Caffery, Oubre, Campbell & Garrison, L.L.P.
New Iberia
Service, Integrity, Results

Court: policy language does not limit insurer’s defense outlay

A recent insurance-linked court outcome outside Louisiana is broadly instructive, setting forth a judicial ruling and reasoning that is logically of interest to national insurers.

OneBeacon is one such insurer. That company offers insurance products to consumers across the United States, including in Louisiana. One service provided by OneBeacon is its safeguarding against risk as a reinsurer for other insurance company clients.

It is as a reinsurer that OneBeacon has over the past year found itself embroiled in litigation in Pennsylvania, losing court cases at every level of that state’s judicial system.

The core contention in OneBeacon’s protracted dispute with two other insurance companies it had reinsured revolved around policy language.

Specifically, ambiguous policy wording. That was the assessment of successive courts in the OneBeacon matter as its case wound its way through Pennsylvania’s appellate system.

The state’s Supreme Court recently ruled that provisions in OneBeacon’s reinsurance policies with its customers were not clear in setting forth a policy cap regarding losses and litigation defense costs. OneBeacon was tasked with paying out $11 million to cover its clients against liability in asbestos claims. The court also upheld lower-court rulings as well, though, which had flagged OneBeacon with an additional $7 million-plus in outlays its customers had spent on defense costs.

OneBeacon argued that its stated policy limit was intended to cover all claim-related costs. Justices’ rejected that argument based on their inability to see any language limitation expressly focused upon comprehensive liability concerning a claim. The court stated that reasonable interpretation supported the view that the $11 million policy limit applied only to losses, with expenses incurred for defending the claim being additional costs to be borne by OneBeacon.

There is a clear take away for insurers from the litigation in the form of an imperative.

And that is this: Insurance companies must absolutely ensure that policy language is as clear and unequivocal as it can be regarding every material detail of coverage and representation.

Proven defense attorneys with a deep well of experience drafting, defending and enforcing policies can centrally help with that.

No Comments

Leave a comment
Comment Information

contact us

With offices in Lafayette and New Iberia, our lawyers represent clients in state and federal courts throughout Louisiana. Contact us today to schedule your case assessment with one of our experienced attorneys. Email or call us at 337-446-2442 to reach our Lafayette office or call 337-352-2310 to reach our New Iberia office.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Lafayette Office
100 East Vermilion Street
Suite 201
Lafayette, LA 70501

Phone: 337-446-2442
Map & Directions

Lafayette Office

New Iberia Office
800 South Lewis Street
Suite 205
New Iberia, LA 70560

Phone: 337-352-2310
Map & Directions

New Iberia Office