Hunton Insurance Recovery Blog

Retaining Insurance Coverage in the Face of Late Notice and Misconduct Exclusions, Risk Management
August 24, 2015

Retaining Insurance Coverage in the Face of Late Notice and Misconduct Exclusions – A Texas federal court recently ordered an insurer to reimburse an oil and gas company for costs and expenses incurred while defending against environmental claims.  See Tow v. Water Quality Ins. Syndicate (In re ATP Oil & Gas Corp.), No. 14-3280, 2015 WL 3545091 (Bankr. S.D. Tex. June 5, 2015). The court found that a duty to defend existed even though the insured failed to immediately notify the insurer of the occurrence giving rise to the claim, as required by the insurance policy, and despite alleged willful misconduct that was excluded from coverage under the policy. The opinion presents important lessons for corporate policyholders concerning choice of law, the notice-prejudice rule and the duty to defend.