Clients regularly ask their counsel to propose alternative fee arrangements and they are growing in popularity. While these arrangements can be beneficial for clients, they should be carefully considered when an insurance company will be paying all or part of the defense fees. Insurers are typically averse to alternative fee arrangements; they are more comfortable with a straight hourly arrangement – after trying to impose rate caps and litigation guidelines of course. Carriers have ingrained methods of managing defense costs and negotiating bespoke alternative arrangements with individual insureds is not cost-effective or efficient for a claims adjuster dealing with dozens or even hundreds of cases. Accordingly, insureds may need to accept more traditional fee deals when retaining counsel that will ultimately be paid by the insurer. Continue Reading Alternative Fee Arrangements When the Insurer Is Footing the Bill
A number of companies have been sued by the FTC in recent years, alleging, for example, that the company made claims regarding the product or service without adequate substantiation. Many of these companies are small private companies with limited resources. These companies frequently have “Management Liability” or “Private D&O” coverage which may provide relief. Many insureds do not understand that these polices are different than public company D&O policies, because Management Liability policies provide broad coverage for the company itself, not just for the directors and officers. If a company is sued by the FTC, these policies may provide coverage whether individual defendants are named or not. Continue Reading There May Be Coverage for the Defense and Settlement of FTC Claims
Are communications among a client, a third party, such as an insurance broker, and the client’s attorney privileged? The answer is yes, if the communications are confidential and reasonably necessary to accomplish the purpose for which the lawyer was consulted. Behunin v. Superior Court, 2017 WL 977095 (2d Dist. March 14, 2017), decided last week, addresses this question. Continue Reading Communications With Your Broker May Be Privileged
D&O policies vary quite a bit from carrier to carrier, and language on “standard” exclusions can change from year to year. Accordingly, it is important to do a yearly review of your D&O policy to make sure your company has the right coverage. Three recent federal court decisions interpreting the “insured vs. insured” or “I v. I” exclusion remind us why examining specific policy language and understanding how it may apply to your business is so important. Continue Reading Trio of Recent Decisions on the I v. I Exclusion Should Remind Policyholders to Annually Review the Language in Their Policy to Avoid Losing Coverage
The Internet of Things gives rise to many risks and exposures that companies and their insurers were not thinking about as recently as a couple years ago, and probably aren’t fully cognizant of today.
The DDoS attack late last week on internet infrastructure company Dyn should act as a wake-up call. It shows how large and disruptive a cyber attack can become because of all the seemingly benign “things” connected to the internet. And it should cause companies to think about what their risks really are and whether their current risk management approaches address them.
Just one example from this latest attack – I’m reading that one or more of the manufacturers of the devices that were used as bots in this attack must recall a very large number of products because the passwords (which were easily cracked) cannot be changed by the user. The software that runs those products came ready installed on components bought from China, and it is this software that contains the vulnerability. Now that the passwords are known, the devices can no longer be considered secure. Maybe the manufacturers have product recall insurance or maybe they don’t. But they likely never thought they would have to conduct a product recall under these circumstances and whether such a recall might be covered under their current insurance program.
Protect your company by:
- Understanding your company’s IoT exposures.
- Using your company’s broker and coverage counsel to review all insurance policies with IoT exposures in mind and negotiate favorable policy terms.
- Revisiting the policies annually at renewal time because of quickly changing risks and policy terms.
In two previous posts, on April 19, 2016 and June 21, 2016, we reported on the EquityComp workers’ compensation program offered by Berkshire Hathaway subsidiaries Applied Underwriters (Applied) and California Insurance Company (CIC). In the wake of the California Insurance Commissioner’s ruling in Shasta Linen that the EquityComp program is invalid and unenforceable, Applied Underwriters and the Commissioner on September 6, 2016 stipulated to a Cease and Desist Order. The Order can be found online here: Stipulated Consent Cease and Desist Order. Insureds under the program should read it carefully, as it presents them with a number of options. Continue Reading NEW UPDATE: Is Your Workers’ Compensation Program Unlawful?
In what it described as a case of first impression, the Northern District of California ruled that a professional liability policy that excluded the insured’s “assumption of liability obligations in a contract or agreement” did not extend to breach of warranty or false advertising claims arising out of a genetic data testing company’s marketing and sale of a personal genome service. See Ironshore Specialty Ins. Co. v. 23andMe, Inc. (July 22, 2016) N.D. Cal. No. 14-cv-03286-BLF. What is noteworthy about this case is not so much the decision, but the fact that the insurer challenged coverage on this ground. While this issue apparently has never been decided in the context of a professional liability policy, both case law and custom and practice recognize that the same phrase used in a general liability policy applies only to liabilities “assumed,” i.e. created by, a contractual indemnity agreement. Continue Reading “Assuming” the Obvious: Exclusion for “Assumption of Liability in a Contract” Does Not Apply to Breach of Professional Services
The California wildfire season is well underway. Only a year ago, the Lake County fire destroyed hundreds of homes, thousands of acres and threatened vineyards and wineries. A recent report on climate change predicts that wildfires in the western U.S. and Canada will become more frequent and severe. And the Napa earthquake — only two years ago as of Aug. 24 — reminded us of another constant danger for California residents and businesses, particularly those with costly products like wine in tanks, barrels and bottles.
In the face of these risks, you can take steps now to be sure you have the right insurance and are prepared to get the most out of it if the worst happens.
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?
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?