On November 10, 2020, a federal judge in New York rejected an insurer's counterclaim for limiting exposure below a $ 15 million sublimity and an order preventing the policyholder from pursuing additional amounts.
In February 2017, Pilkington sued North America, Inc. (Pilkington), suffered between $ 60 million and $ 100 million in damage from a tornado that struck its Illinois glass factory. Pilkington sought compensation for its loss under a commercial real estate and business interruption policy issued by defendant Mitsui Sumitomo Insurance Company (MSI). Pilkington also claimed that its insurance broker, Aon Risk Services Central, Inc. (Aon), is responsible for incorrect advice provided during the mediation of the insurance. Aon's negligence allegedly gave way to MSI's fraudulent revision of the insurance policy, which resulted in the losses from the tornado not being fully compensated. The revision changed the wording in a windstorm sub-boundary. Aon was reportedly informed by MSI of the changes and could not inform Pilkington that the review would significantly reduce coverage for windstorms, including tornadoes.
In June 2020, MSI filed two lawsuits against Pilkington, claiming that they did not pay more than $ 1
The Court concluded that “
Having designed the nature of the coverage dispute. , the court granted Pilkington's request for dismissal. The court thus noted the unique nature of insurance contracts, including the trust of a policyholder in its insurer. "MSI offers no facts to support a conclusion that a sophisticated insurance company like itself, which repeatedly tried to substantially change the terms of its policyholder's insurance contract, in no way innocently misled the policyholder into agreeing to something MSI did not intend." The judge also stated that MSI will have a chance to argue that they have met their coverage obligations while considering whether Pilkington is entitled to further payment under the policy. for policyholders who often rely on the representations of insurers and brokers. Here, the court thoroughly ignored the insurer's creative attempt to limit coverage prematurely and instead focused on the policyholder's complaints and well-known allegations of fraud and misrepresentation in connection with the current sublimity. The court rightly refused to briefly accept the insurer's argument that sublimit covers cover and excludes the plaintiff from seeking cover that exceeds that ceiling.
An insurance is an agreement and, implicit in such an agreement, is the insurer's obligation to act fairly with its insured. Insurance brokers who provide insurance coverage for their clients are also obliged to act in good faith and with reasonable care to obtain the requested coverage on the best possible terms. Claims for broker liability arise when the broker does not achieve an appropriate policy that covers the type of risk that the client tried to protect against or if a broker incorrectly states the terms or coverage of an insurance policy. The decision here serves as a reminder of the obligations owed by policyholders, including the duty of good faith and fair trade. An insurance company has its rights to explicitly limit or exclude coverage, but an insurance company and a broker must act fairly and disclose important facts. A policy revision that significantly limits the coverage is an important fact that should be fully disclosed to the insured.
This decision also serves as a reminder to policyholders to carefully review all insurance audits proposed by an insurance company or broker. A qualified adviser can help analyze policy changes and ensure that the policyholder remains adequately protected under the policy.