December 26, 2013

Beazley Strengthens Environmental Liability Underwriting Capabilities

Source:, December 19, 2013

Beazley’s environmental liability team is expanding with the recruitment of two senior underwriters, Dana Hughes and Gregory Dunn. Ms Hughes and Mr Dunn will both be based in Beazley’s Philadelphia office.

Ms Hughes joined Beazley in August 2005 and currently underwrites for the company’s Architects & Engineers (A &E) team. In her new role she will be expanding her focus to include professional liability and contractors’ pollution liability for environmental consultants and contractors. A former geologist and environmental consultant, she brings strong technical expertise to the team.

Mr Dunn was previously vice-president/regional manager at XL Insurance. He has a degree in geology, over five years of environmental consulting experience and more than a decade of underwriting experience in fixed site and contractors’ pollution liability across a broad range of risk categories.

“I am delighted that Dana and Greg have joined our team,” said Jayne Cunningham, environmental liability focus group leader. “With his technical underwriting background and ample business development experience, Greg will fit right in with our disciplined underwriting approach.”

“Dana has been a tremendous asset to Beazley’s A &E team. Her expertise and extensive experience in general and environmental underwriting will be extremely valuable to us as we continue to expand our portfolio.”


December 20, 2013

Insured May Settle Claim Before Suit if Insurer Wrongfully Denies Coverage

Source:, December 18, 2013
By: Jill Berkeley, Neal, Gerber & Eisenberg LLP

In Selective Ins. Co. v. Cherrytree Cos., 2013 IL App (3) 120959, the Illinois Appellate Court for the Third District drove the final nail in the insurer’s “if there is no duty to defend, there is no duty to indemnify” coffin. Holding that an insured had the right to settle a claim for defective construction after the insurer wrongfully denied coverage, the court reaffirmed its previous ruling that Zurich Ins. Co. v. Carus Corp., 293 Ill. App. 3d 906 (1997) misstated and misconstrued the law when it held that “when there is no duty to defend, there will be no duty to indemnify.” The court explicitly ruled that a standard general liability policy does not require the filing of a “suit” before the insured is entitled to seek indemnification for damages it is legally obligated to pay to a third party.

Not only does the majority opinion bring a smile to my lips, but the dissent by Justice Schmidt articulates one of my other favorite rules that “whereas here, the insurer denies coverage, the insured is entitled to do what he or she can to cut his or her losses, and need not wait until suit is filed to once again make demand on the insurer.” Hooray, sanity reigns in the Third District.


December 17, 2013

AIA contracts help effectively allocate risks and result in predictable interpretations

Source:, December 6, 2013
By: Cade J. Laverty and C. Michael Shull III, Frost Brown Todd LLC

It is sometimes difficult to tell whose insurer will be liable for certain occurrences on a construction project. The whole purpose of contracting is to allocate risk—hopefully to the party that is better situated to deal with that risk. In allocating that risk, all parties need to know which party is ultimately responsible for insuring against certain risks. While some court opinions can leave a reader unsure of the ultimate holding and its application, the Indiana Court of Appeals recently issued a clear and concise opinion regarding issues of insurer liability in the context of interpreting an American Institute of Architects (AIA) standard form agreement.

In Allen Cnty. Pub. Library v. Shambaugh & Son, L.P., the court considered issues of liability related to environmental remediation costs incurred as a result of a diesel spill under a standard AIA contract form. The spill was allegedly caused when a line connecting a back-up generator tank to its generator was struck by a certain contractor involved in the renovation of a library. The resultant leak allowed approximately 3,000 gallons of fuel to leak into the ground under the library. This ground was not a part of the scope of Work as defined in the contract. This was a key fact in the Court’s decision.

Both the library and the contractors on the job obtained multiple insurance policies. The library obtained a builders risk policy which contained a specific “coverage extension” for environmental remediation. When the library sued to recover the costs it incurred in cleaning up the diesel spill, the defendant contractors asserted that the library had waived its ability to seek compensation due to one of the provisions contained in the AIA agreement which provides for a waiver of subrogation, as well as the library having obtained its own pollution cleanup insurance.…

December 17, 2013

Missouri court holds underlying loss not progressive injury

Source:, December 12, 2013
By: Brian Margolies, Traub Lieberman Straus & Shrewsberry LLP

In its recent decision in Stoddard Equipment Co., Inc. v. American Safety Indemnity Co., 2013 U.S. Dist. LEIS 170701 (W.D. Mo. Dec. 4, 2013), the United States District Court for the Western District of Missouri had occasion to consider whether property damage occurred during the policy period of a pollution liability policy.

American Safety’s insured, Stoddard, was named as a defendant in an underlying suit for its alleged negligent installation of a gas pipeline running from a storage tank to a marina where the gasoline was dispensed. Stoddard completed the work in early October 2009. The underlying plaintiff alleged that during the evening of September 2, 2011, the entire contents of its tank leaked into the surrounding soils and waters. Plaintiff alleged that Stoddard’s negligent installation of the pipe in 2009 is what caused the release in 2011.

