In the most recent Corporate Insurance Law column published in the New York Law Journal on July 15, 2014, we examine recent Southern District case law addressing disputes over whether separate claims constitute interrelated claims under the terms of an insurance policy. Our focus is on Glasscoff v. One Beacon Midwest Ins., a recent decision issued by the Southern District, in which Juge Deborah Batts found that claims made by the FDIC and claims made by a group of investors did not have a sufficient factual nexus to be considered interrelated claims.
Resolution of disputes over whether two claims are interrelated necessarily turns on analysis of the facts surrounding the underlying claims. As a result, court rulings resolving such disputes are largely fact-specific and broad conclusions based on case law precedent can be elusive. Courts in New York have tried to introduce some consistency by focusing on whether there is a “sufficient factual nexus” between the two claims. However, it is questionable whether this standard is consistent with the applicable policy language much less whether the standard provides useful guidance.
Whether two claims are interrelated can mean the difference between coverage and no coverage. For example, a claim made against an insured after expiration of an insurance policy might be covered under the expired policy if it relates back to a prior claim made during the policy period. On the other hand, if the claim relates back to a prior pending claim made before the inception of a policy, it might be barred by an exclusion for prior claims. In some cases, insurance carriers may utilize interrelated claims provisions to attempt to confine the available policy limits for separate claims to one policy limit.
Given the sometimes critical nature of the related claims issue and the fact-specific nature of the case law precedent, we can expect the courts to have ample opportunity to refine their approach to these disputes.