Here is a brief survey of the major new rulings and legal developments that dominated the headlines over the past twelve months. 



The remarkable record of wins that insurers had notched in federal courts of appeal in 2021-22 was cemented in 2023 with victories in state supreme courts, including Connecticut, Louisiana, Massachusetts, Nevada, New Hampshire and Oklahoma.   Crucial states remain to be decided, however, with important appeals pending in the state supreme courts of California, New Jersey and Pennsylvania among others.  Unless one or more of those courts flies in the face of the overwhelming pro-insurer body of jurisprudence on the issue of “direct physical loss,” it appears that the existential threat that COVID BI claims once posed to the insurance industry has, like the virus itself, now receded to a manageable annoyance.  Over the next few months, looked for emerging Supreme Court authority on secondary issues, notably the scope of virus exclusions.


Over five years have passed since the American Law Institute approved the controversial Restatement of Law, Liability Insurance in May 2018.   In the years immediately following its approval, numerous state legislatures passed bills barring state courts from citing this Restatement.   While it does not appear that these bans have had much practical effect, neither have courts rushed to embrace the RLLI as a significant source of new authority.   One notable exception is Section 21’s ban on recoupment, which policyholders and a few courts have focused on, whereas insurers and the Nevada Supreme Court have pointed out that this section’s treatment of recoupment is utterly inconsistent with Section 35 of the Restatement of Law (Third), Restitution.   Notwithstanding the relatively low number of courts citing the RLLI, its long-term impact may still be significant, particularly as regards its provisions permitting consideration of so-called custom and usage to avoid plain meaning.

The ALI is also expected to include a discussion of first party bad faith when it approves the Restatement of Law (Third), Torts-Miscellaneous Provisions when it meets in San Francisco next May.   Over the past year, however, those provisions of Section 20-A that initially raised concern in the industry have been rewritten and the remaining analysis is, for the most part, an innocuous recitation of black letter law on first party bad faith.


Coverage litigation concerning environmental clean up and related pollution losses peaked during the 1990s and has subsided since due to reduced governmental enforcement activity and widespread adoption of effective pollution exclusions.   Recent discoveries concerning the lethal effect of PFAS “forever chemicals” and ubiquity in the environment has raised some commentators to question whether we have finally found the answer to the age-old question:  What will be the next asbestos?  (NB:  this was always a trick question since the answer was always asbestos).   Unlike earlier contenders like MTBE, PFAS is not limited to a single group of businesses.   Further, unlike most earlier types of pollution, it is extremely difficult to identify the source or date of PFAS discharges, which may complicate issues such as trigger of coverage and allocation.

–Climate Change

The availability of CGL coverage for climate change litigation, which has been dormant ever since the Virginia Supreme Court 2012 AES decision in the Village of Kivalina litigation, is now re-emerging as more and more claims are being filed.  The Hawaii Supreme Court is expected to be the first court in the country to assess whether climate change claims are subject to absolute pollution exclusions when it rules later this year in Aloha Petroleum Ltd. v. National Union Fire Insurance Company of Pittsburgh, PA,.

Insurers also prevailed in 2023 on a case that could have created a precedent for requiring coverage to protect against flooding and other climate-related losses.  In Ken’s Foods, Inc. v. Steadfast Ins. Co., 491 Mass. 200 (2023), the Supreme Judicial Court of Massachusetts declared that it would not add coverage to a pollution liability policy that would have required Zurich to reimburse a salad dressing manufacturer for the cost of an agreement that Ken’s negotiated with local authorities that allowed it to stay in business after a spill from its wastewater treatment facility given that the policy did not cover these costs.  Despite Ken’s argument that the $2 million that it had paid was recoverable as a mitigation cost to avoid a much larger business interruption loss that Zurich would have owed coverage for, the SJC ruled that the mitigation provision in the Zurich policy did not require Ken’s Foods to prevent an imminent suspension of operations or require reimbursement of such costs.

–Trigger of Coverage

The Sixth Circuit ruled in James River Cas. Co. v. UniControl, Inc., No. 22-3721 (6th Cir. July 14, 2023) that an Ohio District Court did not err in holding that a “Claims In Progress” endorsement which precluded coverage for bodily injury or property damage “which begins or takes place before the inception date of coverage” eliminated coverage for allegations that UniControl’s predecessors had caused property damage to soil and groundwater in Indiana between 1918 and 1971.  The court rejected the insured’s argument that this exclusion only applied to that portion of the damage that had occurred prior to the policy period as “unreasonable” and as ignoring the fact that the exclusion includes both “begins” and “takes place.


