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Connecticut insurer one of several to lose in policy-related battle

On Behalf of | Apr 6, 2017 | Business Litigation |

In any given case, a court’s ruling in a litigation matter is centrally determined by any number of things.

As noted in a recent business article, a judicial outcome from earlier this month featuring a Connecticut insurance company and several other insurer defendants issued “after an extensive and complex analysis of policy language” led the court to a clear determination regarding liability.

That court — a Delaware tribunal — found most fundamentally that sloppy and unclear contract language compelled an adverse result for Stamford-based XL Specialty Insurance Co. and several other insurers who had executed policies with communications giant Verizon Communications Inc.

XL’s policy was for excess coverage exceeding liability limits in a primary policy Verizon had executed with insurance giant AIG to protect itself from any adverse fallout that might result from the spinoff of one of its business units several years ago.

And fallout did indeed result, following that subsidiary’s subsequent collapse and bankruptcy filing. Verizon was forced to defend against a number of business entities alleging harm resulting from the spinoff.

In defending, Verizon pointed to the policies, which it stated directly covered its losses.

The insurers disputed that point, saying that coverage applied only under limited circumstances.

Verizon sued.

And, as a result, the court engaged in the above-cited protracted and complex analysis of language that it ultimately deemed was so unclear and inconsistent that there was no recourse other than to rule in Verizon’s favor.

And the tribunal minced no words when it came to expounding on the reasoning underlying its decision.

The insurers, the court stated, obviously spent more time and energy being focused upon touting and selling a relatively pricey and niche-based product/service than they did on taking a “plain language approach to clearly articulating what was covered.”

And that cost them, in a big way. The ruling against the insurers mandates that they pay more than $48 million to Verizon to recoup it for outlays it has spent in defending itself against spinoff-related liability.