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.

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

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.

Continue Reading Headline: “SXSW Disaster: Event Admits It Has No Insurance for Coronavirus Cancellation”

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.

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

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.

Continue Reading Policyholder Win Under Crime Policy for Social Engineering Scam

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:

Under the eight-corners rule, the duty to defend is determined by the claims alleged in the petition and the coverage provided in the policy. The rule takes its name from the fact that only two documents are ordinarily relevant to the determination of the duty to defend: the policy and the pleadings of the third-party claimant. Facts outside the pleadings, even those easily ascertained, are ordinarily not material to the determination and allegations against the insured are liberally construed in favor of coverage.

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

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?

Continue Reading 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)

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.

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

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. 

Continue Reading A Word to the Wise About Concurrent Causation

The California Supreme Court has agreed to decide for the first time whether class actions alleging violations of the Telephone Consumer Protection Act (“TCPA”)—which prohibits certain unsolicited fax, telephone or text message advertisements—are covered by a CGL insurance policy. See Yahoo! Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., Case No. S253593 (Cal. S. Ct., March 27, 2019). The Ninth Circuit asked the California Supreme Court to resolve the issue as a certified question of unresolved state law. See Yahoo! Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 913 F.3d 923, 926 (9th Cir. 2019).

Continue Reading Do TCPA Claims Trigger CGL Coverage? The California Supreme Court Agrees to Decide

The fallout from the Illinois Supreme Court’s January 25, 2019, opinion in Rosenbach v. Six Flags Entertainment Corp., 19 IL 12316, continues. Rosenbach settled the dispute of who qualifies as an “aggrieved person” under the Illinois Biometric Information Privacy Act (“BIPA”), and in doing so opened the floodgates for this litigation to proliferate. The immediate result was a sharp increase in the filing of BIPA class actions as well as the lifting of stays of the numerous cases pending that were awaiting the Rosenbach ruling.

Continue Reading All Stop: Ruling on the Applicability of Exclusion to BIPA Claims Delayed