workers comp formIn 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?

Blog-Image---Are-You-CoveredIn 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

shutterstock_223838977 Are You ReadyIt’s a good time to insulate your wine business against getting burned or shaken up in a disaster.

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.Continue Reading Insurance for Wildfires and Other Natural Disasters

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?

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

sample

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

No one insurance policy covers all liability risks. Risk managers expect to purchase several types or layers of insurance to cover different types of insurance liabilities, to provide sufficient limits for a catastrophe loss, or to provide coverage over multiple policy years. They may be surprised to learn however, that what they thought was a comprehensive and seamless program in fact contains glaring but avoidable gaps.

Consider the following: 

  1. A social networking site for minors purchases an insurance policy which contains a “Technology, Media and Professional Services” component defining “Professional Services” as “providing advertising services for others, for a fee.” The same policy also includes a D&O component which excludes coverage for any claim “based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the rendering or failing to render professional services.” “Professional services” is not defined in the D&O component. Consumers complain that the site contains inappropriate content, and the State Attorney General sues the site for false advertising, alleging it misrepresented its efforts to protect minors from inappropriate content. The insurer denies coverage under the Technology, Media, Professional and Services component of the policy because the claim does not relate to the site’s “paid provision of advertising to others,” i.e., the claims do not allege covered “Professional Services” (the defined term).  It also denies coverage under the D&O component on the grounds that the “professional services” (the undefined term) exclusion extends to all services involved in operating the website. Surprisingly, the liability does not fall under either policy because the coverage grant in the professional services coverage was not broad enough to pick up the services the court found were excluded under the D&O coverage.

Continue Reading Mind the Gap! Avoiding Unexpected Gaps in Insurance Programs

We recently litigated and successfully settled an insurance coverage case that offers a model for managing a case thoughtfully. Too often, parties reflexively dive into litigation with its procedural hurdles and delays, unbounded discovery, and often unnecessary motion practice, without considering whether a more efficient but fair alternative exists. Our group regularly seeks to fashion a sensible case-specific dispute resolution process at the outset. These models also allow us to offer creative fee arrangements that build incentives to optimize the costs and recoveries for the client.

Our client company and its officers were named in an intellectual property lawsuit. The same insurer provided CGL and D&O policies. It denied coverage under the CGL. It initially agreed to defend under the D&O policy but later withdrew its defense over our objections.Continue Reading Mindful Case Management

Earlier this month, I gave a presentation with Irfan Saif, principal of Deloitte & Touche, on cyber insurance at the Institute for Advance Corporate Counsel (iACC) in Burlingame, CA.  We discussed how companies can analyze their data-related risks and develop strategies to mitigate those risks, including through the purchase of insurance.  Because cyber insurance is still a developing market, insurance policy forms are far from standardized and often can be negotiated.  As a result, it is important to carefully analyze your company’s data security risks and the proposed policy forms when considering the purchase of cyber insurance.  This is particularly critical when the company’s risks are related its data held by third-parties or computer systems that rely on third-party systems, as the scope of coverage for these risks varies widely among the policy forms currently available.Continue Reading Panel Discussions on Mitigating Cyber Risk