When does an excluded loss end and a covered “resulting loss” begin? This thorny question was the subject of a recent decision out of the Southern District of Texas, EMS USA, Inc. v. The Travelers Lloyds Insurance Co., No. H-16-1443, 2018 U.S. Dist. LEXIS 54509 (S.D. Tex. Feb. 28, 2018), adopted by EMS, USA, Inc. v. Travelers Lloyds Ins. Co., 2018 U.S. Dist. LEXIS 52884 (S.D. Tex., Mar. 29, 2018). EMS involved a builder’s risk policy that covered a natural gas pipeline construction job in southeast Texas. The insured, the pipeline contractor, had through a subcontractor, drilled a “pilot hole” for the pipeline. The next step was to widen the pilot hole to accommodate the pipeline. This operation involved using a reamer attached to a guide wire that directed the operation. When the guide wire broke, the reamer was stuck in the pilot hole and could not be removed, and a new pilot hole had to be excavated. Travelers denied coverage for the cost of attempting to salvage the first pilot hole, and redrilling the second, arguing that the loss was not covered because (1) the pilot hole was “land” that was not covered under the policy; (2) the hole had not suffered “direct physical loss or damage” as required by the policy’s coverage grant; and (3) the loss, even if within the grant of coverage, fell under the policy’s exclusion for faulty workmanship.
Continue Reading Texas Federal Court Holds Faulty Workmanship Exclusion Applies to All Damage Caused By Drilling Gear Malfunction, Rejects Insured’s Claim for Covered “Resulting Loss”
Faulty Workmanship Exclusion
New Jersey Appellate Court Rejects Insured’s Attempt to Circumvent the Pollution Exclusion in Asbestos-Related Loss by Using the Vandalism Exception to the Exclusion
When faced with the impending application of an exclusion that negates any coverage for a claimed loss, an insured may sometimes resort to far-fetched or implausible arguments to contend that the exclusion does not apply, or that an exception to the exclusion has the effect of reviving coverage. The insured in Woodcliff Lake Board of …
Insurance Fraud Case: Second Circuit Addresses Adverse Inference Instruction, Restitution For Prior Payments
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Posted in Anti-Concurrent Causation, Appraisal, Bad Faith, Causation Approaches, Collapse Exclusion, Direct Physical Loss, Earth Movement Exclusion, Ensuing Loss, Faulty Workmanship Exclusion, Flood Exclusion, Fortuity, Late Notice, Mold Exclusion, Pollution Exclusion, Trigger of Coverage, Uncategorized
In insurance fraud cases involving actual or alleged destruction of evidence by the insured, an issue often arises regarding whether an adverse inference instruction is appropriate, and, if so, what form it should take. The Second Circuit recently approved a “light” form of adverse inference instruction that allowed the jury to make an adverse inference…
Collapse and Ensuing Loss Clause Addressed By New York Trial Court
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A New York trial court recently addressed the definition of “collapse” and the meaning of the ensuing loss clause in Copacabana Realty LLC v. Fireman’s Fund Insurance Company, No. 10-2919, 2013 NY Slip Op 30960(U) (NY Sup. Ct. Suffolk County Apr. 29, 2013), granting the defendant insurer’s motion for summary judgment on both issues…