Tuesday, November 19, 2013

Navigators Responds to Attention Focused on Its Recent Lawsuits Against Appraisers

Navigators Insurance Company has released a statement about its recent lawsuits against four appraisers it insured for E&O and about the attention the lawsuits have brought to coverage for "regulatory claims" in some of its E&O policies.  Navigators' lawsuits against the appraisers have been discussed in earlier posts on the Appraiser Law Blog.  This is Navigators' statement:

Navigators' response is just plain ugly.  At the end of its statement, Navigators makes an accusation that the public reporting about its four recent lawsuits is just "competitor rhetoric whose sole purpose is to slur the competition."  To the contrary, in the realm of appraiser E&O insurance, the issues in the lawsuits are critical and newsworthy -- indeed, Navigators itself thinks the issues are important enough to sue four appraisers and the FDIC over the issues.  "Regulatory claims" exclusions and sublimits in Navigators' policies (and in other policies too) have been accurately reported here on the Appraiser Law Blog and discussed by others in the insurance industry for several years.  It's newsworthy that the policy provisions are now resulting in lawsuits.  Navigators is only of only a few insurance carriers who sell policies containing "regulatory claims" exclusions to appraisers. 

Moving on to the substance of Navigators' response, Navigators also states that it "offers a sublimit of $100,000 for defense coverage in select states ONLY for claims by the FDIC."  (The emphasis is in Navigators' statement.)  It's not clear what Navigators is trying to say, but if Navigators is suggesting that its "regulatory claims" exclusion and sublimit only apply to FDIC claims, that statement isn't accurate based on the actual wording of its exclusion applied in the selected states (Arizona, California, Florida, Georgia, Illinois, Michigan, Nevada and Washington).  The provision excludes coverage for damages not only by the FDIC but also by "any similar federal or state regulatory agency."  Who such agencies are is not defined in the policy.  This is the actual "regulatory claims" provision at issue in Navigators' lawsuits:

In its response, Navigators also indicates that the four insurance coverage lawsuits it has filed against the individual appraisers and the FDIC are part of a larger battle with the FDIC over the "regulatory claims" provision in its policies.  As mentioned in an earlier post, I agree that Navigators is likely correct in its legal position that the policies at issue do not cover damages awarded against appraisers in legal actions filed by the FDIC and that the policies only pay for attorneys' fees and costs to defend such cases up to a set limit ($100,000).  Navigators' policies say what they say.