 The Fifth Circuit ruled in Discover Property & Casualty Insurance Company v. Blue Bell Creameries, USA, No. 22-50842 (5th Cir. July 11, 2023) that a CGL insurer had no obligation to provide a defense to a shareholder derivative action following an outbreak of Listeria that caused a shutdown of the insured’s dairy factories in 2015.  Applying Texas law to the dispute, the Fifth Circuit ruled that the shareholder claims did not arise out of an “occurrence” as the breach of fiduciary duties stemmed from intentional acts and the Listeria outbreak and the resulting financial harm were natural and probable consequences that could be reasonably anticipated.”  The court also refused to find that intentional acts could constitute an “occurrence” because the policy would otherwise not have had a separate exclusion for injuries that are expected or intended.”   Finally, the court ruled that the shareholder lawsuit did not seek “damages” because of “bodily injury.”  The court observed that such policies only provide coverage for claims requiring proof of an actual bodily injury, “not all claims tangentially related to bodily injuries.”

The Illinois Appellate Court ruled in Continental Cas. Co. v. 401 North Wabash Venture LLC, 2023 IL App (1st)  221625 (2023) that various liability insurers were not required to defend pollution claims arising out of the improper operation of a water intake system at the Trump International Hotel and Tower because the illegal discharge of contaminated effluent from the hotel was not an “occurrence.”  Although 401 North Wabash argued that the relevant inquiry was whether it expected or intended for its withdrawal of river water to cause harm to fish and other aquatic life, the Appellate Court agreed with the insurers that the proper focus is on the property’s intentional operation of its water intake structure in the absence of a valid NPDES permit.

–Pollution Exclusions

The Rhode Island Supreme Court, which has never met an environmental coverage dispute that it didn’t manage to mangle, has ruled that a total pollution exclusion does not preclude coverage for the liability of furnace installer for causing a leak of oil into the customer’s basement.   In Regan Heating & Air Conditioning, Inc. v. Arbella Protection Ins. Co., No. 2020-170 (R.I. Jan. 24, 2023), the Supreme Court  did reject the insured’s argument that the total pollution exclusion endorsement was ambiguous because it conflicted with a separate endorsement that provides limited coverage for discharges from furnaces and other heating equipment.  The court ruled that Rhode Island follows the general rule that policy exclusions should be read “serially” and not “cumulatively.”   Nevertheless, the Supreme Court found ambiguity based on conflicting rulings around the country concerning this exclusion, especially in cases that are not clearly “environmental.”   The Rhode Island court declined to follow the Massachusetts Supreme Judicial Court’s decision in McGregor v. Allmerica, despite its close similarity to the facts in this case, because the oil spilled by the contractor in McGregor was not confined to a customer’s basement and had resulted in remediation of the environment, whereas the spill in this case was confined to the insured’s basement and the customer’s claim was only for damage to his personal property. Notably, this case has been pending before the Rhode Island Supreme Court for nearly three years.

The Illinois Appellate Court has ruled that a total pollution exclusion did not preclude a duty to defend suits against the City of Sycamore by town residents who claimed they had been harmed by exposure to unsafe drinking water as a result of old and decaying water mains  The Second District held in LM Insurance Corp. v City of Sycamore, 2023 IL App. (2nd) 220234 (Ill. App. Ct. June 8, 2023) that these claims did not meet the standard for “traditional environmental pollution” that the Illinois Supreme Court had set in Koloms.  In particular, the court ruled that in this case “there was no release, discharge or escape of a pollutant into the ground that caused the ground water to become contaminated.  Rather, the complaint alleged that the water did not become contaminated until it was already in Sycamore’s water pipes …”  The court also refused to find that allegations that lead had been released through the leaking pipes were subject to an absolute lead exclusion in the policy in particular, the court ruled that the underlying claims were not solely for lead pollution.  It also alleged contamination as a result of iron and bacteria.  Finally, the court held that this is not a case where a court would refuse to find an “occurrence.

