Audit, Compliance and Risk Blog

Over the past several decades, the construction industry has moved to an airtight standard for new buildings in order to reduce heating and cooling costs. In such dwellings, however, where moisture gets in, it is less likely to air-dry. The resulting damp conditions create the perfect environment for mold growth.

On April 16, 2013 the U.S. Supreme Court delivered another reminder that agreements must be drafted clearly and specifically if they are to deliver predictable outcomes – otherwise a court’s later efforts to sort through ambiguities may produce surprises. The case is U.S. Airways v. McCutchen. It arose under a medical benefits plan subject to the federal Employee Retirement Income Security Act of 1974 (ERISA).

The Insurance Services Office (ISO) has presented four major filings in commercial property, business auto, business owner’s coverage, and commercial general liability (CGL), some of which will make 2013 an interesting year for professionals whose success hinges on understanding insurance law. These are the first major new filings by the ISO in seven years.

Extreme weather is having an impact on the insurance industry with everything from hurricanes to blizzards resulting in increased activity in the sector. In order to remain profitable, insurers write policies that exclude certain types of damage, such as that often caused by water ingress. Most states regulate the sorts of exclusions insurers may specify in insurance policies, and state insurance bureaus receive filings from insurers seeking approval for such exclusions. The bureaus also carry out initiatives around consumer protection entailed by state legislation, and often release publications that educate consumers on their insurance options around mold damage and related insurance claims.

Christopher Roinestad and Gerald Fitz-Gerald were overcome by poisonous hydrogen sulfide gas while cleaning a large grease clog in a sewer near the Hog’s Breath Saloon & Restaurant. The district court concluded that Hog’s Breath caused respondents’ injuries by dumping substantial amounts of cooking grease into the sewer. On summary judgment, the district court found Hog’s Breath liable under theories of negligence and off-premises liability, and entered a damage award in respondents’ favor. Mountain States Mutual Casualty Company (“MSM”) sought a ruling that it had no obligation to indemnify Hog’s Breath and the district court agreed, holding that dumping substantial amounts of cooking grease constituted a discharge of a pollutant under the policy’s pollution exclusion clause. The court of appeals reversed. It held that the terms of the pollution exclusion clause were ambiguous and that its application to cooking grease could lead to absurd results and negate essential coverage. The parties took the case to the Colorado Supreme Court who, in Mountain States Mutual Casualty Company v. Christopher Roinestad and Gerald Fitz-Gerald, and Tim Kirkpatrick, D/B/A Hog’s Breath Saloon & Restaurant., 2013 CO 14 (Colo. 02/25/2013), resolved the dispute.

In the concluding part of his year in review series, Barry Zalma selects his final choice of the most significant insurance law cases of 2012:

As part of the year in review series, insurance expert Barry Zalma identifies his three most significant insurance law cases of 2012. Here is his second selection:

As part of the year in review series, insurance expert Barry Zalma identifies his three most significant insurance law cases of 2012. Here is his first choice:

Recent storms on the US east coast have once again highlighted the importance of having at least some understanding of insurance law, in particular the procedures for making an insurance claim in the aftermath of a catastrophic event.

A picture may be worth a thousand words. But words – or lack thereof – can be worth millions. Never more so than when courts are deciding the level of coverage and the amount of payout policyholders are entitled to from insurance companies. So, when it comes to understanding insurance law you need to make sure you understand rule number one: words rule.