Rosciti v. Ins. Co. of the State of PA, No. 10-2087 (1st Cir. 2011)
Annotate this CasePurchasers of a motor home claim that defects resulted in leakage, which caused mold growth, rendering the home uninhabitable and causing health problems. The manufacturer, which was self-insured on claims up to $500,000, went bankrupt shortly after the purchasers filed suit. Defendant provided insurance for liability above $500,000. The purchasers added defendant to their suit, invoking a Rhode Island statute allowing tort victims to recover damages directly from insurers of a bankrupt tortfeasor, within policy limits. The district court held that defendant's obligation had not been triggered, based on a provision in the policy stating that defendant's duty to pay arose only after the insure had paid the initial $500,000. The First Circuit reversed, emphasizing that it was not expanding the scope of defendant's coverage. Allowing the company to avoid liability would violate public policy; requiring defendant to assume additional defense costs does not violate public policy.
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