–Virus or Bacteria Exclusions

 The Eleventh Circuit has refused to apply a “virus or bacteria” exclusion to personal injury claims involving workers who were exposed to Legionella bacteria in a water cooling tower.   In Southern-Owners Ins. Co. v. Waterhouse Corporation Nursery Supplies, Inc., No. 22-12703 (11th Cir., June 28, 2023), the court ruled that these claims did not allege that the discharge was in a “structure or building” as required by the exclusion.  In an unpublished opinion, the Eleventh Circuit held that “a cooling tower is not a building or structure –  rather, it constitutes large scale machinery.”  In finding ambiguity in the exclusion, the court conceded that “one could reasonably interpret “structure” to include a cooling tower, but it would be equally reasonable to interpret “structure” to mean something more akin to a building.”


The Fifth Circuit has refused to find that a contractor’s liability insurer had a duty to defend toxic tort suits involving Weyerhaueser’s fire retardant coating products under policies that did not name Weyerhaeuser as an additional insured.   In Weyerhaeuser Co. v. Burlington Ins. Co., No. 22-30164 (5th Cir., July 14, 2023), the court refused to consider extrinsic evidence, notwithstanding Weyerhaeuser’s argument that the underlying plaintiffs had mistakenly sued it instead of its operating subsidiary NR that was an additional insured under these policies.  The court also rejected Weyerhaeuser’s argument that the District Court should have permitted it to amend its complaint to reform the policies at issue based upon a claimed “mutual mistake” with respect to Weyerhaeuser’s rights as an additional insured.


Courts around the country remain sharply split on the issue of whether general liability insurers may recoup defense costs that they paid under a reservation of rights in cases where courts ultimately ruled that they had never had a duty to defend.

The Eleventh Circuit has ruled in a Georgia case that a liability insurer may not recoup legal fees that it paid to defend a case for which it was later held not to have had a duty to defend.  In Continental Cas. Co. v. Winder Laboratories LLC, No 21-11758 (11th Cir. July 13, 2023), the Court of Appeals agreed with a Georgia District Court that CNA had no obligation to provide a defense to false advertising claims under the Lanham Act,  Nevertheless, the Eleventh Circuit ruled that the insurer had no right to recoup the defense costs that it had paid under a reservation of rights due to the fact that, although a right to recoup was set forth in the RoR, no such right was contained in the policies at issue.  While acknowledging a lack of guidance from state courts, the Eleventh Circuit predicted that the Georgia Supreme Court would follow the recent trend evidenced by the Restatement of Law, Liability Insurance disfavoring insurer claims for recoupment.

The Ninth Circuit has ruled in Massachusetts Bay Ins. Co. v Neuropathy Solutions, Inc., No. 22-55272 (9th Cir. April 3, 2023), that a CGL insurer who paid $2 million to settle a suit arising out of a negligently performed stem cell injection was entitled to be reimbursed by its insured for the payment as the insurer had complied with the prerequisites for recoupment set forth in the California Supreme Court’s decision in Blue Ridge v. Jacobson by having explicitly reserved the right to later seek recoupment and having obtained a court ruling that the underlying claims were subject to a policy exclusion for professional services.

On the other hand, the Ninth Circuit ruled in in United Specialty Ins. Co. v. Banihavshemi, No. 21-17042 (9th Cir. Mar. 8, 2023) that a San Francisco judge erred in ordering an insured to reimburse his insurer for the cost of settling a non-covered wrongful death claim, ruling that United Specialty had failed to properly analyze or allocate the cost of the settlement among its insureds and that the trial court had erred in assuming that allocation could be done on the basis of joint and several liability.


A decade after the battle over coverage for junk faxes subsided, a new controversy has arisen under Coverage B with respect to new statutory protections for biometric data such as fingerprints and retina scans.  Additionally, courts are increasingly giving effect to exclusions for violations of TCPA and similar statutes.

–Biometric Privacy Disputes

Pending the passage of biometric privacy statutes containing a private right of action in other states, Illinois remains the principal venue for these coverage disputes.

A federal court in Chicago has ruled that neither the Recording or Distribution or the Access or Disclosure Exclusions in a CGL policy apply to BIPA claims.  In Society Ins. Co. v. Cermak Produce, No. 21-1510 (N.D. Ill. July 27, 2023), Judge Kim refused to find that BIPA fell within the “catch all” concluding provisions of the Recording exclusion, declaring that “the broad nature of this exclusion creates an ambiguity as it applies to the alleged BIPA claims because it conflicts with the policies’ inclusive nature.”  While acknowledging that this exclusion was substantially broader than the one that was considered by the Illinois Supreme Court in Krishna Schaumburg, the District Court adopted the recent decision of the Seventh Circuit in Wyndalco and declared that the exclusion was “intractably ambiguous.”

