Archives: Construction Insurance

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AIG Must Defend Additional Insureds

That it took an appellate court to order AIG’s Lexington Insurance to honor its additional insured obligations is a measure of how frequently insurers attempt to dodge this important contractual obligation. The case of McMillin Management Services v. Financial Pacific Insurance, et al., in the Fourth District of the California Court of Appeal, was decided … Continue Reading

Mind the Details: Make Sure your WRAP Coverage is Done Right

A client recently asked for advice about insuring their development project with a wrap insurance policy.  As we talked through the pros and cons, I was reminded of the intricacies of wrap insurance products.  Undoubtedly, wrap insurance is a critical risk mitigation tool for many developers, owners, and general contractors of construction projects.  These policies, … Continue Reading

Policyholders Must Be Vigilant for Construction Defect Exclusions, Including For Impaired Property to Combat Insurance Companies’ Drastic Measures (and Big Money)

Continuing the most recent trend in coverage litigation, insurance companies are increasingly engaging “Big Law” firms to develop legal arguments for narrower interpretation of their policies when troublesome claims threaten the bottom line.  A prime example can be found in a recent lawsuit, Regional Steel Corp. v. Liberty Surplus Insurance Corp., in which Sheppard Mullin scored another … Continue Reading

When Is a Construction Defect a Mere Business Risk and Not Insurable?

In an unpublished appellate decision from the state of Washington, on May 5, 2014, the Washington Court of Appeals affirmed a summary judgment in favor of a CGL insurer, Western National Assurance, relieving it of any obligation to defend the contractor insured, Shelcon Construction against a construction defect claim. This is the latest in a … Continue Reading

Mid-Year ICLC Report: Coverage Litigation Hot Topics

As I have done for the last twenty years, I attended the Mid-Year meeting of the Insurance Coverage Litigation Committee of the Tort and Insurance Practice Section of the American Bar Association held in Phoenix, Arizona.  The three days of seminars were intense and covered a wide range of topics, including: Coverage issues arising under … Continue Reading

Cumis, and Some Refinements on the Insurer’s Duty to Defend

California has been the leader in recognizing an insured’s right to control the defense of its case where the insurer reserves its coverage rights and the outcome of the case could determine whether the coverage applies.  This is called the Cumis rule, after a 1984 case, and has since been codified as Civil Code section … Continue Reading

Insurer’s Demand is Enforced Despite Being Unreasonable

Something is seriously wrong with this case. Where an insurer defends a claim under a reservation of rights, it may put its insured on the spot by putting this choice to him:  The insurer proposes to fund a settlement (within policy limits) with the third party claimant, but gives the policyholder notice of that claim … Continue Reading