In Verizon Communications Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pa.[1] the Delaware Superior Court ruled that Verizon was entitled to a defense under its D&O policy for fraudulent transfer claims. Although the decision relies on unique facts and specific policy language, it provides guidance on how to exploit minor but critical differences in policy language to expand the company’s coverage beyond claims involving securities fraud.

The opinion also rejected the insurers’ efforts to limit coverage under a separate policy, based on their contention that the subsidiary out of which the liabilities arose was not a subsidiary when the policy was purchased. And finally, it handed policyholders a practical and valuable gift of universal application, holding that an insurer who wrongfully refuses to defend a claim cannot contest the reasonableness of the fees incurred by the policyholder to defend the case.

Whether or not it is successfully challenged on appeal, the Verizon decision is an important reminder not to make assumptions as to what is or isn’t covered under any type of insurance policy. Coverage depends on the particular language of the policy under review and the particular facts for which claims are sought. Continue Reading In Verizon Decision Careful Review of Insurance Policies Expands Coverage

Two phrases combined in a single exclusion—“alleging, arising out of, based upon or attributable to any violation of any law…” and “as respects… unfair trade practices” could inspire carriers to make trouble for policyholders seeking coverage for consumer protection claims. Fortunately, a recent federal decision recognizes that California rules of policy construction limit the scope of this exclusion, in line with a policyholder’s reasonable expectations of coverage. Continue Reading “Unfair Trade Practices” Exclusion Does Not Extend to Consumer Protection Claims

Unfortunately, we again write while wildfire is devouring homes and businesses in Napa and Sonoma, and threatening many more. We’ve previously posted tips about first steps that you should take in the event your business has suffered a fire loss. We want to provide this refresher, as prompt action is important to preserve your business’ rights under its insurance policies and to maximize its ultimate insurance recovery. If your business has sustained a fire loss, below are steps for you to take in working with your insurers to ensure that you receive the maximum benefits under any applicable insurance policies. Continue Reading Maximizing Business Insurance Coverage Benefits After a Fire

Though much of the conversation regarding insurance coverage for COVID-19-related losses has focused on the potential for business interruption-type coverage (see prior discussion here), insureds should not overlook the potential that COVID risks trigger other types of coverage. For example, as previously discussed here, some insureds may seek coverage under D&O policies should they face securities and derivative-type claims.

In addition to the forms of coverage we’ve previously blogged about, businesses who have continued operations during the pandemic as well as those considering whether, when, and how to reopen their businesses in the coming weeks and months should consider whether they will be able to access coverage under their GL policies for some COVID-related claims. For example, companies that continue or restart operations in some form during the pandemic may anticipate claims from individuals who allegedly contracted the virus while interacting with that company’s employees or independent contractors. While those claims will likely face significant causation issues (will plaintiffs be able to substantiate transmission from a particular source though some combination of location tracking data and genetic testing of the virus?), these kinds of claims can be costly to defend and may create significant risks for certain businesses. Continue Reading COVID-19 Exposure and GL Coverage: Issues for Personal Injury Claims

Over the last few weeks we have seen a number of informative articles discussing the crucial issue of coverage for business interruption claims arising out of government shutdowns of businesses to inhibit the spread of COVID-19, here. As the economic disruption from these efforts continues, however, we are likely to see impacts in the Directors & Officers Liability market – not only from claims that trigger D&O policies, but also additional challenges in placements and renewals of D&O programs. Continue Reading Directors & Officers Liability Issues and the Coronavirus: Is That a “Thing”?

The coronavirus (COVID-19) has already caused severe disruption to the economy. In the U.S., governmental entities as well as the private sector are implementing more and more drastic measures to respond to the coronavirus.  While these efforts may be wise in light of the substantial public health concerns, they threaten to bring parts of the economy to a virtual halt, adversely impacting most every business and resulting in substantial losses.  The Organization for Economic Cooperation and Development estimates that if the coronavirus continues to spread more widely, it could cut global growth in 2020 by half.

Business Interruption

As a company determines the impact of the coronavirus on its business, it should assess the business interruption coverage available under its commercial property (or “first-party”) insurance policies.  Continue Reading Business Interruption Coverage for the Coronavirus (COVID-19)

The cyber insurance markets are beginning to adapt to the new California Consumer Privacy Act (CCPA) which went into effect on January 1, 2020.

There is great variation in how cyber insurance policies currently address risks under the CCPA. And further developments are expected as the law begins to impact companies under its jurisdiction—that is, companies that, regardless of their location, are for-profit, collect data from California residents, and either have annual revenue of at least $25 million; or collect, store and/or save the data of at least 50,000 California data subjects; or realize at least half of their revenue from the sale of data.

It is critical that companies subject to the CCPA understand the nuances of cyber insurance policies, and how they may be able to negotiate favorable coverage terms when they buy or renew them this year.

I dive into the CCPA’s impact on insurance policies in an article I co-authored with my Farella colleagues Sushila Chanana and Nate Garhart for TAG Cyber Law Journal. Read the full article, here.

Companies of all sizes have fallen victim to attacks whereby fraudsters will use deceptive communications, such as spoofed emails, to trick an employee into transferring money into the fraudsters’ control. While these increasingly prevalent schemes are an ever-present risk for businesses, the body of case law finding these losses covered under crime insurance policies continues to develop. In a previous post, we discussed decisions from the Second Circuit and Sixth Circuit that have found coverage under crime policies for phishing-related losses. Now, with its decision in Principle Sols. Grp., LLC v. Ironshore Indem., Inc., 944 F.3d 886 (11th Cir. 2019), the Eleventh Circuit has held that such losses are covered by policies insuring against fraudulent instructions. Continue Reading Another Federal Circuit Finds Phishing Loss Covered Under Crime Policy

In an article I wrote for the North Bay Business Journal’s Vine Notes column, I review the issues around insurance coverage for smoke taint damage to grapes and wine. Insurers’ attempted clean lines of distinction can quickly become hazy when it comes to smoke taint. Now that we are just over two years past the 2017 wildfires in Napa and Sonoma, it is a good time to review how this issue is developing.

Read the full article: Wine ‘Smoke Taint’ Blurs Insurance Coverage Distinctions

It is an all-too-common dilemma. As phishing schemes have become more prevalent and more sophisticated, businesses of all sizes have fallen victim to these attacks where a fraudster will use a spoofed email or other deceptive communication to trick an employee into transferring money into the fraudster’s control. While this is a difficult scenario for anyone to face, two decisions from federal circuit courts have offered policyholders some relief by finding coverage for these losses under policies insuring against Computer Fraud. In doing so, these opinions rejected insurers’ arguments that the theft accomplished through these fraudulent emails did not qualify as Computer Fraud or were not losses that were directly caused by Computer Fraud. Continue Reading Are Losses Resulting from Phishing Incidents Covered by Crime Policies Insuring Against Computer Fraud?