In Remprex, LLC v. Certain Underwriters at Lloyd’s London, 2023 IL App. (1st) 211097 (Ill. App. Ct. Mar. 31 2023), the Appellate Court issued a split decision with respect to a media E&O insurer’s duty to cover BIPA claims.  Applying New York law, as required by a choice of law designation in the policy, the First District ruled that the Beazley Breach Response policy, which provided coverage for data and network liability and media liability, was potentially triggered by the “CN” class action as the insured’s alleged unauthorized transfer of fingerprint information might constitute disseminating media materials to the public.  While noting that the policy contained an exclusion for unauthorized disclosure of personal information, the First District found that these claims fell within an exception to the exclusion for claim expenses incurred in defending the insured against the allegations of unlawful collection of personally identifiable information.   The court separately ruled that there was no duty to defend a second BIPA class action suit as Remprex had never been named as a defendant in that suit nor had a claim for damages been made against it as required by the policy.  The court also declined to award damages under Section 155 as insurer’s conduct had not been vexatious or otherwise unreasonable.

–TCPA Claims

The Michigan Court of Appeals has ruled in Bridging Communities Inc. v. Hartford Cas. Ins. Co, No. 355955 (Mich. App. Mar. 2, 2023) that a statutory right of privacy exclusion precluded coverage for TCPA claims notwithstanding the insured’s argument that it was entitled to coverage for common law privacy liability that it would had even in the absence of the TCPA statute.   The court found that Michigan does not recognize a common law right to be “free from intrusion into seclusion,” the tort implicated by the TCPA.

–Violation of Statutes Exclusions

While acknowledging the conflicting decisions of Illinois District Courts as regards whether CGL policies cover BIPA violations, the Seventh Circuit ruled in Citizens Ins. Co. of America v. Wyndalco Enterprises, No. 22-2313 (7th Cir. June 15, 2023) that there is an “intractable ambiguity” in the policy’s Distribution of Material in Violation of Statutes.  The court found that while a “plain-text” reading of the exclusion might not render the protection promised by Coverage B  “wholly illusory,” “such a reading would, as a practical matter, all but eliminate coverage for certain claims that are largely, if not exclusively, statutory in nature (intellectual property claims in particular) and that the policy by its express terms otherwise purports to cover.”

The Fifth Circuit ruled in Princeton Excess & Surplus Lines Ins. Co. v. A.H.D. Houston, Inc., No. 22-20473 (5th Cir. Aug. 25, 2023),that a Texas District Court erred in finding coverage for a law suit in which sixteen models alleged that three strip clubs had unlawfully used their likenesses in its advertising and had suggested that these women endorsed the clubs or had worked there as exotic dancers.  The Fifth Circuit upheld the applicability of a “Field of Entertainment” exclusion in a 2001 CGL policy and a “Exhibitions and Related Marketing Exclusion” in the 2022 policy.  While conceding that these exclusions largely eliminated most of Coverage B, the court refusing to invalidate them on the basis that they rendered this coverage “illusory,” noting that they did leave open coverage for “advertising idea” disputes.  The court also rejected the dancers’ argument that the exclusion only applied to a “violation of the “right of privacy,” whereas their claims were for “invasion of privacy.”   Finally, the Fifth Circuit ruled that the trial court had erred in finding that the unlawful use of the models’ images involved the infringement of an “advertising idea.”  To the contrary, the court held that “while the Models’ curated photographs could similarly be used to promote an array of business ventures, the images themselves would not be the “advertising idea””.


Following on key 2022 victories in the Supreme Courts of Delaware and Ohio, liability insurers notched another victory when the Sixth Circuit rejected the Seventh Circuit’s H.D. Smith approach and ruled in Westfield National Ins. Co. v. Quest Pharmaceuticals, Inc., No. 21-6026 (6th Cir. Jan. 13, 2023) that these suits did not seek damages “because of “ bodily injury.  “Nothing in the policies suggests that they were meant to cover lawsuits like the ones here, brought primarily by local governments to recover purely economic damages. The plain language instead indicates that claims must in some way derive from a particular bodily injury to a person.  Although some of the complaints plead tort claims such as nuisance or negligence, the underlying theory of recovery is that Quest’s alleged misconduct resulted in economic harms to the entities themselves. No complaint predicates recovery on a particular person’s bodily injury, and so no complaint triggers the insurers’ duty to defend.”


