CHAPTER 1: INSURANCE CONTRACTS
1.1 IN GENERAL
1.2 FORM AND REQUISITES
1.201 Offer and Acceptance
1.202 Essential Terms
1.203 Insurable Interest
1.204 Title 38.2 of the Virginia Code
1.3 CONSTRUCTION
1.301 In General
1.302 Ambiguity
1.303 Exclusions and Incontestability Clauses
1.304 Punitive Damages
1.4 TERMINATION BY CANCELLATION, SURRENDER, OR
RESCISSION
1.401 In General
1.402 Definitions
1.403 Requirements for Effective Cancellation by the Insurer
1.404 Notice to a Loss Payee
1.405 Cancellation by the Insured; “Free Look” Provisions
1.406 Cancellation by Mutual Consent
1.407 Review by the Commissioner
1.5 REFORMATION AND RENEWAL
1.501 Reformation
1.502 Renewal
CHAPTER 2: AGENTS AND BROKERS
2.1 INTRODUCTION
2.2 DEFINITIONS
2.201 In General
2.202 Traditional Distinction Between “Agent” and “Broker”
2.203 Statutory Definitions
2.204 “Broker” Versus “Consultant”
2.3 STATUTORY DUTIES AND OBLIGATIONS
2.301 In General
2.302 Licensing Requirements
2.303 Policy Language
2.304 Financial Duties and Obligations
2.305 General Trade Practices
2.306 Penalties
2.307 Insurance Data Security
2.4 COMMON LAW DUTIES
2.401 In General
2.402 Duty of Good Faith
2.403 Other Duties
2.5 LIABILITY AND DEFENSES
2.501 Overview
2.502 Parties
2.503 Jurisdiction
2.504 Tort Liability to an Insured
2.505 Contract Liability to an Insured
2.506 Defens
2.507 Damages
2.508 Examples and Particular Problem Areas
2.509 Liability of Agents to Insurers
2.510 Liability of Brokers to Insurers
2.511 Attorney Fees
2.6 SURPLUS LINES INSURANCE BROKERS
2.601 Definitions
2.602 Statutory Requirements
CHAPTER 3: THE TRIPARTITE RELATIONSHIP
3.1 OVERVIEW
3.2 THE INSURED-INSURER RELATIONSHIP
3.3 THE COUNSEL-INSURER RELATIONSHIP
3.4 THE COUNSEL-INSURED RELATIONSHIP
3.5 CONFLICTS
3.501 In General
3.502 Coverage
3.503 Negotiation and Settlement
3.6 CONFIDENTIALITY
3.601 In General
3.602 Third-Party Audits and Reviews—Legal Ethics
Opinion No. 1723
3.7 INDEPENDENCE
3.8 STAFF COUNSEL
3.9 CONCLUSION
CHAPTER 4: DUTY OF GOOD FAITH
4.1 INTRODUCTION
4.2 FIRST-PARTY ACTIONS
4.201 Relationship Between the Insurance Company
and the Insured
4.202 Good Faith Standard
4.203 Legal Basis of Liability for Bad Faith
4.204 Defenses
4.205 Bifurcation and Discovery
4.206 Question for Judge or Jury?
4.207 Damages
4.3 THIRD-PARTY ACTIONS
4.301 Relationship Between the Insurance Company
and the Insured
4.302 Good Faith Standard
4.303 Legal Basis of Liability for Bad Faith
4.304 Defenses
4.305 Bifurcation and Discovery
4.306 Question for Judge or Jury?
4.307 Damages
4.4 ACTIONS BY THIRD-PARTY BENEFICIARIES
4.5 UNINSURED AND UNDERINSURED MOTORIST ACTIONS
4.6 ACTIONS BY A SECONDARY INSURER AGAINST
A PRIMARY INSURER
4.7 CONCLUSION
CHAPTER 5: MISREPRESENTATIONS
5.1 OVERVIEW
5.2 MISREPRESENTATIONS IN THE APPLICATION PROCESS
5.201 Rationale Behind the Rule in the Application Process
