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August 25, 2016  

 
 Q&A of the Week
Defense Costs for an Indemnitee

An Indiana subscriber recently asked the following question:

How does the CGL form apply when it comes to extending defense cost coverage to indemnitees, that is, those entities whose liability has been assumed by the insured under an insured contract?


ANSWER: The current CGL form states that "reasonable attorneys' fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages". This answers the question about defense cost coverage in the affirmative since the word "damages" is the key word. The exception to the contractual liability exclusion in the CGL form states that the exclusion does not apply to liability for damages assumed under an insured contract; therefore, if the defense costs for the entity other than the insured are damages, the CGL form will cover them.

Note that there are some conditions to be met before the defense costs are deemed to be damages, namely, liability for the defense costs has to be assumed in the insured contract and the defense costs have to be for defense against alleged damages that are covered by the insured's policy. And, note that one would have to look to the supplementary payments section of the CGL form to see whether these defense costs for the indemnitee are included within the limits of insurance. In the supplementary payments section, the insurer declares that payments for attorneys' fees and litigation expenses for a party other than an insured will not reduce the limits of insurance provided that the enumerated conditions are met.
 Read More
 
 What's New This Week in FC&S
Tobacco Sales Warehouses Coverage Form

The Tobacco Sales Warehouses Coverage Form, CP 00 80 10 12, covers direct physical loss or damage to tobacco in sales warehouses. Read More
 
 Litigation Watch
Uninsured Motorists Coverage and Use of an Auto

The estate of Yong Suk Chong sues National Continental Insurance Company seeking compensation from an automobile insurance policy's uninsured motorists coverage (UM). This case is Chong v. National Continental Insurance Company, 2016 WL 3014613.

Chong and Yun Yi were domestic partners living in Alaska where Yi owned and operated a taxi business, with Chong employed as a cab driver. In January 2012, Motgin called for a cab and Chong responded. Motgin wanted to go to Napakiak, but the only way to get there by auto was on the frozen Kuskokwim River, which required a permit. Chong did not have such a permit and told Motgin she could not drive him to Napakiak. Motgin was angered by this refusal and he pulled a knife on Chong and cut her. Motgin then proceeded to push Chong out of the driver's seat and shove her in the back seat of the cab. Motgin then drove off. In February 2012, the taxi was found in Napakiak and Chong's dead body was found in the backseat of the cab.
 Read More
 
 Fraud of the Week
Fraudulent Life Insurance and Death Benefit Claims – New Jersey
AMOUNT: $2,157


A Mercer County insurance agent has been charged with knowingly submitting fraudulent life insurance applications and death benefit claims for applicants who did not meet U.S. residency requirements along with other policy conditions. Read More
 
   
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here.
 
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FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@alm.com, to set one up! They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer.
 
 Contact Us
As always, your comments and questions are welcome.

Contact us at:
FC&S Department
Phone: 800-543-0874
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The Zalma Insurance Claims Library
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Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
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FC&S Team
Kelly Maheu, J.D.
Publisher
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
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David D. Thamann, J.D., CPCU, ARM
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  Emily Brunner
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  Tosha Brinkman
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Barry Zalma, Esq., CFE
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  Donna Cozatchy
Creative Director
Hannah Smith, J.D.
Staff Writer
 
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