 Construction defect and faulty workmanship claims remain a mainstay of coverage litigation throughout the country.

Having ruled 7 years ago in Wisconsin Pharmacal, that  “property damage” under a CGL policy requires damage to “other property” in the context of construction defect cases, the Wisconsin Supreme Court has now declared that its adoption of an “integrated systems analysis” in Wisconsin Pharmacal was a departure from existing law that it would no longer follow.  In 5 Walworth LLC v. Engerman Contracting, Inc., 2023 WI 51 (Wis. June 20, 2023), a majority of the justices ruled that a trier of fact could conclude that the water leakage and consequent cracks in the pool that the insured’s had installed and damage to the surrounding soil constituted “property damage” caused by an “occurrence.”   In a concurring opinion, Justice Roggensack criticized the majority for overruling Wisconsin Pharmacal (which no party had requested) and for not understanding the scope of “integrated systems analysis” and  took issue with the majority’s opinion, agreeing with Travelers that “damage to the pavers themselves was not damage to other property. We determined other property was not damaged by the allegedly defective cement because the pavers constituted an integrated system or product where one component could not be separated from the other components..”   Two other justices agreed that Wisconsin Pharmacal should be overruled but argued that summary judgment was nonetheless properly granted to West Bend because its insured was already aware that the pool was leaking before it purchase coverage from West Bend.

In a case arising under New York law, the Third Circuit has ruled that a Pennsylvania District Court erred in requiring a contractor’s liability insurer to accept coverage for allegations that its insured ‘s hydraulic fracking services to extract natural gas from wells owned by U.S. Energy had damaged dozens of those wells.   Whereas the District Court had ruled that the jury’s finding that the insured “fail[ed] to perform its contract with U.S. Energy in a workman like manner” was not the same as “faulty workmanship,” the Court of Appeals concluded in American Home Assur. Co. v. Superior Well Services, No. 22-1498 (3d Cir. May 31, 2023)  that these terms are, in fact, equivalent and ruled that faulty workmanship, such as rendering a substandard service or causing damage by use of an unsuitable product, as was the case here, does not constitute an “occurrence’” under Pennsylvania law.   The Third Circuit also rejected the lower court’s finding that the “occurrence” requirement did not apply to the policy’s Underground Resources and Equipment Coverage endorsement.

The Ninth Circuit has ruled that an Idaho District Court was correct in ruling that a CGL Insurer had no duty to defend suits brought against a building contractor for failing to return a deposit and for failing to make payments on financed equipment   In Northland LLC v. Contractors Bonding and Insurance Company, No. 22-35476 (9th Cir. June 16, 2023)(unpublished), the court ruled that complaints only sought damages for breaches of contract and sought liability arising from contractual obligations and debts rather than from property damage.


 The Ohio Supreme Court ruled in Krewina v. United Specialty Ins. Co., 2023-Ohio-2343 (Ohio July 12, 2023) that an exclusion for “bodily injury arising from any actual threatened or alleged assault or battery” applied to an incident in which a fellow resident at a treatment center attacked the plaintiff with a knife.   Whereas the underlying claimant had argued that her assailant lacked the mental state necessary to commit an “assault” or a “battery,”  the court held that under such circumstances the civil law definitions of “assault” and “battery” controlled and that “when a commercial general-liability insurance policy excludes coverage for injuries arising out of an “assault or battery,” the subjective intent of the person who committed the assault or battery is irrelevant.”

The Wisconsin Supreme Court has ruled in Dostal v. State Farm Fire and Cas. Co., 2023 WI 6 (Wis. Jan. 26, 2023) that a criminal conviction for second-degree reckless homicide did not preclude an insured from arguing that the incident constituted an “occurrence” under his homeowner’s policy. Citing the New York Court of Appeals’ decision in Zuk, the court declared that “a person may engage in conduct that involves a calculated risk without expecting – no less reasonably – that an accident will occur.”  The Supreme Court also declined to rule for State Farm based upon the “resident relative” and intentional act exclusions in State Farm’s policy, finding that these were fact intensive issues that required further evaluation on remand.  Three justices dissented from the majority’s holding, arguing that the insured’s conviction for reckless homicide for the death of his own child precluded the insured from claiming that the death was an accident.

