Q&A of the Week |
Personal and Advertising Injury Liability Question
A Florida subscriber recently asked the following question:
Our insured hired a construction company to construct a building. They agreed upon the specific price that should be paid as soon as the building was finished. The insured made a partial payment, and refused to pay the full amount, arguing that there were some construction defects.
As a result, the insured was sued by the construction company, in order to collect the outstanding balance, plus late charges and interest. A second allegation made against the insured is that the construction company has been known in the industry for the quality of its work and for its responsibility, and the actions of the insured affected the reputation and image of the company with suppliers and other third parties, and as a result, the construction company earnings have diminished dramatically.
Our insured carries a general liability policy (CG 00 01 12 07). The insurance company believes that under the insured's policy, there is no obligation to offer defense under this suit. The insurer argues that there is no coverage for the claim, because this is a matter of a debt collection, not a bodily injury or property damage claim. The insured argues that the second allegation triggers the company's obligation to offer defense under this suit since this could be covered under the personal injury section of the general liability policy.
What is your opinion about this issue?
ANSWER: The insured may have a point. The CGL form applies to personal and advertising injury which is defined as oral or written publication in any manner of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services. So, the question is whether the insured publicized its disputes with the construction company and in doing so, disparaged the company's services. You need some more facts to see exactly what the insured did or did not do. Publication of the material would mean informing the general public of the disparagement. If the insured is simply not paying the balance and fighting a lawsuit over that, we do not see the insured publicizing its criticism of the company to the general public so the definition of personal and advertising injury is not being met. But, you need to know exactly what the insured did or did not do in this instance to be sure about the CGL coverage or lack of it. Until there is some clarification on this point, the insurer would be wise to offer a defense accompanied by a reservation of rights letter to the insured.Read More |
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What's New This Week in FC&S |
Types of Fraud
There are many different types of fraud, and hard and soft fraud are larger categories that contain many more specific types of fraud. Read More |
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Litigation Watch |
MCS-90 Endorsement Coverage
A damaged truck's owner petitioned for equitable garnishment against a semi owner's insurer, pursuant to the Motor Carrier Act of 1980 (MCS-90) endorsement to collect a default judgment. This case is Tri-National v. Yelder, 781 F.3d 408 (2015).
While operating a semi-tractor and trailer, Yelder collided with a Tri-National truck, causing extensive property damage. Tri-National filed a claim with its insurer, Harco Insurance Company. The insurer paid Tri-National $91,100 and retained a subrogation interest in the claim. However, Harco agreed not to file against Canal but did allow Tri-National to pursue the subrogation claim.
At the time of the accident, Yelder was insured with Canal Insurance Company; the policy included an MCS-90 endorsement. Canal sought a declaratory judgment that, among other things, the MCS-90 endorsement did not require Canal to satisfy a subrogation claim. The U.S. District Court decided that the MCS-90 endorsement obligated Canal to reimburse Tri-National for its losses. Canal appealed. Read More
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