We touch upon several issues in this month’s update.
Negligent breach of contract: Courts recognize that a CGL policy does not cover breach of contract claims. But where the insured is accused of negligently performing its obligations, courts are divided over whether that claim qualifies for coverage. The answer depends on whether there is an independent basis for tort liability, and that often implicates the economic loss rule.
Last month, the Oregon Supreme Court considered whether a faulty workmanship claim is covered where the claimant only sued for breach of contract. And the Colorado Supreme Court considered whether alleged willful non-performance creates an exception to the economic loss rule. Claim: Over the past few months, we’ve written about what constitutes a “claim” under a claims-made policy. This month, we add a twist. Plaintiff’s counsel suggested that an insurer acted in bad faith by not accepting its settlement demand against the insured. Does that qualify as a “claim” under the insurer’s own E&O policy?
Employer’s Liability: Owner controlled insurance programs are often used at jobsites. But as Exxon found out, providing workers’ comp coverage to its contractor’s employees impaired Exxon’s ability to collect as an additional insured under its contractors’ CGL policy.
Pollution: Indiana stands alone in its interpretation of the absolute pollution exclusion. Unless the contaminating substance is specifically listed in the exclusion, it finds the exclusion to be ambiguous. A federal district judge in New Mexico adopted Indiana’s approach, but did it withstand Tenth Circuit scrutiny?
Care, Custody, and Control: This exclusion may be common to liability policies, but the Ninth Circuit had to decide whether it applied to an uncommon set of facts involving a law firm, its plane, its files, and a shared hangar.
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