The Eighth Circuit has ruled that a Missouri District Court did not err in declaring that an assault and battery exclusion precluded coverage for a $2.5 million garnishment claim brought by a patron who was shot in the course of gunfire at the insured’s bar.    In Scaglione v. Acceptance Ind. Co., No. 22-2496 (8th Cir. August 1, 2023), the court held that the exclusion, which included claims based on negligent hiring and training, clearly applied to these claims and rejected the plaintiff’s argument that the exclusion was ambiguous because it did not state that it applied to assaults committed by persons other than the insured and its employees.  The court also refused to find that the insured’s alleged failure to provide a safe space was a separate act of negligence subject to the “concurrent-proximate cause” rule, holding that “Scaglione’s negligence was not independent of and distinct from the excluded assault and battery.”\


On the heels of a June decision by the U.S. Supreme Court disallowing its affirmative action programs, the U.S. Court of Appeals for the First Circuit has affirmed a Massachusetts court’s ruling that Harvard’s failure to give timely notice of that suit disallows coverage under a $15 million excess policy.   In President and Fellows of Harvard College v. Zurich American Ins. Co., No. 22-1938 (1st Cir. Aug. 9, 2023), the court emphasized the long-standing line of state and federal appellate authority giving strict application to “claims made and reported” requirements and rejected arguments by the Anderson Kill law firm that Harvard should be covered if it could show through discovery that Zurich was independently aware of the litigation against Harvard or that giving strict effect to such terms is against public policy because it would encourage “opportunistic insurers” to draft “convoluted notice provisions in the hope of duping customers into defaulting on their coverage.”  Pointedly, Judge Selya stated that litigants who wish to reverse long-standing common law principles must do so in state court and that it is not up to the federal courts to determine what the public policy of Massachusetts is.


In Estate of Bramble v. Greenwich Insurance Company, 2022 SC 0043 (Ky. June 15, 2023), the Kentucky Supreme Court ruled that a third-party claimant may pursue bad faith claims against a tortfeasor’s liability insurer without waiting for an adjudication that the insurer owed coverage for the claims.  While holding to its longstanding rule that tort victims do not have direct rights of action against a tortfeasor’s insurers, the Supreme Court held that the plaintiffs in these cases had their own tort claims for which they may recover if they can prove that Greenwich (1) is obligated to pay the claimant the terms of its policy; (2) lacked a reasonable basis in law or fact for denying the claim; and (3) knew it had no reasonable basis for denying the claim or acted in reckless disregard for whether such a basis existed.

In State Farm Mutual Automobile Insurance Company v. Edwards, 2022-SC-0145 (Ky. June 15, 2023), the Kentucky Supreme Court refused to grant State Farm’s writ of prohibition that would have stayed discovery with respect to its handling of the claim and alleged bad faith until such time as the tort claims based upon its alleged negligent handling of the case had been resolved.  While acknowledging that there are cases where both a coverage claim and a bad faith claim are alleged, the best practice usually is for the trial court to bifurcate the claims for trial and to stay discovery on the bad faith claim until the tort claim is resolved, the Supreme Court found that in this case the tort and bad faith claims were inextricably intertwined.  Further, the Supreme Court refused to find that the trial court’s discovery orders erroneously allowed discovery of privileged information.  The court criticized State Farm for its sweeping refusal to respond to certain discovery requests that did contain privileged information but which also contained non-privileged documentation for which State Farm has failed to provide any specific delineation.  The court noted that the privilege log submitted by State Farm contained a description of the documents too vague to allow for a determination of whether they were privileged or not.  The court also declined to find that State Farm’s offer to allow the trial judge in camera review of the disputed documents was a satisfactory remedy. noting the burden that this placed on the trial court and the difficulty the trial court might have in describing the documents for purposes of later appeals.  However, while remanding the case back to the trial court for further proceedings with respect to the requested discovery, the court observed that State Farm still had the right to seek protective orders as might be appropriate.

The Kansas Supreme Court has reaffirmed its principle that insurers have an implied contractual duty to act with reasonable care and in good faith when handling claims.  As a result, it ruled in Granados v. Key Ins. Co., No. 123, 684 (Kan. Jan. 27, 2023) that the Court of Appeals erred in adopting a narrow standard for “duty to settle” cases that would have relieved insurers of any obligation to make an offer of settlement prior to receiving a claim for damages from an injured accident victim.  Further, the Supreme Court ruled that in so holding, the Court of Appeals had conflated the elements of a legal duty with the element of breach thereby invading the traditional problems of a jury as factfinder.

