Case Watch

Additional Insured

Evanston Insurance Co. v. Atofina Petrochemicals Inc., Texas Feb. 15, 2008.
Contract provision requiring that refinery “shall be named as additional insured” sufficient to trigger additional insured coverage for refinery’s negligence, despite contract provision prohibiting indemnification of refinery for its own negligence. A refinery entered into a service contract with a contractor. The contract required the contractor to indemnify the refinery for losses arising from the work, except for losses arising from the refinery’s negligence. It also required the contractor to obtain insurance to cover its indemnity obligations. The contract further stated that the refinery “shall be named as additional insured” under the contractor’s liability policy. The contractor’s liability insurer argued that the refinery was not entitled to insurance proceeds for its own negligence, given the limitation on contractual indemnification. The court held that the requirement that insurance be obtained to cover the contractor’s indemnity obligation may be limited by the exception for indemnification of the refinery for losses arising from the refinery’s negligence, but that the additional insured requirement was not limited by such exception.

Auto Liability

Barousse v. Western World Insurance Co., La.App., 3rd Cir. March 5, 2008.
Carrier may validly reduce the limits of coverage to $10,000 with respect to non-listed drivers. The policy contained an endorsement that dropped the otherwise applicable $100,000 policy limit to $10,000 with respect to drivers not specifically listed on the policy. The plaintiffs argued that the $10,000 limit violated La.R.S. §32:900(B)(2), a statute which prohibits an insured from excluding drivers under a commercial auto liability policy, unless the drivers are insured under another liability policy issued to the insured. The court concluded that the endorsement limiting coverage to $10,000 was valid, since the endorsement did not reduce the coverage below the statutorily required minimum limits of auto liability coverage.

Duty to Defend

Vansteen Marine Supply Inc. v. Twin City Fire Ins. Co., Texas App. 13th Dist. March 6, 2008.
Insurer has no obligation to fund the insured’s counter-claims against the plaintiff once the plaintiff’s claims against the insured are dismissed. The insured was granted summary judgment dismissing the plaintiff’s claims against it. As there were no longer any claims to defend the insured against, the insurer withdrew its defense. Subsequently, the insured sued the insurer arguing that the insurer had a continuing duty to fund the litigation. The court held that the insurer’s duty to defend terminated once all claims against the insured were dismissed.

Miscellaneous

Reed v. Louisiana Citizens Property Insurance Corp., La.App., 4th Cir., March 5, 2008.
Louisiana Citizens Property Ins. Corp. is not immune from penalties for failure to timely pay claim. La.R.S. §22:658 provides an insured claimant with the right to seek a penalty of 50 percent on the amount found to be due from an insurer that it fails to pay on a claim within 30 days after the insurer receives proof of claim. The lower court assessed the penalty against the Louisiana Citizens Property Ins. Corp. (LCPIC), an insurer which was created by the legislature. On appeal, LCPIC argued that it was immune from such penalty. The court held that LCPIC was subject to the penalty.

Brown & Brown of Texas Inc. v. Omni Metals Inc., Texas App., 1st Dist. March 20, 2008.
Non-party to insurance contract has no cause of action against insurer or its agent for negligent misrepresentation. The policyholder stored in its warehouse, and processed, steel belonging to Omni Metals Inc. The policyholder purchased an insurance policy from the insurer through the insurer’s agent. The policy contained an exclusion for the stored property of others. A fire occurred at the policyholder’s warehouse, and damaged Omni Metals Inc.’s steel. It was alleged that the insurer and/or its agent should be liable for the loss on the ground that the agent negligently misrepresented, via a certificate of insurance and oral statements, the existence of coverage for property of uninsured persons stored at the insured’s warehouse. The court held that Omni Metals Inc. could not recover from the insurer or its agent based on information outside of the insurance policy, since Omni Metals Inc. was not a party to the insurance contract.

The information for Case Watch is provided by the law firm of Goldberg Segalla LLP (www.goldbergsegalla.com). Editors are Richard J. Cohen, Daniel W. Gerber and Sarah J. Delaney.

Topics Carriers Texas Agencies Claims Louisiana Property Contractors