Lou assessed Harleysville Group Insurance v. Heritage Communities Inc. On January 11, the South Carolina Supreme Court ruled that an insurer’s reservation of rights letter must state clearly why the insurer believes a policy may not provide coverage for a loss.
“The decision requires insurers to be specific about the grounds on which they may deny indemnity coverage when defending under a reservation of rights,” Lou told Law360. “Failure to specifically identify the grounds for denying coverage will bar the insurer from asserting the defense.”
Lou also commented on General Refractories Co. v. First State Insurance Co. In this case, a Third Circuit panel ruled that a common asbestos-related policy exclusion applies to claims arising from asbestos in any form.
“The court’s decision is most remarkable because of the consequences to the insurance industry that would have occurred if the court has applied the exclusion narrowly,” Lou said.