A Pennsylvania state court recently held that an insurer had not waived a defense by failing to specifically reference it in a coverage denial letter because the letter contained a “catch-all” provision reserving the insurer’s rights to raise other coverage defenses and issues. 1804-14 Green Street Associates, L.P. v. Erie Insurance Exchange, et al., No. 1763 (Phila. Ct. Cora. Pl., Aug. 21, 2008).
The insurer denied coverage for a property damage claim on various grounds and further stated in its denial letter that “[w]e do not waive any of the other potentially applicable policy conditions or exclusions that may also apply to your loss. We do reserve any and all rights under the policy.”
The insured brought suit for breach of contract and the insured moved for summary judgment based upon a policy exclusion not explicitly mentioned in its coverage denial letter. The insured opposed the insurer’s summary judgment motion, arguing that the insurer had waived its right to rely on the particular exclusion as a defense for non-coverage by failing to specifically cite it or rely upon it in its denial letter.
The court rejected the insured’s argument, finding that the insurer did not waive its right to deny coverage based on the exclusion because its denial letter contained a “catch-all” statement in which the insurer reserved its right to raise other defenses and issues that might affect coverage. Accordingly, the court found that the insurer was not precluded from relying on the particular exclusion as a defense to coverage under the policy (although summary judgment was denied on the ground that genuine issues of material fact existed with respect to the application of the exclusion).
The court’s decision also noted that under Pennsylvania law, the doctrines of waiver and estoppel cannot create an insurance contact where none existed. The court distinguished conditions going to the scope of coverage from those creating a ground for forfeiture, which it held could not be waived by implication from insurer conduct. However, as issues of fact existed as to the application of the exclusions, the insurer’s motion for summary judgment was denied.