SDV Insights

Tennessee's Supreme Court recently held that an insurer may not withhold repair labor costs as depreciation when the policy definition of actual cash value is found to be ambiguous. Tennessee joins other states like California and Vermont that prohibit the depreciation of repair labor costs in property policies.

In recent years, the foundations of approximately 35,000 homes in northeastern Connecticut have begun to deteriorate as a result of faulty concrete used to build homes during the 1980s and 1990s. Dozens of homeowners have been suing their insurers for denying coverage for claims based on the deteriorating foundations. Of those cases, three related lawsuits against Allstate Insurance Company were the first to make it to the federal appellate level.

The Southern District of California recently held that a series of demands for a general contractor to investigate and repair several construction defects at a U.S. Army facility did not constitute a "suit" within the meaning of the general contractor's commercial general liability ("CGL") policy.

The recent white paper on Repair Work Endorsements by Jeremiah Welch, drew a storm of responses. Most were appreciative and included follow up questions, but there were those that lamented along the lines of: "How can that be? We've been doing it this way for years...".

The Florida Supreme Court's decision in GEICO General Insurance Co. v. Harvey1 held an insurer accountable for bad faith as a result of actions which were not malicious in nature, but rather consisted of self-serving inaction. The court's decision ushers in an era of closer scrutiny on the actions of insurers and may pave the way for a lower standard for proving bad faith.

Wisconsin's Supreme Court recently held that even where a complaint generally alleges a company acted wrongfully and with intent to defraud, a single potentially covered claim still triggers the duty to defend. The case is yet another in a long line of state high court decisions finding that the duty to defend is exceedingly broad and applies where there is a single potentially covered claim.

Many markets which provide insurance for construction projects include an endorsement providing coverage for "repair work" as part of their standard policy. "Repair work" endorsements are largely misunderstood by policyholders and the insurance broker community.

In a lawsuit arising out of a traffic accident, the Nevada Supreme Court departed from the majority view among jurisdictions that an insurer's liability is generally capped at its policy limits. In Century Surety Co. v. Andrew, the Court held that a commercial liability insurer could be liable for damages in excess of the policy limits for failing to defend its insured, even if the insurer acted in good faith.

The Fifth Circuit ruled that settlements between an insured and its subcontractors qualified as "other insurance" to the extent those settlements were used to pay for damages covered by an excess insurance policy. Policyholders should note the outcome of this case as it demonstrates the significant impact that settlements can have on coverage.

As all insurance coverage attorneys know, how courts interpret certain words and phrases in insurance policies is significant since one word can make the difference between a claim being covered ...