Insurer Estopped from Asserting Exclusion
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Insurer Estopped from Asserting Exclusion

Unraveling what the court called a “veritable ‘comedy of errors’” a Pennsylvania appeals court has ruled against an insurer that issued a reservation of rights letter, but failed to tell its policyholder for 18 months that coverage was excluded under its policy. The underlying case involved a slip and fall in a shopping center parking lot after which the plaintiff sued several parties including a snow and ice removal company. That company’s insurer sent a letter stating it would defend the company subject to a reservation of rights but failed to mention there was a snow and ice removal exclusion in the policy. The insured sued the carrier citing “insufficient” language in the letter that bars it from raising the policy exclusion; the insurer countersued. The court found the insurer’s failure to clearly communicate the extent of the rights being reserved resulted in presumptive prejudice to its insured and estopped the carrier from asserting the exclusion.

Selective Way Insurance Company v MAK Services Inc