May 2024 Insurance Update

Careening race cars, missing diamonds, and gold treasure provide some of the backdrop for insurance issues that courts had to decide this past month.

We begin in Pennsylvania where the state’s high court reined in some loose analysis by the lower courts.  If a controlled substances exclusion applies to “bodily injury” claims and “bodily injury” does not include emotional harm, must an insurer defend a claim that potentially asserts emotional harm?

The Illinois Court of Appeals found that the innocent insured doctrine overrides an unambiguous policy exclusion where a diamond goes missing.  See if you agree.

At the federal level, the Fifth Circuit considered whether the seemingly innocuous phrase – “All other terms and conditions of the policy remain unchanged” – appearing in each policy endorsement created an ambiguity.

The Sixth Circuit, predicting what the Michigan Supreme Court would do, allowed an insurer to recoup defense costs, while the Ninth Circuit turned away our favorite treasure hunter.

We hope you enjoy the update and find these cases informative.

Rob Tugander and Greg Mann