The Eleventh Circuit ruled in Ilias v. USAA General Ind. Co., 21-12486 (11th Cir. Mar. 14, 2023), that a Florida District Court erred in granting summary judgment to USAA in a bad faith case based upon its claimed failure to settle a time limited policy limit demand.  Whereas the trial court had ruled that no reasonable juror would find bad faith in this case, the Eleventh Circuit concluded USAA had, in fact, acted negligently in waiting a month to undertake settlement discussions and in failing to promptly provide information to plaintiff’s counsel confirming the absence of any excess insurance coverage.  Notwithstanding USAA’s contention that mere negligence is not a basis for finding bad faith under Florida law, the Court of Appeals declared that the facts suggested that there might have been more than a simple mistake here and that, in any event, even negligent conduct is relevant to a “totality of the circumstances” analysis.


2023 saw dramatic shifts in the business of insurance, particularly the impact of climate change and increased cat claims on the willingness of property insurers to write business in states such as California and Florida.

Following the decision of Allstate, Farmers, Liberty Mutual and State Farm to stop writing various lines of insurance in California, state Insurance Commissioner Ricardo Lara announced a compromise plan to restore stability to the residential insurance market. The agreement will for the first time allow insurers to set rates based on forward-looking actuarial models, rather than historical loss data.   In consideration of this and other inducements, insurers will agree to assume more of the risks that are now being insured through the FAIR plan and will commit to writing no less than 85% of their statewide market share in high wildfire risk communities.  The plan also implements financial safeguard to ensure the solvency of the FAIR Plan and allows it to expand commercial coverage to $20 million per building to close insurance gaps for homeowners associations and condominium developments,

AIG also announced that it is pulling back from writing high-end insurance in 200 Zip codes around the country, including affluent communities in New York, Delaware, Florida, Colorado, Montana, Idaho and Wyoming.

Finally, the Nevada legislature enacted Statute §679a which states that insurers may not issue or renew policies containing terms wherein defense costs erode limit


Alaska Supreme Court

Estate of Wheeler v. Garrison Property and Casualty Insurance Company

Issue on appeal:  The Ninth Circuit has asked the Alaska Supreme Court to clarify whether a total pollution exclusion applies to carbon monoxide poisoning claims arising out of a defective water heater in the insured’s cabin.

California Supreme Court           

John’s Grill v. Hartford Financial Services, S278481
French Laundry Partners v. Hartford Fire, S278492

Issue on appeal:  Whether a virus exclusion is unenforceable because enforcing it would render the policy’s coverage illusory.

Hawaii Supreme Court

Aloha Petroleum Ltd. v. National Union Fire Ins. Co. of Pittsburgh, PA,

Issues on appeal:  Are allegations that an oil company continued to market petroleum products even after knowing that doing so would contribute to climate change an “occurrence” and is this conduct subject to an absolute pollution exclusion?

Massachusetts Supreme Judicial Court

Zurich American Ins. Co. v. Medical Properties

Issue on appeal:   The First Circuit has asked the SJC to clarify whether rainwater that accumulates on a parapet roof before inundating the insured’s property is “surface water” so as to be subject to the policies’ coverage limitations for floods.

Montana Supreme Court

Ward v. Safeco Ins. Co. of America,

Issue on appeal:  The Ninth Circuit has asked the Montana Supreme Court to clarify whether anti-concurrent causation language in a property policy’s Earth Movement and Water Damage exclusion avoids the efficient proximate cause doctrine.

New Jersey Supreme Court

Ocean Walk LLC v American Guarantee Liability Ins. Co., A28-22

Issues on appeal:  Does the COVID 19 virus caused direct physical loss?    Is `    coverage avoided by the policy’s Contamination Exclusion?

Texas Supreme Court

Rodriguez v. Safeco Ins. Co. of Indiana, No. 23-0534

Issue on appeal:   Does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees pursuant to the state Prompt Payment Act?   The case was argued before the Texas Supreme Court on October 4, 2023.


U.S. Court of Appeals for the First Circuit

Berkley National Ins. Co. v. Granite Telecommunications, LLC, No. 22-1959

Issues on appeal:  Did a Massachusetts District Court err in ruling that a bacteria or virus exclusion precluded any duty to defend a suit by an employee whose leg became infect while standing in sewage and did the insurer have an equitable right to recoup sums that it paid under a reservation of rights to defend and then settle the case?  The insured’s appeal was argued on October 3, 2023.