Zalma on Insurance
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Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
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March 04, 2025
No Coverage for Known False Statements

Exclusion of Defamatory Or Disparaging Statements Made With Knowledge Of Their Falsity Effective

Post 5007

Liability Insurance is Limited to Unintentional Conduct

Read the full article at https://lnkd.in/gJ2XXKB3, see the full video at https://lnkd.in/g5HA2uAA and at https://lnkd.in/gDd9PE6C, and at https://zalma.com/blog plus more than 5000 posts.

The main issue presented to the Tenth Circuit Court of Appeals was whether the insurance policies’ exclusions, which deny coverage for defamatory or disparaging statements made with knowledge of their falsity, apply. The District Court held that the exclusions do apply, as the underlying complaint alleged that the insureds knowingly published false statements.

In New Hampshire Insurance Company; National Union Fire Insurance Company Of Pittsburgh v. TSG Ski & Golf, LLC; The Peaks Owners Association, Inc.; Peak Hotel, LLC; H. Curtis Brunjes, No. 23-1248, United States Court of Appeals, Tenth Circuit (February 24, 2025) the Tenth Circuit affirmed.

BACKGROUND

TSG Ski & Golf, LLC (TSG) was insured under commercial general-liability insurance policies issued by New Hampshire Insurance Company and National Union Fire Insurance Company of Pittsburgh. The policies provided coverage for personal and advertising injury but excluded coverage for injury arising from the publication of material known to be false.

In late 2018 the TSG Parties began implementing a three-part scheme to coerce the Underlying Plaintiffs into paying annual assessments that the TSG Parties knew were not owed. First, the TSG Parties commissioned a “sham” audit of the annual assessments paid by Telluride between 2009 and mid-2015. They manipulated the audit to overlook payments made by Telluride through the True-Up Process, guaranteeing that TSG’s accountant would erroneously conclude that Telluride had failed to pay any assessments during the relevant time period.

The underlying lawsuit was filed by Telluride Resort & Spa, LLC and its principals against TSG and other parties, alleging that they knowingly published false statements to coerce the plaintiffs into paying assessments that were not owed. The jury returned a verdict for the Underlying Plaintiffs on all claims that proceeded to trial. It awarded the Underlying Plaintiffs $225,000 in compensatory damages but declined to award punitive damages. The court awarded the Underlying Plaintiffs $2,298,225 in statutory attorney fees and $328,510.53 in costs.

THE ISSUES AT THE TENTH CIRCUIT

The insurers sought a declaratory judgment that they had no duty to defend or indemnify the TSG parties in the underlying lawsuit. The District Court granted summary judgment in favor of the insurers, concluding that the knowledge-of-falsity exclusions precluded coverage.

The TSG parties appealed.

DISCUSSION

An insurer need not defend its insured when an exclusion in the insurance policy precludes coverage. To avoid the duty to defend, the insurer must establish that the allegations in the complaint are solely and entirely within the exclusions in the insurance policy; that is, that there is no factual or legal basis on which the insurer might eventually owe coverage.

Because the knowledge-of-falsity exclusions precluded coverage, the Insurers had no duty to defend the TSG Parties in the underlying lawsuit.

The duty to indemnify relates to the insurer’s duty to satisfy a judgment entered against the insured. Unlike the duty to defend, the duty to indemnify arises only when the policy actually covers the harm and typically cannot be determined until the resolution of the underlying claims.

At trial the uncontroverted testimony of TSG and POA officers (all of whom sat on the POA board and approved the debt-collection letter) established that the TSG Parties knew the statements in the debt-collection letter were false when the letter was published. The testimony of multiple witnesses established that the liability imposed against the TSG Parties was precluded from indemnification under the knowledge-of-falsity exclusions. The Tenth Circuit concluded, therefore, that the Insurers owed no duty to indemnify the TSG Parties for their losses in the underlying lawsuit.

BAD FAITH

It is settled law in Colorado that a bad faith claim must fail if coverage was properly denied and the plaintiff’s only claimed damages flowed from the denial of coverage.

The Tenth Circuit affirmed the district court’s decision, holding that the insurers had no duty to defend or indemnify the TSG parties. The district court’s grant of summary judgment on all claims was affirmed.

ZALMA OPINION

Liability insurance is designed to protect the persons or entities insured against claims or suits that they cause damage to third parties from an accidental or fortuitous cause. Since intentional acts are not accidental nor fortuitous there can never be coverage for defense or indemnity of intentional acts. The insurers did not rely on lack of fortuity by including in the policy wording a clear and unambiguous exclusion for claims of defamation if the insured had knowledge-of-the-falsity of the statements when made and were deprived of defense or indemnity.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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00:10:16
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20 hours ago
Allegations That Establish Breach of a Condition Defeats Suit

Notice of Claim Later than 60 Days After Expiration is Too Late

Post 5089

Injury at Massage Causes Suit Against Therapist

Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.

Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.

In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.

FACTUAL BACKGROUND

Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...

00:08:31
June 02, 2025
Zalma’s Insurance Fraud Letter – June 1, 2025

ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma

Post 5087

See the full video at and at

Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf

Zalma’s Insurance Fraud Letter – June 1, 2025

See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.

ZIFL – Volume 29, Issue 11

The Source for the Insurance Fraud Professional

Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...

00:08:42
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May 30, 2025
Plain Language of Policy Enforced

No Coverage if Home Vacant for More Than 60 Days

Failure to Respond To Counterclaim is an Admission of All Allegations

Post 5085

See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.

In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.

BACKGROUND

On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.

Plaintiff filed suit ...

00:06:50
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:

Health Care Fraud Trial Results in Murder for Hire of Witness

To Avoid Conviction for Insurance Fraud Defendants Murder Witness

In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Immigrant Criminals Attempt to Profit From Insurance Fraud

People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.

The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

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