

Colony Insurance Co. has resolved an Illinois coverage fight over an $11 million lawsuit against Electro Power Systems of Utah Inc.

National Union Insurance Company Gets out of Coverage

National Union Fire Insurance Co. sued in Washington state court to avoid covering Redbox in two proposed class actions against the movie rental company.  Redbox is on its own.

Insured Stuck Paying Deductible in Settlement Required by Insurance Company

Stryker Corp. must pay a $2 million deductible payment in a settlement by its insurer XL Insurance America Inc. of tort claims against Stryker.  So much for insurance.

August 2014

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