Professional
Liability - Conduct Exclusion
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SEC Administrative Order Does Not Establish Insured's
Guilt Under Dishonest Acts Exclusion
J.P. Morgan Sec. Inc. Vigilant Ins. Co., 2014 N.Y. Misc.
LEXIS 796 (N.Y. Sup. . Feb. 28, 2014)
The court finds that an SEC Administrative Order entered after a
settlement does not implicate the policy's Dishonest Acts Exclusion as the
settlement was not a final adjudication or judgment that establishes
insured's guilt.
The insured sought coverage under professional liability
policies in connection with a settlement that was reached with the SEC
relating to alleged violations of federal securities law. The insured
brought the present declaratory judgment action following the insurer's
denial of coverage on the grounds that the loss included payments
are not insurable as a matter of law and were otherwise barred by the
Dishonest Acts Exclusion. The insured argued the that the Dishonest
Acts Exclusion did not apply because the Administrative Orders were
settlements, not judgments or other final adjudications of the underlying
claims, and therefore did not establish the insured's guilt as required for
the exclusion to apply. In response, the insurers argued that the
exclusion does not require a finding of guilt from an actual trial since
"the Administrative Orders constitute final adjudications of [the
insured's] dishonest conduct.
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Property Coverage - Contractual Suit Limitation
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New York's Highest Court Recognizes
Contractual Suit Limitations are Generally Enforceable, but Finds Application
Unreasonable Where Policy also Required Policyholder to Replace Damaged
Property, and Reasonable Replacement Time Exceeded Suit Limitation Period
Executive Plaza, LLC v. Peerless Ins. Co., 2014 N.Y. LEXIS 165
(N.Y. Feb. 13, 2014)
The New York Court of Appeals ruled that a suit
limitation provision that required the policyholder to replace the damaged
property within two years was unreasonable and unenforceable where the damaged
property could not reasonably be replaced within the policy suit limitation
period.
The insured owned a commercial property that was severely
damaged by fire. The policy provided a choice between the payment of
the "actual cash value" or "replacement cost." The
policy provided the insured "will not pay on a replacement cost basis
for any loss or damage: '(i) Until the lost or damaged property is actually
repaired or replaced; and '(ii) Unless the repairs or replacement are made as
soon as reasonably possible after the loss or damage." The
limitation provision stated "No one may bring a legal action against us
under this insurance unless: . . . : b. The action is brought within 2 years
after the date on which the direct physical loss or damage occurred."
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Property
Coverage - Reasonable Expectations
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Court Upholds Insurer's Declination of Coverage for Loss Caused
by Discharge Occurring Off the "Described Location"; Rejects
Policyholder's Argument that Undefined Term Frustrated Reasonable Expectation
of Coverage for Water Damage to Condo Unit
v. Harleysville Ins. Co., 2014 N.J.
Super. . LEXIS 385 (App. . Feb. 27, 2014)
The New Jersey Appellate Division upheld an insurer's
declination of coverage despite the policyholder's argument that the
undefined term "Described Location" was ambiguous as applied to the
condominium complex where the loss occurred. The policyholder owned a
single unit in an 800-unit condominium complex. The policyholder's unit
sustained $60,000 in damages when water leaked into it from a neighboring
unit. The policyholder sought coverage under a "perils insured
against" policy which covered specified damage for the property. According
to the policy, coverage did not include loss caused by accidental discharge
or overflow that occurred off the "Described Location," but the
policy did not define this term.
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Coverage
Modification - Required Notice
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Deleting Vehicle from Coverage Not Equivalent to a Policy
Cancellation
Russo v. Chubb Ins. Co. N.J., 2014 N.J. Super. . LEXIS 763 (App. . Apr. 4, 2014)
A formerly insured vehicle was dropped from an insurance policy.
The insured was subsequently involved in an accident and, in response to the
insurer's refusal to cover the insured's damages, argued the insurer had not
given proper cancellation notice. The Appellate Division found no such notice
was required because the policy had not been canceled -- its terms had
instead been modified.
The insured was involved in a traffic accident while driving a
vehicle leased by her employer. She sought coverage under the vehicle's
business motor vehicle policy. The insurer responded that the vehicle had not
been insured at the time of the accident. It relied on the insured's failure
to satisfy a condition precedent under the policy: transmit documents to the
insurer proving the vehicle's status as a leased company car.
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Estoppel
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Insurer Not Estopped from Recovering PIP Benefits Paid to
Another Insurer
v. Smith, 2014 N.J. Super. . LEXIS 805 (App. . Apr. 10, 2014)
An insurer sought, after a year-long delay, to claw back PIP
benefit payments it had made to another insurer. The Appellate Division found
reimbursement was appropriate. The paying insurer had not been estopped from
requesting repayment because the insurer seeking estoppel had suffered no
harm or prejudice.
An individual was involved in a traffic accident while operating
his employer's company car. The employer obtained a judgment finding the
employee had not been operating the vehicle within the scope of his
professional duties. That ruling was based on findings that the
accident.
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Homeowners
Warranty - Arbitration Clause
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Arbitration
Not Clearly
Mandated by Policy
v. Quality Builders Warranty Corp.,
2014 N.J. Super. . LEXIS 517 (App. . Mar. 13, 2014)
Insured homeowners sought coverage under a homeowner's warranty
agreement for defects in their home that were reported to the insurer in the
eighth year of coverage. The insurer argued the policy required that the
dispute be submitted to arbitration. The Appellate Division rejected this
contention, finding that the policy's arbitration provision related only to
claims made within the first two years of coverage.
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