The Sixth Circuit recently entered a ruling in American Tooling Center, Inc. v. Travelers Casualty and Surety Co. of America, data security image of digital locks2018 WL 3404708 (6th Cir. July 13, 2018), soundly rejecting a cyber carrier’s extremely narrow reading of its policy’s “Computer Fraud” coverage.  The insured American Tooling Center (“ATC”) had fallen for a “social engineering” scam.  ATC received emails from someone impersonating one of its vendors and claiming to have changed its wire instructions.  ATC transferred over $800,000 to the thief before realizing it was a scam.  Continue Reading Social Engineering Scam Covered By Cyber Insurance

A federal district court in Florida has ruled that a claim against a policyholder arising out of a hacker’s theft of confidential credit card information was not covered under a commercial general liability (CGL) policy.  St. Paul Fire & Marine Ins. Co. v. Rosen Millennium, Inc., M.D. Fla. Case No. 17-cv-540 (Sept. 28, 2018).  This is not the first such decision.  Courts have held similarly in Innovak Int’l, Inc. v. Hanover Ins. Co., 280 F.Supp.3d 1340, 1347-1348 (M.D. Fla. 2017) and Zurich American Ins. Co. v. Sony Corp. of America,  2014 WL 3253541, 2014 N.Y. Misc. LEXIS 5141 at *71 (N.Y. Sup. Ct. Feb. 21, 2014).

While we disagree with these courts’ reasoning, policyholders concerned about data breach liability should take note of these decisions and consider buying more reliable insurance protection for this risk. Continue Reading Florida Court Finds No CGL Coverage for Data Breach Claim

Defense counsel often assume that an insurer has a “duty” to fund any settlement opportunity their client wants to accept. The legal requirements under California law for triggering an insurer’s duty to settle are far more nuanced.  For non-insurance practitioners, this is often a confounding and confusing topic!  The fact is, an insurer doesn’t have a “duty to settle” a case simply because the defendant wants to do so, or because defense counsel recommends it.  And while a demand within the policy limits is essential, that isn’t the only required element.

I will moderate a Bar Association of San Francisco program on this subject on September 19. The panel will cover all the required elements necessary to trigger an insurer’s duty to settle, and provide helpful practice pointers for satisfying those elements.  We’ll also talk about consequences of the breach of the duty to settle.  The panelists will provide the defense counsel perspective, as well as perspectives from both sides of the insurance coverage bar. For program details and to register to attend, visit the BASF event page, here.

While experts debate how quickly autonomous vehicles (AVs) will take over our roads, there is little doubt they will be a fixture in the next decade. Fully self-driving vehicles are predicted to substantially reduce the accident rate, given the dominant role of human error in most crashes today.

But there still will be accidents. And where there are accidents, there are plaintiffs’ lawyers. But who will these lawyers sue, and how will the defendants insure their liabilities?

We explore these questions in our article for WardsAuto. The full article is available, here.

Fewer and fewer companies in California have insurance coverage for “wage and hour” claims, i.e. claims for failure to pay overtime, failure to provide meal and rest periods, and failure to provide accurate itemized wage statements. Many times such coverage is prohibitively expensive or simply unavailable.  Accordingly, if a company in California has an Employment Practices Liability policy, it may have a very broad “wage and hour” exclusion.

Even if your policy has such an exclusion, there still may be hope. A recent unpublished decision by the Ninth Circuit in PHP Insurance Services, Inc. v. Greenwich Insurance Company, Case No. 16-15083, is a reminder that a mere allegation of a covered Employment Practices Wrongful Act may trigger a carrier’s duty to defend even if not asserted as a cause of action.  Continue Reading Ninth Circuit Affirms Carrier Had Duty to Defend Employment Class Action

I recently participated in a negotiation with an insurer who had denied coverage for an underlying errors and omissions claim in the mid-seven figures. The insurer’s counsel and I exchanged stern letters, each explaining why our respective client’s position was absolutely correct, and the other’s absolutely wrong. The client’s broker arranged a meeting with principals and counsel on both sides. At the meeting, the insurer’s counsel and I debated our respective positions once more. Neither of us conceded any possibility that the other could be right. After 25 minutes, my client put a stop to the debate competition and, aided by the broker, moved into negotiations with the insurer’s principal.

The opening offer and demand were miles apart. But within an hour, the case settled, to the clear satisfaction of both sides. With no mediator. No wrangling about which mediator to select. No waiting three months to get a date on the mediator’s calendar. No mediation briefs or reply briefs. No waste of non-refundable mediator’s fees. No shuttle diplomacy, bracketing or mediator’s proposals. No mediator reserving jurisdiction to hammer out disputed settlement terms. It felt almost too easy.

Are lawyers too dependent on mediators to settle their cases? Whether you answer that question yes or no, there are many situations where a neutral can resolve a case where party negotiations would fail. This is particularly true in a “three-way” mediation, where the defendant’s insurer is participating but is reserving rights, denying coverage, or rejecting defense counsel’s settlement recommendations. These mediations present unique challenges that require a skilled mediator and savvy defense and coverage counsel. Continue Reading A Policyholder Perspective on the Unique Challenges of a Three-Way Mediation

Michael KornFarella’s Insurance Recovery Group lawyers regularly collaborate with and learn from different players and functions within the insurance industry. To provide more value to our readers, we have reached out to a series of insurance brokers to create the Insurance Broker Series Q&A.

Our latest installment is with Michael Korn, Managing Principal, Property Practice Leader with Integro Insurance Brokers. Continue Reading Insurance Broker Series: Michael Korn, Integro Insurance Brokers

Larry RebackFarella’s Insurance Recovery Group lawyers regularly collaborate with and learn from different players and functions within the insurance industry. To provide more value to our readers, we have reached out to a series of insurance brokers to create the Insurance Broker Series Q&A.

Our latest installment is with Larry Reback, Managing Principal, Leader of Policy Response Unit with Integro Insurance Brokers. Continue Reading Insurance Broker Series: Larry Reback, Integro Insurance Brokers

John OrrFarella’s Insurance Recovery Group lawyers regularly collaborate with and learn from different players and functions within the insurance industry. To provide more value to our readers, we have reached out to a series of insurance brokers to create the Insurance Broker Series Q&A.

Our latest installment is with John M. Orr, Managing Principal – West Region Financial Lines Practice Leader with Integro Insurance Brokers. Continue Reading Insurance Broker Series: John Orr, Integro Insurance Brokers

Farella’s Insurance Recovery Group lawyers regularly collaborate with and learn from different players and functions within the insurance industry. To provide more value to our readers, we have reached out to a series of insurance brokers to create the Insurance Broker Series Q&A.

Our latest installment is with Daniel Law, Office President with The Liberty Company Insurance Brokers, Inc.   Continue Reading Insurance Broker Series: Daniel Law, The Liberty Company Insurance Brokers, Inc.