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Quote of the Day - Verbosity leads to unclear, inarticulate things. - Dan Quayle
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When Is A Press Release An Insurance Claim?

When the Fifth Circuit says it is, that is.  The USEPA determined that a subsidiary of RSR Corporation should be added to its National Priorities List, and before it did so, sent out a press release making that announcement. 

No comment here from the peanut gallery on whether that qualification merits a press release or gnashing of teeth and renting of clothes.  The USEPA later sued RSR's subsidiary, Quemetco. 

After it saw the press release, RSR immediately notified its insurance company, International Insurance Company, of the press release, and asked it to provide coverage.  Good thing it did because soon after, RSR's reporting period expired, and along with it, the claims-made insurance that RSR had purchased to protect itself.  It was not until after the claims reporting period expired that the USEPA filed suit. 

In response, International filed an action with the Texas court, seeking a declaration that it was not liable.  The USEPA sought $8 million in cleanup costs.  Among other reasons, International claimed the the USEPA's press release didn't amount to a claim, and if it was right, then it wouldn't have to cover the $8 million claim because the lawsuit fell outside the policy period.

It's a big deal for claims-made, claims-reported policies because there's a very short window of coverage.  After those periods expire, it's like renter's insurance:  you don't have any.  Some policies and court decisions define "claim" as requiring a lawsuit.  Here, however, the policy language is even more ambiguous.

According to the Court, "The policy includes a provision labeled 'definition of claim' which fails to define the term comprehensively.  That provision merely states that a claim 'comprises any single claim or series of claims from one or multiple claimants resulting from the same isolated, repeated or continuing environmental impairment.' "  In other words, it's as clear as mud.

Never fear, though.  The Fifth Circuit saw this one correctly and held International to provide coverage.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Friday, September 23, 2005 at 20:01 Comments Closed (0) |
 
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