Growing Trend: N.J. Corporation Suing to Enforce Coverage

The Hunton attorneys who wrote the above-referenced blog call it “an unfortunate sign of the times.” A senior living corporation sued its insurers in New Jersey federal court, claiming they suddenly stopped covering its defense costs. The allegations are indicative of a growing trend; insurers are taking extreme steps to avoid paying in the face of a tightening economy and the prospect of a global downturn. Springpoint senior living facility in New Jersey was sued in a 2013 class action alleging that it defrauded residents through misleading statements regarding the refund of the initial fee they paid. After paying defense fees for seven years, National Union and CNA suddenly took the position that their coverage was excess over the CNA policy. National Union claimed that after seven years it had just come to understand that concurrent coverage was available through CNA. Now neither insurer is paying those defense costs. Springpoint has sued National Union, CNA, and an excess insurer to enforce its rights to coverage. Hunton suggests a proactive approach to submitting claims and careful communication regarding coverage. “Policyholders should expect their insurers to look for ways to avoid or limit coverage and they should be prepared to fight back.”