5.202 Section 38.2-309 of the Virginia Code
5.3 MISREPRESENTATIONS IN THE CLAIM PROCESS
5.301 Rationale Behind the Rule in the Claim Process
5.302 False Swearing Provisions
CHAPTER 6: FORFEITURE, WAIVER, AND ESTOPPEL
6.1 FORFEITURE
6.101 Overview
6.102 Bases for Forfeiture
6.2 SUBSTANTIAL COMPLIANCE
6.3 WAIVER AND ESTOPPEL
6.301 General Principles
6.302 Payment of Premiums
6.303 Knowledge of the Agent or Insurer
6.304 Misrepresentation and Mistake
6.305 Delay
6.306 Examples of Specific Policy Provisions
6.307 Waiver of Defenses by Failure to Comply with Statute
6.4 STATUTORY REQUIREMENTS
6.401 In General
6.402 Liability Insurance
6.403 Fire Insurance
6.404 Accident and Sickness Insurance Policies
6.405 Life Insurance
CHAPTER 7: PRACTICE AND PROCEDURE
7.1 OVERVIEW
7.2 DECLARATORY JUDGMENTS
7.201 In General
7.202 Purpose
7.203 Initiation
7.204 Virginia State Court
7.205 Federal Court
7.3 RESERVATION OF RIGHTS
7.301 In General
7.302 Purpose
7.303 Statutory Language
7.304 Scope
7.305 Estoppel and Waiver
7.4 REIMBURSEMENT AND SUBROGATION (OTHER
THAN FIRE INSURANCE)
7.401 Comparison
7.402 Subrogation
7.403 Statutory Provisions Affecting Subrogation
7.404 Proceedings
7.405 Reimbursement
7.406 Workers’ Compensation
7.407 Miscellaneous Case Law
7.5 MISCELLANEOUS
7.501 Disclosure of Policy Limits
7.502 Electronic Notification and Delivery
7.503 Website Access to Forms and Endorsements
APPENDIX 7-1: COMPLAINT
CHAPTER 8: MOTOR VEHICLES: BODILY INJURY AND
PROPERTY DAMAGE LIABILITY INSURANCE
8.1 THE AUTOMOBILE LIABILITY INSURANCE POLICY
8.101 Introduction
8.102 How to Read the Policy
8.2 STATUTORY REQUIREMENTS
8.201 In General
8.202 Insurance Is Not Mandatory
8.203 Minimum Limits Not Required
8.204 Section 38.2-2204—The Omnibus Statute
8.205 Other Requirements of Chapter 22 of Title 38
8.206 Certified Policies
8.3 VEHICLES AND PERSONS INSURED
8.301 In General
8.302 Motor Vehicles
8.303 Persons
8.4 RISKS COVERED
8.401 Ownership, Maintenance, and Use
8.402 Policy Exclusions in General
8.403 Statutory Exclusions
8.404 Bureau of Insurance Exclusions
8.5 THE INSURER’S OBLIGATIONS
8.501 In General
8.502 Basic Policy Coverage
8.503 Limits of Liability
8.504 Duty to Defend
8.505 Punitive Damages
8.506 Supplementary Payments
8.507 Multiple Coverages and Policy Limits
8.508 Out-of-State Endorsements
8.6 THE INSURED’S OBLIGATIONS
8.601 In General
8.602 Notice
8.603 Cooperation
8.604 Breach of Notice and Cooperation Conditions
8.7 CANCELLATION AND RENEWAL
8.701 Introduction
8.702 Applicable Statutes
8.703 Cancellation and Refusal to Renew
8.704 Review by the Commissioner of Insurance
APPENDIX 8-1: ANALYSIS OF AUTHORITY—CASES FROM
OTHER STATES—SUMMARY OF JURISDICTIONS
CHAPTER 9: MOTOR VEHICLES: UNINSURED AND
UNDERINSURED MOTORIST INSURANCE
9.1 INTRODUCTION
9.2 STATUTORY ANALYSIS
