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In the world of insurance coverage litigation, insurance companies like to accuse policyholders of attempting to expand coverage terms, or limit the scope of exclusions, beyond the language’s plain meaning. “The policy means what it says,” is a common refrain insurers use to justify coverage denials. However, a recent decision by the federal Fourth Circuit Court of Appeals, Capital City Real Estate, LLC v. Certain Underwriters at Lloyd’s, London, No. 14-1239 (June 10, 2015), demonstrates that insurers are at least as likely as policyholders to try to make policy language say what they wish it said, rather than what it actually says. The court does an admirable job of applying the straightforward language of an additional insured endorsement that has given some other courts trouble, and demonstrates that oftentimes the best approach is simply to hold insurers to the plain meaning of the language that they drafted.

The facts of Capital City are simple. Capital City Real Estate, LLC (“Capital City”) was a real estate company operating as the general contractor for the renovation of a building in Washington, D.C. The building was owned by 57 Bryant Street, NW LP and Bryant St., LLC (together “Bryant Street”). Capital City subcontracted work on the foundation, structural and underpinning work to Marquez Brick Work, Inc. (“Marquez”). The subcontract required Marquez to indemnify Capital City for damages caused by Marquez’s work and further required Marquez to obtain general liability insurance that named Capital City as an additional insured. Marquez duly obtained a general liability policy from Certain Underwriters at Lloyd’s, London (“the Underwriters”). The policy contained a standard additional insured endorsement that insured Capital City:

but only with respect to liability for … “property damage” … caused in whole or in part by:

  1. the Named Insured’s acts or omissions; or
  2. the acts or omissions of those acting on the Named Insured’s behalf

in the performance of the Named Insured’s ongoing operations for [Capital City].Continue Reading It Means What It Says: Federal Court of Appeals Rejects Insurer Attempt to Read Limitations Into Additional Insured Endorsement

Courts commonly observe that the purpose of Business Interruption or Business Income insurance is to put the policyholder in the same position it would have been in had there been no interruption. The Business Interruption inquiry is, thus, counterfactual. As such, for Business Interruption claims that go to trial, insurance companies and policyholders alike usually…

A hypothetical: The roof of a parking garage that is part of a condominium development partially collapses, destroying landscaping over the collapsed section of the roof and the floors underneath the collapsed section. The roof had been fully installed and the parking garage was being used at the time of the collapse, but work continued on the landscaping and the condominium units. The cause of the collapse is traced to roof beams not strong enough to withstand the load of the landscaping. The design of the parking garage called for weaker roof beams. The roof beams cannot be replaced, and consequently the landscaping over the rest of the roof must be removed and replaced with lighter materials to prevent further collapses.

This hypothetical, which is not an outlandish scenario in the construction business, raises a myriad of coverage issues under several different types of policies, including first party property, builder’s risk, general liability and professional liability policies. The attorneys in Reed Smith’s Insurance Recovery Group have extensive experience advising policyholders and engaging in litigation regarding these types of coverage issues.Continue Reading Coverage For Construction Defects

On June 17, 2009, the Department of the Treasury released its “white paper” detailing proposals for comprehensive reform of financial industry regulation, entitled “Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation.” The entire report can be found here. Among the reforms advocated by the Treasury Department is the creation of an Office of National Insurance within the Department. Treasury, which would “gather information, develop expertise, negotiate international agreements, and coordinate policy in the insurance sector.”
Continue Reading What Obama’s Proposed Financial Regulatory Reforms Mean for Insurance — The New Office of National Insurance

Recent severe storms in the Midwest and Great Plains have caused extensive flooding in several states, with levees and dams breached, roads and interstates washed out or impassible, and cities and towns under water. Corn and other crops have been damaged and destroyed, pushing prices to record highs on commodities exchanges. Power has been lost…