Insurance Legal Memorandum

Memorandum

Question(s) Presented:

1. Does the insurer have a duty to defend? If so, on what grounds?

2. If the insurer must defend, will the insurer need to indemnify? If so, explain why.

3. What should the insurance company do to avoid having a duty to defend or indemnify these types of cases in the future?

Short Answer:

1. Yes, the insurer does have a duty to defend due to the Turner’s policy with Youngston Insurance was still in effect at the time of the occurrence. Also, the lead poisoning sustained by the Cavanaugh’s 4 year old son named Jason can be classified as a latent injury.

2. Yes, the insurer should also indemnify if the insurer has a duty to defend the Turner’s policy against the suit filed by the Cavanaugh’s if the Turner’s are found liable. This would assist the Cavanaugh’s with any medical expenses they may have incurred due to their son’s illness. The idea behind indemnifying is an attempt to place the awarding party financially back where they would have been before the incident occurred.

3. The insurance needs to revise the language in their policies to be more specific to exclusions where lead paint is being used in property.

Statement of Facts:

The Cavanaughs brought a lawsuit against their landlord Mr. and Mrs. Turner claiming they are liable for the alleged lead poisoning of their four year old son. Jason became ill and was taken to his pediatrician b y his parents Mr. and Mrs. Cavanaugh. After a battery of tests, it was determined that he had high levels of lead in his system. Testing of the paint in the Cavanaughs' apartment confirmed that the paint used in the apartment was old and included high levels of lead. The Turners have a commercial general liability coverage insurance policy ("the policy") with the Youngston Insurance Company for their property on East 158th Street. However, the policy, which was purchased prior to the Cavanaughs moving into the apartment, is still in effect. The policy has...