9.201 When Uninsured Motorist Coverage Must Be Provided
9.202 “Insured” Defined
9.203 “Uninsured Motor Vehicle” Defined
9.204 Geographical Scope of Uninsured Motorist Coverage
9.205 What Coverage Is Provided
9.206 What Triggers Coverage
9.3 FILING AN UNINSURED MOTORIST LAWSUIT
9.301 Prompt Report of a John Doe Accident
9.302 Service of Process
9.303 Venue
9.304 Statute of Limitations
9.305 Choice of Law
9.306 Federal Cases
9.4 RIGHTS AND OBLIGATIONS OF UNINSURED MOTORIST
CARRIERS
9.401 Duty to Pay
9.402 Right to File Pleadings and Make Defenses in General
9.403 Right to File Pleadings and Make Defenses in John
Doe Actions
9.404 No Duty to Furnish Information to the Insured
9.405 Duty to Defend and Settle Claims
9.406 Effect of the Failure of the Uninsured Motorist to Testify
9.407 Disclosure of Insurance Coverage Prohibited
9.408 Consent to Settlement Clauses
9.409 Arbitration
9.410 Medical Examinations
9.5 STACKING OF UNINSURED MOTORIST CLAIMS
9.501 Inter-Policy Stacking
9.502 Intra-Policy Stacking
9.6 PRIORITY OF UNINSURED MOTORIST COVERAGES
9.601 Multiple Uninsured Motorist Coverages<
9.602 Virginia Property and Casualty Insurance Guaranty
Association
9.7 SETTLEMENTS AND JUDGMENTS IN UNINSURED
CLAIMS
9.701 Judgment
9.702 Contribution
9.703 Subrogation
9.704 Joint Tortfeasors
9.705 Items Recoverable
9.8 RELATIONSHIP OF UNINSURED MOTORIST COVERAGE
TO WORKERS’ COMPENSATION
9.9 UNDERINSURED MOTORIST COVERAGE
9.901 Historical Development
9.902 “Underinsured Motor Vehicle” Defined
9.903 Calculation of Underinsured Motorist Limits
9.904 When and to Whom Coverage Is Applicable
9.10 FILING AN UNDERINSURED MOTORIST LAWSUIT
9.11 RIGHTS AND OBLIGATIONS OF UNDERINSURED
MOTORIST CARRIERS
9.12 STACKING OF UNDERINSURED CLAIMS
9.1201 Inter-Policy Stacking
9.1202 Intra-Policy Stacking
9.13 PRIORITY OF UNDERINSURED MOTORIST COVERAGES
9.14 SUBROGATION AND RELEASE OF UNDERINSURED
CLAIMS
9.15 RELATIONSHIP OF UNDERINSURED MOTORIST
COVERAGE TO WORKERS’ COMPENSATION
CHAPTER 10: MOTOR VEHICLES: MEDICAL EXPENSE
INSURANCE
10.1 INTRODUCTION
10.2 OFFER OF COVERAGE
10.3 WHO IS COVERED?
10.301 Statutory Coverage
10.302 “Motor Vehicle” Defined
10.303 “Resident Relative” Defined
10.304 “Occupying” a Motor Vehicle
10.305 “Alighting From” a Motor Vehicle
10.306 “Upon” a Vehicle
10.307 Being Struck by a Motor Vehicle While Not
Occupying a Motor Vehicle
10.308 Shooting Cases
10.309 Policy Provisions
10.4 WHAT IS COVERED?
10.401 In General
10.402 “Reasonable”
10.403 “Necessary”
10.404 “Incurred”
10.5 AMOUNTS OF COVERAGE
10.501 Medical Expenses
10.502 Loss of Income Expenses
10.503 Stacking
10.6 EXCLUSIONS
10.601 In General
10.602 Workers’ Compensation
10.603 Vehicle Furnished for Regular Use
10.604 Combined Effect of Exclusions
10.7 PRIORITY OF COVERAGE
10.8 WRITE-OFFS
10.9 CREDITS
10.10 OFFSETS
10.11 SUBROGATION
