Following The Money To Resolve Policy Disputes

This case is notable because the court examined premium flow to resolve a claimed ambiguity in policy language.

August 20, 2012

Law360, New York (August 20, 2012, 1:20 PM ET) -- The United States Court of Appeals for the First Circuit supported an interpretation of arguably ambiguous policy language by considering whether that interpretation made “economic sense.” OneBeacon America Insurance Co. v. Commercial Union Assurance Co. of Canada, No. 11-2072, 2012 U.S. App. LEXIS 14205, 1st Cir. (July 11, 2012).

The disputed policy language concerned whether the direct insurer was reinsured. For the policy years in dispute, extrinsic evidence showed that the direct insurer retained all of the direct premiums and ceded none. The U.S. Court of Appeals for the First Circuit rejected arguments from the direct insurer that a claimed policy ambiguity precluded summary judgment.

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