Insurance Update

March 11, 2019 | Robert Tugander | Insurance Coverage

Most people think of spiders as insects.  But my 4th grade teacher taught us otherwise.  Insects have a head, thorax, and abdomen.  And six legs.  Spiders have two body parts (the head and thorax are combined) and have 8 legs.  They belong to a species known as arachnids.

So what does this have to do with insurance?  Well, this issue was central to a federal judge’s analysis in considering whether a homeowner’s claim was covered.  A colony of brown recluse spiders took up residence in a house. The policy excluded damage caused by “insects.”  In applying the exclusion, should the court go with the common understanding of spiders as insects, or the scientific distinction?  This presented an interesting question of policy interpretation.  The exclusion actually applied to “birds, vermin, rodents, or insects.”  Were spiders in this same class of vandals?  The answer is in our March Insurance Update.

If bugs are not your thing, perhaps late notice is.  We have a trilogy of late notice cases in this month’s update.  One in the first-party context (damage repaired before insurer was notified), one in the third-party context (the insured gave notice of claim but not notice of suit), and one in the ERISA context.  ERISA?  That’s right, the court had to decide if the state common law prejudice rule applied to an ERISA claim.

We discuss one state supreme court opinion this month.  It’s from the Wisconsin Supreme Court and deals with advertising injury.  Those familiar with this coverage know that the harmful offense must occur in the insured’s advertisement.  There must be a causal connection between the injury and the advertising.  The court addressed this issue in the context of the duty to defend, but even so, it loosely applied this causal connection requirement.

Our update also includes a case providing a lesson on reservation of rights letters, a case deciding whether the pollution exclusion applies to a “welder’s lung” claim, and a case interpreting an exclusion for the insured’s intentional conduct.

Click here to read the Update.

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