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Keywords

lawsuitnegligenceliabilitytrialsummary judgment
contractliabilitysummary judgmenttrustwillbankruptcyappellant

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Greenwood Ins. Group, Inc. v. United States Liability Ins. Co., 157 S.W.3d 444

Facts

Greenwood Insurance Group secured a $2 million comprehensive general liability insurance policy for its client, All–Tex Roofing, placing the primary coverage with Resure, Inc., which had a 'B' rating. After a personal injury lawsuit against All–Tex resulted in a judgment of $1.3 million, it was discovered that Resure had become insolvent prior to the judgment, leaving All–Tex without primary coverage. All–Tex subsequently sued Greenwood for negligence and violations of the DTPA, claiming that Greenwood failed to ensure adequate coverage.

Appellant, Greenwood Insurance Company (“Greenwood”) is an insurance broker, and All–Tex Roofing, Inc. (“All–Tex”) is its client. On behalf of All–Tex, Greenwood secured a $2 million per occurrence comprehensive general liability insurance policy. Greenwood placed the first $1 million of primary coverage with Resure, Inc., a surplus lines carrier with a “B” rating.

Issue

Whether an insurance broker's professional liability policy provides coverage for claims brought against the broker by its client, based on the broker's procurement of coverage from an insurer that subsequently became insolvent.

The issue before the Court is whether an insurance broker's professional liability policy provides coverage to the broker for two suits brought against the broker by its client, based on the broker's procurement of coverage for the client from an insurer that subsequently became insolvent.

Rule

The professional liability policy contained an insolvency exclusion that barred coverage for any claims arising from the placement of a risk with an insurer that was not rated B+ or higher by A.M. Best Company at the time of placement and that became insolvent.

This policy does not apply to, and [USLIC] will not defend or pay Loss for, any Claim arising out of, directly or indirectly resulting from, based upon or in any way involving any actual or alleged: Placement of a risk or an insurance or reinsurance contract, policy or other risk transfer mechanism, device or funding vehicle with any insurance company, reinsurer, self-insured trust, group insurance trust, risk retention group, joint underwriting association or other risk assuming entity that is not rated B+ or higher by A.M. Best Company at the time of placement and becomes insolvent or bankrupt.

Analysis

The court analyzed the insolvency exclusion in the context of the claims made by All–Tex against Greenwood. It determined that all claims, including those alleging negligence and violations of the DTPA, were directly or indirectly related to Resure's insolvency. The court emphasized that the broad language of the exclusion applied to any claims involving the placement of risk with an insurer that became insolvent, thus negating any potential duty to defend or indemnify Greenwood.

The professional liability policy excludes all claims 'arising out of, directly or indirectly resulting from, based upon or in any way involving' placement of a risk with an entity that is not rated B+ or higher, and which becomes insolvent or bankrupt. This broadly-worded language excludes, not only claims 'arising out of' Resure's bankruptcy, but also claims 'in any way involving' Resure's bankruptcy.

Conclusion

The court affirmed the trial court's summary judgment, concluding that USLIC had no duty to defend or indemnify Greenwood against All–Tex's claims due to the applicability of the insolvency exclusion.

We affirm the summary judgment.

Who won?

United States Liability Insurance Company (USLIC) prevailed in the case because the court found that the insolvency exclusion in the professional liability policy barred coverage for all claims made by All–Tex against Greenwood.

USLIC presented summary judgment proof that, at the time Greenwood procured the Resure policy for All–Tex, Resure was rated “B” by A.M. Best Company, not “B+” as required by the terms of the insolvency exclusion.

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