Friday, May 29, 2009

Credit card insurance coverage for rental cars

As usual, last time I rented a car, in Michigan, the rental car agent explained that I should purchase the exorbitantly priced property damage insurance because 1) Michigan is a fully no-fault state and 2) liability for damage to the car would include rental costs while the car was being repaired. Despite having posted on this very topic, I had no idea whether I would be fully covered by my insurance for property damage if I was in a collision.

Shortly after that I received a benefits guide from one of my credit cards and I took a close look at its rental insurance coverage. It covers vehicles rented for 31 days or less with a value of $50,000 or less. There is no coverage unless you decline the Collision/Damage waiver offered.

And, yes, it covers "reasonable loss-of-use charges imposed by the vehicle rental company for the period of time that the rental vehicle is out of service."

So next time I rent a car I'll refuse the property damage insurance with confidence--that is, if I can remember which credit card I should be using.

Wednesday, May 27, 2009

Save the date: Massachusetts Reinsurance Bar Association Symposium

I mentioned here the formation of the Massachusetts Reinsurance Bar Association. MReba has now scheduled its first symposium for October 1, 2009 at the Harvard Club Back Bay on Commonwealth Avenue in Boston.

Friday, May 22, 2009

Calculation of punitive damages under 176D/93A

I reported here on a Superior Court case that I stated correctly awarded unfair settlement practices damages based on the lost interest amount. A reader pointed out that the damages that are trebled pursuant to Mass. Gen. Laws ch. 93A are actually the entire trial verdict.

He is correct. Under the current law of Mass. Gen. Laws chs. 93A and 176D, when a case goes to trial and judgment and damages are trebled pursuant to 93A, then the damages that are trebled are the verdict amount. When the underlying case settles, however, and the claimant successfully sues for treble damages under 93A, the amount that is trebled is the interest that was lost because of the delay in settlement. Single damages under 93A are always the lost interest.

Thursday, May 14, 2009

Court of Appeals gives good drafting tip

This is my last post on Essex Ins. Co. v. BloomSouth Flooring Corp.

In a comment near and dear to my heart as a brief-writer, the court took the insurer's counsel to task for failing to respond to an argument:

Essex, for its part, gives no good reason to affirm the [District] court's decision regarding exclusion (k). Specifically, Essex fails to offer a reasoned argument in support of the court's conclusion that the concrete floor became BloomSmith's product for purposes of the exclusion. Instead, Essex states that "The defective carpet is clearly BloomSouth's product. Just as clearly, it does not constitute real property." While we may agree with Essex on this point, BloomSouth's argument is that Suffolk's complaint may be reasonably construed as alleging that the carpet caused damage to a third party's real property-BFDS's concrete floor. Essex's statement is not responsive to that argument.

Tuesday, May 12, 2009

Court of Appeals holds that odor does not come within impaired property exclusion

Returning to Essex Ins. Co. v. BloomSouth Flooring Corp. which I have been discussing in my last several posts, the court turned next to the business risk exclusions.

The court held that the impaired property exclusion did not exclude coverage. That exclusion excludes property damage to property that has not been physically injured.

The court held that the allegation that the odor permeated the building was an allegation that the odor physically injured the property.

Pursuant to the terms of the policy the impaired property exclusion applies only to property that can be restored to use by "the repair, replacement, adjustment or removal of the insured's product or work."

The court interpreted the complaint as suggesting that the property could not be restored simply by removing, replacing, adjusting or removing BloomSouth's product or work. Rather, the complaint alleged that Suffolk attempted to remediate the odor by installing carbon air filters to the ventilation system in the building.

Friday, May 8, 2009

Court of Appeals holds that allegation of bead-blasting is allegation of physical injury to property

I have been discussing Essex Ins. Co. v. BloomSouth Flooring Corp. in my last couple of posts.

Suffolk was the general contractor and BloomSouth was the subcontractor that installed the defective carpeting. Suffolk alleged in its lawsuit against BloomSouth that as a result of BloomSouth's installation of the defective carpet the concrete floor beneath the carpet had to be bead-blasted. The court interpreted that allegation as alleging "physical injury to property, viz, the concrete substrate."

The court held, more specifically, that the bead-blasting allegation was part of a remedial measure, not a replacement process. The decision does not explain why that distinction is important under the terms of the policy.

Wednesday, May 6, 2009

Court of Appeals holds that permeating odor may constitute a "physical injury"

As I discussed in my last post, in Essex Ins. Co. v. BloomSouth Flooring Corp. the United States Court of Appeals for the First Circuit discussed whether an insurer must defend a construction contractor against allegations that unpleasant odors emanated from a carpet the contractor installed.

The court first held that coverage was triggered because a permeating odor may constitute a "physical injury to tangible property" within the meaning of the policy.

I have seen this issue frequently arise in the context of fumes and airborne pollutants. No published Massachusetts appellate decision has addressed the issue. The Court of Appeals relied on two Superior Court decisions to predict that the Supreme Judicial Court would hold that an odor may be a physical injury.

Monday, May 4, 2009

U.S. Court of Appeals defines "adumbrate"

My next several posts will discuss Essex Ins. Co. v. BloomSouth Flooring Corp., a decision just handed down by the United States Court of Appeals for the First Circuit.

The case addresses whether a liability insurance policy issued to a building contractor covers losses arising from an unpleasant odor emanating from a carpet the contractor installed. My next posts will deal with the substance of the decision.

For now, though, I want to applaud the Court of Appeals for providing a definition of "adumbrate." I have discussed how a court determines whether an insurer has a duty to defend("the eight corners test") here. The standard language is, "if the allegations of the complaint are 'reasonably susceptible' of an interpretation that they state or adumbrate a claim covered by the policy terms, the insurer has a duty to defend."

Although I have quoted that language numerous times in legal briefs, I have always skimmed over the word "adumbrate" without pausing to consider what exactly it means.

The Court of Appeals has now been kind enough to provide a definition in footnote 1 of the decision: "We have defined 'adumbrate' in the liability insurance context to mean 'to give a sketchy representation of; outline broadly, omitting details . . . or to suggest, indicate or disclose partially and with a purposeful avoidance of precision.'"