New Jersey's Appellate Division Rejects Proration of Insurance Policy Deductibles
McCarter & English, LLP
In Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., No. A-4423-01T2F (App. Div. Jan. 14, 2002), the New Jersey Appellate Division issued a decision with adverse consequences to policyholders seeking coverage for delayed manifestation, long-tail claims triggering multiple policies. The decision requires policyholders to pay full rather than prorated deductibles in cases in which insurers need only pay a prorated share of their policy limits.
Stub Policies: You Get What You Pay For
Anthony Bartell and Steven H. Weisman of McCarter & English, LLP
New Jersey's Appellate Division recently held that an insurance company, which accepts additional premiums to extend its policy's termination date for less than twelve months, must pay additional policy limits for claims triggering the extended "stub policy" period. The Court reasoned that "an insured who pays a prorated premium for insurance coverage for an additional period with all other terms of the policy to remain the same would reasonably expect that such a prorated premium reflects only the insurer's reduced time on the risk, not a reduction in the policy's aggregate coverage limits."
New Jersey Supreme Court Holds that Non-Cumulation Clauses Cannot Apply to the Allocation of Long-Tail Claims
Sherilyn Pastor of McCarter & English, LLP
In Spaulding Composites Co., Inc. v. Aetna Cas. & Sur. Co., Docket No. A-88-01 (N.J. April 10, 2003), a policyholder sought coverage for environmental defense and remediation costs under its comprehensive general liability insurance policies. The primary insurer argued that its liability, under nine primary policies, was reduced by each policy's non-cumulation clause.
Creative New Insurance Products LMU, REP & Warranty and Contingent Tax Insurance
Dan Bailey, Esq. of Arter & Hadden LLP
In response to the insurance industry's recent profitability challenges and increased commitment to creative risk management techniques, many insurers are now offering three types of new insurance products that can provide significant benefits to a company. Each are briefly described in this article.