Stoddard sought coverage under various policies for the underlying suit, including a contractors’ pollution liability policy issued by American Safety for the period November 3, 2008 to November 3, 2009. The policy’s insuring agreement provided coverage for property damage, but only to the extent the property damage occurred during the policy period. American Safety denied coverage to Stoddard on the basis that the property damage, i.e., the damage caused by the release of the storage tank’s contents, happened in its entirety nearly two years after the expiration of its policy. Stoddard nevertheless maintained that because the pipe was negligently installed during the time the American Safety policy was in effect, the property damage should be considered progressive in nature, spanning several policy periods.

On motion to dismiss, the court rejected Stoddard’s argument, distinguishing the gasoline release from matters involving property damage happening over a lengthy period of time, such as at issue in the Missouri Supreme Court case D.R. Sherry Const., Ltd. v. American Fam. Mut. Ins. Co., 316 S.W.3d 899 (Mo. 2010), which involved structural damage to a home over a period of years as a result of an unstable foundation. The underlying complaint contained no allegation that the pipe installed by Stoddard began leaking prior to November 3, 2009, but instead alleged that the entirety of the leak happened during a one night period in September 2011. The court further reasoned that no inference could be drawn from the complaint that any hole developed in the pipe prior to the expiration of the American Safety policy. In reaching its holding, the court cited to the line of Missouri law “that draws a distinction between the occurrence of negligent act during the policy period and the occurrence of physical damage that results from the commission of a negligent act during the policy period.” While the court agreed that Stoddard’s alleged negligence happened while the American Safety policy was in force, the resulting damage happened in its entirety after the expiration of the policy and thus fell outside of that policy’s scope of coverage.


December 17, 2013

Marsh: Coverage rates continue to rise for U.S. construction firms

Source:, December 13, 2013

U.S. construction firms on average paid more for their insurance in the first half of 2013 as underwriters continue to seek price increases across the breadth of their contractor portfolios, according to a report published by Marsh.

Pricing for contractors general liability, project-specific general liability, umbrella and excess liability, workers’ compensation, and residential construction insurance was up between 3% and 7% on average during the first half of the year, according to Marsh’s Construction Market Update—First Half 2013. Construction firms with poor loss histories were more likely in general to have seen double-digit rate increases.

Pricing for non-residential construction, and contractors and architects and engineers professional liability insurance also was up on average during the first half of the year, but to a lesser degree.

“U.S. construction firms are grappling with a firming insurance market, especially when it comes to liability insurance where underwriters continue to tighten coverage terms and seek rate increases to make up for reduced investment income,” said Michael Anderson, leader of Marsh’s U.S. construction practice. “With a zero interest rate environment, there is no cushion against a poor underwriting decision.”

According to Marsh’s report, not all construction lines are experiencing rate increases. Premium rates for builders’ risk insurance generally remained flat during the first half of the year despite more demand for coverage. Similarly, contractors’ pollution liability rates remained generally flat to down 5%.

“While underwriters are attempting to gain rate increases, the market is awash in capital and new entrants are helping to maintain competition. The good news for well-managed construction firms is they can still generally find competitive pricing and terms,” Anderson said.


November 14, 2013

ACE Releases Advisory Examining Environmental Risks Related to Healthcare Construction Projects

Source:, November 4, 2013

The ACE Group today announced the release of a new advisory entitled, “Healthcare Construction: Managing the Environmental Risks.” The advisory discusses the potential risks and considerations healthcare organizations should identify during new construction or renovation projects. The advisory also examines opportunities to help mitigate the risks of potential pollutant exposures and describes how healthcare organizations can meet higher standards of care and take a proactive approach to risk management to help minimize the potentially harmful effects of pollutants during construction.

“To keep pace with the advances in medical technology and the advent of healthcare reform, healthcare organizations have begun to upgrade their facilities or build new ones to better serve their patients,” said Craig Richardson, Senior Vice President, ACE Environmental Risk. “During new healthcare construction or renovation projects, environmental risks can be a challenge because of the hazards the work poses to patients, staff and visitors. ACE’s Environmental Risk Practice understands these risks and has developed this advisory to provide useful information to help healthcare facilities better mitigate future pollution risks.”

The ACE Environmental Advisory was authored by Gerry Rojewski, Vice President and North America Product Line Manager for the ACE Environmental Contractor Program. The advisory is part of a larger series of papers that ACE produces, which are designed to provide useful information on current industry topics faced by risk managers.…

October 21, 2013

The Right Way to Write Builders Risk Insurance

Source:, October 2013
By: Jeff Cavignac

An effective construction insurance program requires the dovetailing of several different policies in order to protect each project stakeholder. General liability and workers’ compensation are critical elements of insuring a construction project, but the keystone is builders risk coverage.

Builders risk, often called “course of construction,” is a first party property coverage designed to insure the real property under construction. The coverage is purchased by one party, but the policy ideally will extend protection to all parties that may have an insurable interest in the real property.

Standardized builders risk policies are the exception; most insurance companies choose to create their own manuscripted forms and coverage varies greatly. Because no two construction projects are the same, it is important to analyze what could go wrong and then tailor the builders risk coverage to match those exposures.

