Key U.S. Insurance Court Decisions on Premises Liability, Umbrella Policy Exclusions, and Collusive Assignments

The Maine Supreme Court recently ruled on a premises liability dispute in Rowe v. State Mutual Insurance Co., interpreting an exclusion clause in a mobile homeowners policy. The court held that the policy's exclusion for injury or damage "arising out of a premises not insured" barred coverage for negligent failure-to-warn claims. Drawing from workers' compensation case law, the court explained that "arising out of" encompasses injuries with a causal connection to the uninsured premises, regardless of whether the insured's conduct was also a factor. Specifically, the injury was linked directly to a condition of the uninsured premises—a gap at the mobile home entrance—and the property was not deemed an "insured location" as it was neither listed in the declarations nor used as a residence by the insureds. In Kentucky, the Supreme Court addressed conflicting coverage terms between a commercial umbrella policy (CUP) and an underlying businessowners policy (BOP) in Georgetown Chicken Coop LLC v. Grange Insurance Co. The court determined that the CUP's liquor liability exclusion endorsement unequivocally excluded coverage for dram shop claims despite the BOP providing such coverage. It emphasized that the CUP and BOP are separate contracts and that the umbrella policy's unambiguous language must control, preventing extension of coverage beyond the agreed terms. Separately, a Colorado federal district court dismissed a bad faith and breach of contract case in Second Green Mountain Townhouse Corp. v. Mesa Underwriters Specialty Insurance Co., finding the plaintiff's assignment of rights under a Nunn agreement was collusive. The court detailed hallmarks of collusion including lack of negotiation, secrecy, and efforts to harm an insurer's interests. Here, it concluded the insured had not engaged in genuine settlement negotiations and the assignment was designed to circumvent insurer protections. The plaintiff has filed an appeal to the Tenth Circuit. These decisions reinforce key principles in insurance litigation: precise policy language interpretation in coverage disputes; the distinction between related but separate policies in coverage conflicts; and skepticism of collusive assignments that undermine insurer rights. They offer guidance on underwriting, claims handling, and litigation strategy for carrier defense and risk management in premises liability, liquor liability, and excess judgment contexts.