New Cavalcade of Risk

A little late, but here's the the most recent Cavalcade of Risk, in which Jaan Sidorov in his Disease Management Care Blog links to a number of interesting posts on various blogs about various aspects of risk.

Jaan linked to my post on why gun insurance won't work.

I pointed out in that post that liability insurance by its nature cannot provide coverage for intentional acts. Jaan responded:

Yet, thinks the DMCB, health insurance covers intentional injuries and what about the person who knowingly continues with a lifestyle that is harmful.....?

While it's true that health insurance provides coverage for lung cancer for smokers and carpal tunnel syndrome for people who play too many computer games, that's not quite the right analogy. Liability insurance does generally provide coverage for harm incurred from risky behavior. There is no exclusion from motor vehicle coverage if the insured is speeding or from medical malpractice insurance if the doctor has scheduled more operations in a day than can be considered optimally safe.

The true analogy would be health insurance for a suicide attempt, which is intentional harm to oneself, not just the losing side of a risk. But then one gets into a semantic discussion: did the insured intend to become depressed or mentally ill? It's interesting to note that life insurance generally excludes coverage for suicide.

In any event, one must be careful not to analogize too much between medical insurance and liability insurance, mostly because I just don't know all that much about medical insurance.

Mass. Appeals Court holds that insurer must pay market rate to Cumis counsel

When an insurer defends a case under a reservation of rights, the insured has the option of choosing his or her own attorney (often called Cumis counsel after a California case) and having the insurer pay the reasonable charges of that attorney. What has been undetermined, until now, is whether the insurer is obligated to pay that attorney's usual hourly rate, or if it may pay the generally much lower rate it would pay to its usual insurance defense panel counsel.

In Northern Security Ins. Co., Inc. v. R.H. Realty Trust, 78 Mass. App. Ct. 691 (2011), the Appeals Court held that reasonable rates must be based on market rates rather than panel counsel rates.

The court also held that where an attorney agrees to accept a discounted rate from the insured, he or she cannot recover more than that rate from the insurer.

Thanks to Mike Tracy of Rudolph Friedmann LLP for bringing this case to my attention.

Title insurance

Here's an informative article about title insurance.

When my husband and I bought our house, on the advice of our real estate attorney we opted against title insurance. He told us that since the property is registered land, there could be no claim against the title. Not long thereafter I was involved in a case involving title to land and added our lack of title insurance to my list of things to wake up in the middle of the night worrying about. When we refinanced we purchased the insurance. I still don't know whether it's really necessary for registered land, but it sure makes me feel better.

Superior Court notes lack of standard for imminent threat of offsite migration of contaminants

From 1853 to 1952 FG&E owned and operated a plant that manufactured gas. The manufacturing process generated hazardous materials at the site.

FG&E filed a lawsuit seeking a declaration that several primary liability policies issued by OneBeacon and Travelers provide coverage for cleanup costs.

The insurers, relying on an owned property exclusion, argued that coverage is triggered for any policy period only if there was off-site property damage during that policy period.

In Fitchburg Gas & Elec. Light Co. v. OneBeacon Am. Ins. Co., 2010 WL 5490148 (Mass. Super.), Judge Neel of the Massachusetts Superior Court noted that under Massachusetts law coverage is triggered for a cleanup designed to prevent further migration of contaminants to off-site property, even when such migration has not yet occurred. However, there is no standard by which such a threat of migration is to be measured.

This case, however, would not set that standard. Noting that there were competing expert affidavits about whether the contaminants have or would migrate offsite, Judge Neel denied summary judgment to both sides.

Thoughts on umbrella coverage

Kiplinger, a personal finance magazine, has an interesting article on why people with income of over $100,000 or assets over $1 million should purchase umbrella coverage.

Umbrella coverage is coverage above your regular insurance. For example, you might have an auto policy and a homeowner's policy that each have a limit of $300,000. An umbrella policy would kick in if the damages exceed that amount.

The article states that umbrella insurance will cover your legal fees if you get sued. In most cases that is incorrect. Generally, your primary insurance (such as auto or homeowner's) will cover your legal fees, although there are some rare cases when primary insurance does not apply and umbrella insurance does apply. There are also some primary policies in which legal fees deplete the coverage limit.