The key to an effective builders risk policy is understanding the contract’s insurance requirements and indemnity sections. The insurance section specifies who is responsible for buying the builders risk insurance and exactly what coverage it includes. The indemnity section of the contract establishes the party that will be responsible for various losses that could occur during the course of construction, and under what circumstances the parties to the contract have waived their recovery rights against one another. It is also helpful to review the project’s financing documents to determine the coverage the lender requires.…

October 16, 2013

The Changing Landscape of Defective Construction Claims and Commercial General Liability Policies

Source:, September 30, 2013
By: Burke Coleman

Coverage for defective construction claims under commercial general liability (CGL) policies remains an important and frequently contested issue, and the last year has seen significant developments on the issue.

Courts have taken varying approaches to the question and applied different parts of the CGL policy as they define the legal framework for analyzing the issue. As the landscape changes, insurers, contractors and damaged parties must be aware of the legal analyses and differing a

Last year, the Ohio Supreme Court determined that defective construction itself does not trigger coverage.

Westfield v. Custom Agri Systems

In Westfield Ins. Co. v. Custom Agri Systems, Inc., 2012 Ohio 4712, the court took a hard-line approach and found that faulty workmanship lacks the requisite fortuity to constitute an “occurrence” under the policy. The court reasoned that a CGL policy is not intended to protect contractors against every risk of operating a business and does not insure against the insured’s faulty work itself. Rather, a CGL policy insures only the consequential damages to other property that may stem from that work. The decision forecloses any arguments that defective work itself may be covered, but acknowledges that collateral damage to non-defective property may constitute an occurrence and trigger coverage.…

October 8, 2013

Asbestos suit filed by cancer patient over work-related expsosure

Source:, October 4, 2013
By: Holland Phillips

Several companies have been named in an asbestos lawsuit filed by a man who contracted lung cancer, which he attributes to his exposure to asbestos from the early 1970s.

Lones James Gagnard Jr. filed suit against Avondale Industries, Inc., Northrop Grumman Ship Systems Inc., Huntington Ingalls Incorporated, Eagle, Inc., Hopeman Brothers Inc., International Paper Company, Champion International, US Plywood, Liberty Mutual Insurance Company as insurer of Wayne Manufacturing Company, McCarty Corporation, Maryland Casualty Company as insurer of Marquette Insulation Inc., Metropolitan Life Insurance Company, Reilly-Benton Company, Taylor-Seidenbach Inc., Uniroyal Inc., Viacom Inc. as successor to CBS Corporation, Wayne Manufacturing, Albert Bossier, Certain Underwriters at Lloyd’s London, OneBeacon Insurance Company, J.D. Roberts, and James Melton Garrett in the Orleans Parish Civil District Court on July 19.

The plaintiff claims that he was exposed to injurious levels of asbestos and asbestos-containing products from his occupational exposure from 1972 to 1974 and subsequently contracted lung cancer.

The defendants are accused of mining, manufacturing, selling, supplying, distributing, and using products unreasonably dangerous and known to possess inherent dangerous properties with high potential for injury, failing to warn the plaintiff as to the hazards of their products in their foreseeable use, failing to provide safety instructions to eliminate or reduce risks associated with the products, failure to inspect truthfully or adequately report product testing and medical studies, failure to properly design, producing defective products, and failure to properly package their products. In addition, employers allegedly failed to provide Gagnard with a safe place to work, adequate engineering or industrial hygiene measures to control the level of exposure to asbestos and failure to warn of associated hazards.

An undisclosed amount is sought for all medical costs or expenses, lost earnings, mental suffering, anguish, pain, and suffering, physical pain and suffering, loss of quality of life and disability.

The plaintiff is represented by David R. Cannella of New Orleans-based Landry, Swarr & Cannella LLC and the Nemeroff Law Firm.

The case has been assigned to Division F Judge Christopher J. Bruno.

Case no. 2013-06802.


October 4, 2013

Act professional

Source:, September 30, 2013
By: Jay Sturhahn, Sherman & Howard LLC

A recurring risk for licensed professionals remains the threat of liability claims arising from their work. Given the nature of the professional’s practice, the claims are complex and costly, regardless of their merit. Therefore, professional liability insurance is a critical component of any professional’s practice.

Professional liability insurance continues to be a significant expense. Consequently, it has been our experience that the premium is often the biggest driver in policy selection. But selecting professional liability insurance based on cost, to the exclusion of an analysis of coverage, has its own negative economic consequences. Securing the best coverage, at the best price, requires examination of certain critical factors.

Insure the Right Risk.

Don’t assume insurers will voluntarily cover every claim arising from the professional’s performance of a compensated act for a client. Many professionals provide a blend of professional services, whereas liability policies are designed to cover risk arising from the traditional practice of the profession. For example, lawyers often give operational advice to their business clients and architects are asked to provide construction advice. Whether claims arising from the performance of these “non-traditional” acts are covered will depend on the policy in question, so review the policy before binding. Also, if you are a professional that regularly engages in “non-traditional” acts – e.g., a lawyer that prepares clients’ tax returns – confirm that undertaking is covered.…