10.12 CONDITIONS
10.1201 Payment to the Injured Person or Pursuant to
an Assignment of Benefits
10.1202 Independent Medical Examination
10.1203 Notice
10.13 ASSIGNED RISK POLICIES
APPENDIX 10-1: MEDPAY LETTER 1
APPENDIX 10-2: MEDPAY LETTER 2
APPENDIX 10-3: SCC MEDICAL EXPENSE ENDORSEMENT
APPENDIX 10-4: PAP FORM AND AMENDMENT OF POLICY
PROVISIONS—VIRGINIA (2015)
CHAPTER 11: MOTOR VEHICLES: PHYSICAL DAMAGE
INSURANCE
11.1 OVERVIEW
11.2 POLICY LANGUAGE IN GENERAL
11.201 Scope of Coverage
11.202 Definitions
11.203 Exclusions
11.3 DAMAGES
11.301 In General
11.302 Measure of Damages
11.303 Types of Losses
11.304 Newly Acquired Vehicles
11.4 DUTIES OF THE INSURED
11.401 The Duty of Notification
11.402 The Duty of Cooperation
11.403 Proof of Loss<
11.404 Examination Under Oath
11.405 Protection of Salvage
11.406 Consent to Settlement
CHAPTER 12: MOTOR VEHICLES: RENTAL VEHICLE
INSURANCE AND SELF-INSUREDS
12.1 LEGISLATIVE STRUCTURE FOR LIABILITY AND
UNINSURED MOTORIST POLICY COVERAGE
12.2 SELF-INSUREDS
12.3 RENTAL AGREEMENTS AND INSURANCE POLICIES
12.301 Rental Agreements
12.302 Personal Automobile Policies
12.303 Garagekeepers’ Policies
12.304 Miscellaneous Issues
12.305 Practical Considerations
CHAPTER 13: FIRE INSURANCE
13.1 THE POLICY
13.101 In General
13.102 Coverages
13.103 Exclusions
13.104 Insurable Interest
13.2 THE INSURED’S DUTIES IN THE EVENT OF A LOSS
13.201 Notice of Loss
13.202 Protection of the Insured Property
13.203 Separation of the Insured Property
13.204 Inventory
13.205 Proof of Loss
13.206 Exhibition of Property
13.207 Examination Under Oath and Production of Records
13.208 Effect of Failure to Cooperate
13.3 CONCEALMENT AND FRAUD
13.301 In General
13.302 Basis of the Defense
13.303 Affirmative Defense
13.304 Burden of Proof
13.305 Arson
13.306 Misrepresentation and Concealment
13.307 Effect of the Insured’s Fraud, Concealment, or
Misrepresentation
13.308 “Insanity” as a Defense to the Insured’s Misconduct
13.4 THE RIGHTS OF THE “INNOCENT” COINSURED
13.401 In General
13.402 The Language of the Policy Is Controlling
13.403 Policy Language Excluding Coverage to the
Innocent Coinsured
13.5 MORTGAGEES AND ADDITIONAL INSUREDS
13.501 Additional Insureds and Loss Payees
13.502 Rights and Duties of a Mortgagee
13.6 PAYMENT OF LOSS
13.601 Timing of Payment
13.602 Rules
13.603 Actual Cash Value
13.604 Replacement Cost
13.605 Appraisal
13.606 Option to Replace
13.7 SUIT AGAINST THE COMPANY
13.701 Statutory Requirement
13.702 Relationship to the Loss Payable Provision
13.703 Relationship to Replacement Coverage
13.704 Applicability to Bad Faith Claim
13.705 Intervention and Relation Back
13.706 Tolling of the Limitation Period
13.8 SUBROGATION
13.801 The Existence of the Right
13.802 Limitations upon the Right
APPENDIX 13-1: MARTIN VERSUS STATE FARM GENERAL
INSURANCE CO. (UNPUBLISHED)
