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Insurance Coverage Notes and Developments

Insurance Coverage Notes and Developments

Pennsylvania Court Estops Insurer From Asserting Coverage Defense That Was Not Identified in Its Reservation of Rights Letter

A split appellate court in Pennsylvania has held that an insurer is estopped from asserting a policy exclusion that it failed to expressly raise in its reservation of rights letter. See Selective Way Ins. Co. v. MAK Servs., No. 1289 EDA 2019, 2020 Pa. Super. LEXIS 342 (Pa. Super. Ct. April 24, 2020). The court’s ruling is an important reminder that failure to properly reserve the insurer’s right to deny coverage can sometimes have significant consequences. Read More ›

Not All Violation of Statutes Exclusions Are Created Equal

Coverage litigation relating to liability claims arising out of the Illinois Biometric Information Privacy Act (“BIPA”) has been relatively non-existent. One reason for this may be insurers’ reasonable conclusion that an exclusion introduced in 2006 in response to litigation arising under the Telephone Consumer Protection Act (“TCPA”) applies to this new genre of privacy litigation. That exclusion, generically referred as the Violation of Statutes Exclusion, was the insurance industry response to decisions from around the country finding that TCPA violations qualified as “personal injury” under liability policies. The exclusion evolved over time and now includes a catch-all provision that applies to violations of federal or state statutes or ordinances or regulations other than the enumerated statutes referenced in the exclusion—the TCPA, the CAN-SPAM Act of 2003 and the Fair Credit Reporting Act (“FCRA”). The Illinois court’s opinion in Westbend Mutual Insurance Ins. Co. v. Krishna Schaumburg Tan, Inc., 2020 Ill.App.(1st) 191384, is an example of how important the wording of that catch-all provision is for insurers seeking to rely on it to exclude coverage for BIPA violations. Read More ›

Still Only Eight Corners?: The Texas Supreme Court Decides Richards v. State Farm

In November, the Texas Supreme Court accepted a certified question from the Fifth Circuit directly calling into question the continued vitality of the well-known “eight corners rule,” under which a liability insurer can only consider the four corners of the live pleading and the four corners of its policy in deciding whether to defend its insured. As we noted in this blog when the Texas Supreme Court accepted the certified question, the case involved an ATV accident in which Jayden Mills, the young driver, was killed. His mother sued the Richardses, alleging they were negligent in failing to supervise and instruct Jayden. Read More ›

Headline: "SXSW Disaster: Event Admits It Has No Insurance for Coronavirus Cancellation"

That headline appeared Saturday in Music Business Worldwide, a trade paper, as well as in numerous other journals ranging from Variety to the Austin Chronicle. If you dug a little deeper, you would see that there was cancellation insurance for the ten-day event. But that coverage was excluded for bacterial infections, communicable diseases, viruses and pandemics.  Read More ›

Maryland Court Orders Insurance Company to Pay Ransomware Damages Under Businessowner’s Policy

The United States District Court for the District of Maryland recently held that an insurer must cover an insured’s costs to replace its computer systems following a ransomware attack. The case, National Ink and Stitch, LLC v. State Auto Property and Casualty Insurance Company, Civ. No. SAG-18-2138 (D. Md. January 23, 2020), contains lessons for business and insurance companies going forward. Read More ›

Policyholder Win Under Crime Policy for Social Engineering Scam

Sophisticated cyber crimes have been of great interest in the insurance world for the past decade, but relatively low-tech schemes are also a risk to policyholders and to insurers. Tricking an employee to transfer funds to an unauthorized account is a scam that existed prior to wide-spread use of email and the Internet. For example, the fraudster calls the bank employee, pretending to be his supervisor, authorizing a payment to be made ASAP, or a seller provides “updated” information for a wire transfer at a real estate closing, and the title company sends the funds to the wrong account. More recently, perpetrators of these types of social engineering tricks have made use of email to deliver fake payment instructions, and have infiltrated company or employee accounts to obtain necessary credentials or to create the impression of authority. Depending on the facts of a claim and the terms of specific insurance contracts, policyholders who are the victims of such scams may seek coverage under cyber liability policies or under traditional lines such as crime / fidelity and general liability. Read More ›

Assault on the Citadel? The Texas Supreme Court Agrees to Reconsider the “Eight Corners Rule”

Insurance practitioners in Texas are familiar with the so-called “eight corners rule” applied by Texas Courts to determine whether an insurer has a duty to defend a suit against its insured. The “eight corners rule” is simply summarized: Read More ›

Ain’t Going to Study War Exclusions No More... Or Are We? Universal Cable Productions LLC v. Atlantic Specialty Ins. Co. (9th Cir., July 12 2019)

Many insurance policies contain a “war exclusion,” which states that there is no coverage for loss resulting from “war,” “warlike action by a military force,” or “insurrection, rebellion, [or] revolution.” Does the exclusion apply when a militant faction—specifically Hamas—shoots rockets into an area where the insured is conducting activities? Read More ›

Federal Court Rejects Effort to Skirt a Policy’s Claims-Made-and-Reported Requirement

While courts on some issues may seem bent on finding coverage, there are some notable exceptions. Courts generally have faithfully applied claims-made-and-reported provisions even when an insured has had continuous coverage. An Arkansas federal district court recently did just that when it concluded that a school district failed to give its insurer timely notice of a claim under consecutive claims-made-and-reported policies. Read More ›

A Word to the Wise About Concurrent Causation

Hurricane Season 2019 is upon us as of June 1. NOAA’s crystal ball predicts an “average” hurricane season this year; to NOAA, “average” means “a likely range of 9 to 15 named storms (winds of 39 mph or higher), of which four to eight could become hurricanes (winds of 74 mph or higher), including two to four major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher).”[1] By comparison, NOAA predicted that 2018, which produced Hurricane Michael, the first Cat 5 hurricane to come ashore in the continental U.S. since 1992, would be “near or above-normal.”[2] And 2017 produced Harvey, Irma, Maria and Nate.  Read More ›