Under a ruling this week from the California Insurance Commissioner, your company may be insured under an unenforceable workers’ compensation program. You may also be entitled to a refund of premiums paid to California Insurance Company (CIC) and Applied Underwriters (Applied), two Berkshire Hathaway subsidiaries.

Our April 19, 2016 post discussed a decision from the California Department of Insurance finding that the EquityComp workers’ compensation program sold to Shasta Linen Supply by CIC and Applied is void as an unfiled collateral agreement. CIC appealed the administrative law judge’s decision finding the program void. Shasta appealed the denial of its claim for reimbursement of all sums in excess of actual claims paid. On June 20, 2016, the California Insurance Commissioner affirmed the ALJ’s decisions. Continue Reading UPDATE: Is Your Workers’ Compensation Program Unlawful?

Employers continue to face a wave of lawsuits alleging violations of various “wage and hour” statutes (overtime pay, meal and rest breaks, etc.).  Employment liability insurers have uniformly denied coverage for these claims and have tightened applicable exclusions.  Some insurers now offer wage and hour coverage, but these policies and endorsements usually provide only very restricted defense cost coverage.  A new source of coverage now exists, courtesy not of insurers but of revisions to the California Labor Code.

New Labor Code §558.1, effective January 1, 2016, appears to create individual liability for violation of California’s wage and hour statutes.  Continue Reading New Law May Create Coverage for Wage and Hour Claims

Law firms are important gatekeepers between cybercriminals and clients’ sensitive data. The release of the Panama Papers and several other recent high-profile breaches have brought to light vulnerabilities in law firm cyber security.

I recently participated in a podcast with journalist Ben Hammersley and eSentire’s VP and industry security strategist Mark Sangster. Our discussion focused on cyber risks that law firms face and risk mitigation strategies to protect themselves and the data they hold, including cyber insurance.

Listen to the podcast here

When a venture capital or private equity firm invests in a portfolio company (PC) and places a general partner on the PC’s board, they typically require that the PC agree to defend and indemnify the board member in any litigation arising out of their board service, and to purchase directors’ and officers’ liability insurance. However, the D&O insurance requirements are typically quite vague, and some firms may be surprised to learn of key gaps in the PC’s coverage. These gaps are usually discovered when the VC/PE firm needs the coverage most – i.e., after a lawsuit has been filed, naming their board member as a defendant. Here are two examples I’ve come across in representing venture capital and private equity firms: Continue Reading Do You Know What’s In Your Portfolio Company’s D&O Insurance?

A popular workers compensation insurance program offered by Berkshire Hathaway subsidiaries Applied Underwriters Captive Risk Assurance Company (Applied Underwriters) and California Insurance Company may be in trouble. On January 21, 2016, the California Insurance Commissioner adopted an administrative decision finding that a critical piece of the program had not been submitted for approval and was therefore void. Any company now insured under this program should carefully monitor developments and consider alternative options for workers compensation insurance. Continue Reading Is Your Workers Compensation Program Unlawful?

Recently, I was asked to look at coverage for a case where the insurer had denied a duty to defend several years before. We concluded that the insurer should have been defending based on certain allegations in the complaint and asked it to reconsider. In the meantime, though, a successful partial summary judgment motion had dismissed the only covered claims. There is good law to suggest that the duty to defend should continue, but the client could have avoided an unnecessary fight had she retained coverage counsel at the outset. Continue Reading Leave It to the Policyholder Professionals – Do Not Try This at Home

In the December post Systemic Cyber Risks And The Internet of Things, we wrote about the increasing risk of cyber attacks on infrastructure and consumer products, and related insurance issues. We noted in that post that, while there have been a few cyber attacks on the Internet of Things (IoT) reported over the past few years, the number of such attacks was certain to grow. It has. Since our December post, several new attacks and developments have been publicly disclosed. These attacks again remind us that companies should evaluate their risks and exposures relating to the IoT and carefully negotiate their insurance policy renewals or purchases. Continue Reading Cyber Attacks on Infrastructure Are Increasing: Review Your Insurance As “Internet of Things” Risks Grow and Change

As Bay Area residents prepared for thousands of football fans and media to descend on their region for the Super Bowl, one began to hear the sorts of rumblings that typically precede big events. Traffic will be terrible. Parking will be worse. Good luck getting a table at a restaurant. Oh, and good luck finding a place a sleep if you’re from out of town.

Former Mayor Willie Brown had advice for the naysayers: Rent your house on Airbnb! “Everyone is going to make a killing, including the private citizens who are smart enough to schedule a vacation paid for by Airbnb’ing their homes.” Continue Reading Insure Your Risk as an Airbnb Host

When a new company moves to secure funding and formalize operations, insurance is often an afterthought. But with a bit of effort, emerging companies can obtain strong insurance protection, maximize their existing coverage, and make themselves more attractive to future investors and other partners. Emerging companies should focus in particular on commercial general liability, data privacy and cyber liability, errors and omissions liability, directors’ and officers’ liability (D&O) and, depending on the number of employees, fiduciary liability and employment practices liability policies. An effective risk management strategy will also depend on strong external support from insurance brokers and counsel.

In the article 5 Insurance Tips for Emerging Companies published by Risk Management, I discuss five best practices for getting started on an insurance program.

In the ACC Docket article, Cybersecurity and Data Breaches: How In-House Counsel Can Engage the Board, my fellow partner Carly Alameda and her co-author Olga Mack of ClearSlide correctly observe that cyber insurance may cover costs a company incurs as a result of a data security breach.

I’d emphasize that boards should carefully review proposed policies before they buy one to ensure that they obtain the desired coverage. Cyber insurance policies are not written on standard forms. Policy language and the scope of coverage offered by different insurers can vary, sometimes widely.

I’d suggest that boards first gain an understanding of their own risk profile and then seek to tailor the cyber insurance to address their particular risks. For example, not all cyber insurance policies will cover the insured if the data security breach was caused by an intrusion into a third-party vendor’s system, even though the insured is ultimately responsible for providing notice to consumers and may face lawsuits by consumers, banks and others. Companies that rely on third-party vendors to collect or store PII should make sure that any policy they buy covers losses due to an intrusion into third-parties’ systems.