Recently, resolving an insurance-coverage dispute, the U.S. Court of Appeals for the Third Circuit held that “for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract.”  The court’s precedential ruling in Indian Harbor Insurance Co. v. F&M Equipment, Ltd., No.14-1897 (Oct.15, 2015), which is likely to have effects outside of the insurance-coverage context as well, means at the very least that when an insurance company promises to offer its insured a “renewal,” it cannot simply offer a subsequent insurance policy with new terms, even if the insurer provides the policyholder notice of the changes.

In a recent client alert, members of Reed Smith’s Insurance Recovery Group discuss the Third Circuit ruling and its implications for policyholders and insurers both.