January 2025 Insurance Update

We kick off the year with a quartet of state supreme court decisions and an intermediate appellate court ruling that has insurers breathing a harmonious sigh of relief.

Policyholders and insurers often disagree over what the policy means by the word “damages.” The Ohio Supreme Court takes up this issue when considering whether payment into a lead paint abatement fund qualifies as “damages.”

We had stopped writing about Covid-19 business interruption claims because it was becoming old news. Courts were almost unanimously denying these claims because there was no “direct physical loss.” But North Carolina’s highest court sees it differently. And in a pair of decisions, it explains why it does not see the “direct physical loss” requirement as a barrier to recovery, but why the virus exclusion is.

Insurers seeking to cancel an insurance policy have little room for error. The requirements must be followed to a “T.” The Connecticut Supreme Court reinforces this concept when a workers’ comp insurer timely sent a copy of the cancellation notice to the workers’ compensation commission as required by statute, but sent inconsistent letters to the insured that left some doubt over whether the policy was still in effect.

Some claimant attorneys won’t hesitate to set up an insurer for bad faith. One attorney managed to turn a $30K settlement that the insurer accepted into a $28 million bad-faith judgment by imposing an extremely tight payment window. Reversing that award, the North Carolina Court of Appeals found that the insurer did not violate the state’s unfair settlement practices act when asking for an extra day to deliver payment.

We hope you enjoy the update.