Insurer Denies Coverage in TCPA Class Action
Posted: December 16, 2016
As we previously reported, US Coachways entered into a $49.9 million Telephone Consumer Protection Act class action settlement. Because the motor coach leasing company could not fund the settlement, the company tendered a claim for the action to its insurer, Illinois Union Insurance Company, who subsequently denied coverage to US Coachways. US Coachways assigned its rights against the insurer to the named plaintiff and the putative class members.
Illinois Union has now filed a declaratory action suit in New York federal court seeking a judgment that it has no coverage obligations for the underlying lawsuit. Specifically, the insurer alleges that the policy at issue is limited to actions that fall within “the performance of professional services as a bus charter broker for others for a fee.” Illinois Union argues that the underlying TCPA class action did not arise from the performance of such services. “Rather, the underlying lawsuit arose from the alleged use of the ATDS to transmit text messages for advertising purposes only, and does not contain any allegations unique to the performance of the US Coachways’ services as a bus charter broker.”
This new lawsuit serves as a reminder to companies of the importance of reviewing their insurance policies and ensuring comprehensive coverage, especially for TCPA class actions. We will continue to monitor the developments in this case.