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West Virginia Cannelton Indus. v. Aetna Casualty & Sur., 194 W.Va. 203, 460 S.E.2d 18
(1994). Cannelton Industries, Inc. (“Cannelton”) sought relief from the West
Virginia Insurance Guaranty Association (“WVIGA”) after two of its insurance
carriers became insolvent. Pursuant to W.Va. Code § 33‐26‐8 (1)(a) (1985),
the state guaranty association is obligated for “covered claims” against
insolvent insurers existing prior to insolvency and claims arising within 30
days after determination of insolvency. Cannelton claimed that because it
was not aware of the insolvencies of the two companies and it did not
receive notice from the WVIGA, who was aware of the insolvencies, the
WVIGA is liable for the unpaid claims even if they were filed past the final
date for filing claims.
After reviewing West Virginia State law and other jurisdictions, the court
held that WVIGA is not required to notify insureds of insolvent insurers
unless the Insurance Commissioner requires that such notice be given
pursuant to statute W.Va. Code, 33‐26‐10(2)(a) (1970). Therefore, the Circuit
Court of Kanawha County’s dismissal of Cannelton’s claim was affirmed.
Devane v. Kennedy, 1999 WL 166084 (W.Va. 1999). West Virginia Insurance
Guaranty Association (“WVIGA”) appealed an order by the Circuit Court of
Jefferson County enforcing a pre‐insolvency settlement agreement entered
into by the plaintiff, defendant, and defendant’s liability insurance carrier.
The settlement required a release of all claims by the plaintiff and the
defendant’s liability insurer to pay $220,000. The liability insurer became
insolvent before payment to the plaintiff was made, and WVIGA became
liable for “covered claims” pending against the insurer, including the
plaintiff’s claim. The court ruled that the Circuit Court for Jefferson County
did not err in enforcing against the WVIGA the pre‐insolvency settlement
agreement. The court held that W.Va. Code § 33‐12 (1) (1970) (Repl. Vol.
1996) requires the exhaustion of all solvent insurance which provides
coverage for the “covered claim” asserted against the Association. Once the
coverage is exhausted or, as in this case, there is no solvent insurance
available, the settlement agreement is to be enforced and, in this case,
WVIGA is ordered to pay the claim.
Further, the court held that for WVIGA to escape liability for a pre‐insolvency
settlement, the Association would have to contest the settlement, pursuant
to W.Va. Code § 33‐26‐8 (1)(d) (1985) (Repl. Vol. 1996), by demonstrating the
existence of collateral solvent insurance applicable to the claim or by
asserting any defense which would enable it to escape such liability. The
Association’s claim that it had not been included in the settlement
negotiations was not such a defense.
Wyoming Wyoming Ins. Guar. Assoc. v. Allstate Indem. Co., 844 P.2d 464 (Wyo. 1992).
Wyoming Insurance Guaranty Association (WIGA) brought action against
permissive user’s automobile insurer, Allstate, to require the insurer to
defend and indemnify in lawsuit against user. The Supreme Court held that
the policy of the insolvent insurer was “collectible insurance” within the
meaning of permissive user’s policy stating that insurance with respect to
temporary substitute or nonowned automobile is excess over any other
collectible insurance. Therefore, WIGA not Allstate was required to defend
and pay any loss arising from the accident.
Third Party Claims
Second Circuit Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674 (2d Cir. 1990).
Rhulen, a New York corporation, was the broker and program manager for
Transit Casualty Company. When Transit was ordered into liquidation in 1985,