Insurance Claims And Issues

Disclaimer Letters and Catch-Alls: No Waiver? Prejudice?

     Disclaimer Letters usually end with a 'catch-all' sentence.  It follows a list of specific reasons why the Insurance Company has concluded there is no Coverage for a claim.  The catch-all sentence usually goes something like this:  'Nothing in this letter nor any investigation undertaken by or for the Insurance Company waives or is intended to waive any rights of any of the parties to the Insurance Policy.'  Ever wonder why Disclaimer Letters have that language, or if this language is any good to actually stand up against a claim of waiver because a provision in the Policy was not specifically mentioned in the Disclaimer Letter?

     In a recent decision, a Federal Court in New York has held that similar language in a Disclaimer Letter allowed a Business Owners Property Insurance Company to deny Coverage for a reason that the Insurance Company did not mention in its Disclaimer Letter.  Not only did the Insurance Company not mention the particular Policy provision in its Disclaimer Letter, but the applicability of the provision apparently came to light for the first time in the lawsuit that was filed by the Policyholders against the Insurance Company after it disclaimed all coverage.  Here is a link to the Official Report:  Dalton_v. Harleysville Worcester Insurance Co. (E.D.N.Y. Case No. 05.CV.2020, Opinion Filed July 23, 2007).pdf.  This decision is also accessible by subscription at 2007 WL 2120403.   A Notice of Appeal was filed on August 16, 2007 and an appeal is apparently still pending in this case.  Here is what happened in the Trial Court.

 

Liability Insurance Policies and Defense Under a Reservation of Rights.

    It is neither a breach of the Liability Insurance Contract nor Third Party Bad Faith, for the Liability Insurance Company to defend under a Reservation of Rights and also file a Declaratory Judgment Action, it was recently held in Download State_Auto_Property_Casualty_Insurance_Co. v. Stillwell Masonry Co. (M.D. Ala. Case No. 3.06.CV.435, Opinion Filed December 22, 2006).pdf.    Although that case involved "a Series I Contractor's Policy" and Alabama Insurance Law, it is consistent with the vast majority of decisions in jurisdictions across the United States under similar circumstances involving all types of Liability Insurance Policies which provide a duty to defend.
 

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.