APPENDIX 13-2: GUIDELINES FOR APPRAISERS AND UMPIRE
APPENDIX 13-3: OUTLINE OF EXAMINATION UNDER OATH
FOR BUILDING LOSS CAUSED BY ARSON
APPENDIX 13-4: SAMPLE LETTER—REQUEST FOR
EXAMINATION AND DOCUMENTATION
APPENDIX 13-5: AUTHORIZATION
CHAPTER 14: PROFESSIONAL LIABILITY INSURANCE
14.1 INTRODUCTION
14.2 ATTORNEYS
14.201 In General
14.202 Contents of the Policy
14.203 Policy Limits
14.204 The Insurable Event
14.205 Who Is Covered
14.206 What Is Covered
14.207 Policy Exclusions
14.208 Conditions of the Policy
14.209 The Duty to Defend
14.210 Duty to Act in Good Faith
14.211 Other Insurance
14.3 HEALTH CARE PROVIDERS
14.301 Contents of the Policy
14.302 Who Is Covered
14.303 What Is Covered
14.304 Medical Malpractice Cap
14.305 Private Liability Insurance
14.306 Self-Insured Programs
14.307 Medical Malpractice Joint Underwriting Association
14.308 Birth-Related Neurological Injury Compensation
Program
14.309 State Funded Medical Malpractice Insurance
14.4 OTHER PROFESSIONALS
14.401 In General
14.402 The Insurable Event
14.403 Who Is Covered
14.404 What Is Covered
14.405 Policy Exclusions
14.406 Conditions of the Policy
14.407 Other Terms of the Policy
14.5 CONCLUSION
APPENDIX 14-1: COMPLAINT FOR DECLARATORY RELIEF
CHAPTER 15: HOMEOWNERS INSURANCE
15.1 INTRODUCTION
15.2 WHAT IS HOMEOWNERS INSURANCE?
15.201 “Homeowners Insurance” Defined
15.202 Statutory Provisions
15.203 Contractual Limitation Period
15.204 Replacement Cost Endorsement
15.205 “Actual Cash Value”
15.3 PROPERTY COVERAGE<
15.301 Personal Property Coverage
15.302 Structure Coverage
15.303 Ensuing Loss Doctrine
15.304 Location of Personal Property
15.305 Additional Living Expenses
15.306 Coverage After the Homeowner’s Death
15.307 Rights of the Mortgagee and Loss Payee
15.308 Independent Agents
15.309 The Homeowner’s Duties After Loss
15.310 Examination Under Oath
15.311 Defenses to a Homeowner’s Claim
15.4 LIABILITY COVERAGE
15.401 Personal Liability
15.402 Exclusions
15.403 Motor Vehicle Exclusion
15.404 Business Pursuits Exclusion
15.405 Reservation of Rights
15.5 MEDICAL PAYMENTS COVERAGE
15.6 TOXIC MOLD COVERAGE
15.7 CHINESE DRYWALL COVERAGE
APPENDIX 15-1: SAMPLE ANSWER, WITH AFFIRMATIVE
DEFENSES, FOR AN INSURANCE CLAIM LAWSUIT
WHERE ARSON AND FRAUD ARE SUSPECTED
CHAPTER 16: COMMERCIAL GENERAL LIABILITY
INSURANCE
16.1 INTRODUCTION
16.2 “FORTUITOUS LOSS”
16.3 TYPES AND STRUCTURE OF POLICIES
16.301 In General
16.302 The Declarations Page
16.303 The Insuring Agreement
16.304 Who Is Insured
16.305 Limits of Liability
16.306 Definitions
16.307 Conditions
16.308 Endorsements
16.309 Exclusions
16.4 THE INSURER’S DUTIES
16.401 The Duty to Defend
16.402 The Duty to Indemnify
16.5 THE INSURED’S DUTIES
16.501 In General
16.502 Notice
16.503 The Duty to Cooperate with the Insurer
16.504 Payment of Premiums
16.6 TRIGGERS OF COVERAGE
16.601 In General
16.602 Manifestation Theory
16.603 Exposure Theory
16.604 Continuous Trigger Theory
16.605 Injury-in-Fact Theory
16.7 RULES OF POLICY INTERPRETATION
16.701 In General
16.702 Clear Language Is Enforced as Written
16.703 Intent of the Parties
16.704 Ambiguities, Parol Evidence, and Construction
Against the Drafter
16.705 Burden of Proof
CHAPTER 17: COMMERCIAL PROPERTY INSURANCE
17.1 INTRODUCTION
17.2 THE BASIC POLICY
17.201 Definition of Covered Property
17.202 Covered Causes of Losses
17.203 Excluded Causes of Loss
17.204 Fortuity and Other Related Doctrines
17.205 Policy Limits
17.206 Coinsurance
17.3 ADJUSTING THE LOSS AND BAD FAITH
17.4 BOILER AND MACHINERY POLICIES
17.5 BUSINESS INTERRUPTION COVERAGE
17.501 In General
17.502 Coverages
17.503 Causes of Loss
17.504 Measure of Loss
17.6 NOTICE AND SUIT
CHAPTER 18: DIRECTORS’ AND OFFICERS’ INSURANCE
18.1 INTRODUCTION
18.101 Purpose
18.102 “Claims Made” Coverage
18.2 PHYSICAL STRUCTURE OF THE POLICY
18.201 Overview
18.202 Declarations
18.203 Endorsements
18.204 Policy Form
18.3 INSURER’S DUTIES
18.4 INSURED’S DUTIES
18.401 Duty to Give Notice
18.402 Duty to Cooperate
18.5 SPECIAL ISSUES
18.501 Misrepresentation in the Insurance Application
18.502 Securities Claims
18.503 Bankruptcy of the Organization
18.504 Self-Insured Retentions and the Duty to Defend
18.505 Side A Policies
18.506 Coverage for Service to an Unrelated Entity
18.507 Alternative Dispute Resolution
TABLE OF AUTHORITIES
INDEX