A state court in Louisiana recently
rejected three defenses raised by a homeowners insurer to a
claim from policyholders arising from defective drywall.
Gases emitted by defective drywall, most
but not all of it originating from China, have been blamed for
various ailments among humans and for corroding metals
within structures. For background on the issue and its
potential impact on insurers, see the "Emerging Issues &
Exposures"
report by AAIS.
In its
ruling, the court struck down affirmative defenses made
by Audubon Ins. Co. on the basis of exclusions for
pollution, "gradual or sudden loss" (including corrosion,
wear and tear, and latent defect), and "faulty, inadequate,
or defective planning" (including materials used in
construction).
The ruling states that, in Louisiana,
pollution exclusions apply only to pollution that harms the
natural environment. It adds that the corrosion of metals
cited by the plaintiffs is not the cause of the loss, but
the loss itself, and that there is nothing defective in the
drywall that prevents it from serving the purposes of
drywall.
There is little in the ruling to suggest
what the scope of Audubon's exposure could be under the "all
risks" (open perils) policy in question until the case is
tried. But a footnote in the ruling states the following:
"Generally, an 'all risk' insurance
policy creates a special type of coverage extending to
risks not usually covered under other insurance, and
recovery under an "all risk" policy will, as a rule, be
allowed for all fortuitous losses not resulting from
misconduct or fraud, unless the policy contains a
specific provision expressly excluding the loss from
coverage."
In another drywall case being watched by
insurers, a federal judge in Virginia dismissed a claim
under a general liability policy by a developer against
Builders Mutual Ins. Co. In that case, the court ruled that
the developer had voluntarily chosen to remediate homes
originally constructed with defective drywall; thus,
coverage for legal liability under the policy was not
triggered.
AAIS is teaming up with The Hartford
Steam Boiler Inspection & Insurance Company (HSB) to provide
a free breakfast forum on "Equipment Breakdown in
Construction" on the final morning of the annual meeting
of the Inland Marine Underwriters Association (IMUA).
The event will be 8-10 a.m. on Wednesday, May
19, at the Kingsmill Resort, Williamsburg, Va., the site of the
IMUA meeting.
Lisa Phillips, HSB product design
manager, will discuss how to identify and underwrite equipment
breakdown exposures on jobsites.
Robert Guevara, AAIS vice president of inland marine,
will describe new equipment breakdown coverage forms developed
in consultation with
HSB for the Builders Risk and Installation Floater classes found
in the AAIS Inland Marine Guide.
Attendance is free of charge to all IMUA
members; breakfast will be provided. To reserve a spot, contact
Sheila Morris, AAIS manager of inland marine, at
sheilam@AAISonline.com,
or by calling 800-564-AAIS, ext. 286.
AAIS recently
released two new automated rating worksheets for the Electronic
Data Processing section of the AAIS
Inland Marine Guide.
The worksheets, available through the
AAISdirect Internet
service, allow user to rate policies using the revised rating
procedures introduced in 2009 for the class.
Among other things, the worksheets provide:
-
Automatic calculation of loads, charges,
and premium;
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Quote summary prior to printing;
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Ability to save quotes for up to one
month; and
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Free form fields to document risk
features (exposures and loss controls).
For information on affiliating with AAIS for
use of the Inland Marine Guide, reply to Rick Maka,
director of marketing, at
rickm@AAISonline.com, or by calling 800-564-AAIS, ext. 222.
Insurers with
more than .01 percent share in the Delaware homeowners market
have until May 1, 2010 to complete the state's annual rate
survey for the line.
A list of companies required to fill out the
survey, as well as instructions for doing so, is available
online.
The North
Dakota Insurance Department recently issued a
bulletin reminding
insurers that certificates of insurance must be filed and
approved by the department, and cannot be altered without prior
approval from the department.
The bulletin
adds that certificates cannot be used to alter, amend, or extend
coverages provided by policies they summarize.
A recent
bulletin from the
Alabama Department of Insurance states, in essence, that agents
and brokers in that state do not have to contact admitted
carriers before placing windstorm and hail coverage on coastal
risks with surplus lines carriers.
The directive affects properties south of
Interstate 10 in Baldwin and Mobile counties, where the
department says "such coverage is not readily obtainable through
authorized insurers." The bulletin adds that the directive is
temporary until the department "is able to address the issue by
regulation."
