McLaughlin v. Travelers

March 1, 2021
Sally Kim & Kyle Silk-Eglit - Gordon & Rees Insurance Coverage Law Blog

The Washington State Supreme Court recently issued a decision that clarified whether a bicyclist is a “pedestrian” for purposes of personal injury protection (“PIP”) coverage. McLaughlin v. Travelers Commercial Ins. Co., 476 P.3d 1032 (2020).

Reprinted courtesy of Sally S. Kim, Gordon & Rees and Kyle J. Silk-Eglit, Gordon & Rees
Ms. Kim may be contacted at sallykim@grsm.com
Mr. Silk-Eglit may be contacted at ksilkeglit@grsm.com


Oklahoma Court Issues Reasoned Opinion, Adopts Policyholder View on “Physical Loss or Damage” as Only Reasonable One, in Cherokee Nation COVID-19 Coverage Win

February 22, 2021
Sergio F. Oehninger, Geoffrey B. Fehling & Matt Revis - Hunton Insurance Recovery Blog

As previously reported, an Oklahoma state court recently granted summary judgment to the Cherokee Nation for its COVID-19 business interruption claim. The court has now issued a more substantive opinion, establishing the merits of the Cherokee Nation’s claim and providing yet another blueprintfor policyholders seeking to recover COVID-19-related losses under “all risk” commercial property insurance policies.

Reprinted courtesy of Sergio F. Oehninger, Hunton Andrews Kurth and Geoffrey B. Fehling, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com


Ninth Circuit Finds Excess Carrier Can Challenge Primary Insurer's Settlement Payment and Erosion of Limits

February 15, 2021
Tred R. Eyerly - Insurance Law Hawaii

The court found that the excess carrier had grounds to challenge the primary carrier's allocation of a settlement payment. Scottsdale Ins. Co. v. Certain Underwriters at Lloyds, London, 2020 U.S. App. LEXIS 39771 (9th Cir Dec. 18, 2020).

In the underlying case, Underwriters settled on behalf of the insured law firm under a professional liability policy. Scottsdale sued Underwriters for a declaratory judgment that the settlement did not erode the limits. Underwriters counterclaimed seeking equitable contribution. On cross motions for summary judgment, the district court concluded that: (1) Scottsdale could not challenge Underwriters' settlement payment and the corresponding erosion of policy limits, and (2) Underwriters was not entitled to equitable contribution from Scottsdale.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Addressing These Key Issues Can Help Improve Safety on the Jobsite

February 8, 2021
Amerisure - Construction Executive

Risk management strategies allow for improved situational awareness, clear directions in the event of an accident and have the capacity to help reduce insurance claims.

However, effective plans require several key steps, and forgetting a single element can potentially throw the entire plan off track. In order to prevent this from happening, all companies—especially those in high-risk industries like construction—should focus on a comprehensive approach to risk management.

Reprinted courtesy of Amerisure, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Will Insurance Cover Risks Revealed By The Pandemic?

February 1, 2021
Richard Korman & Scott Van Voorhis - Engineering News-Record

COVID-19 has exposed long-overlooked frailties in existing insurance and contract terms on costs and delays, provoking a needed conversation. The vulnerabilities came into view within the first months of the pandemic.

Reprinted courtesy of Richard Korman, Engineering News-Record and Scott Van Voorhis, Engineering News-Record

Mr. Korman may be contacted at kormanr@enr.com


Sharing Company Culture to Strengthen Surety Relationships

January 25, 2021
Joshua Loftis, Bob Bowman & Colby White - Construction Executive

Established as an essential business in the early days of the COVID-19 pandemic, the construction industry quickly adapted to a new way of doing business. The construction industry’s response to this unprecedented adversity is an inspiration. A deeper dive reveals a collection of organizations with extraordinary resilience, and in many cases, a renewed focus on organizational culture and wellbeing.

Surety companies have unique visibility into a construction organization. This visibility provides insight into the remarkable response construction organizations had to the events of 2020. Surety conversations typically begin and end (appropriately) with a discussion around financial standing and performance. While many construction leaders will point to prudent financial management and performance as a reason for survival and success, the real passion is revealed when leaders note the strength of the organization’s culture.

Reprinted courtesy of Joshua Loftis, Bob Bowman & Colby White, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Loftis may be contacted at jloftis@csdz.com
Mr. White may be contacted at cwhite@csds.com
Mr. Bowman may be contacted at bbowman@csdz.com


How Are Insurers And Policyholders Faring in COVID-19 Business Interruption Coverage Litigation?

January 18, 2021
Edward M. Koch & Elizabeth C. Dolce - White and Williams LLP

This article is based on a presentation by the authors (along with Marc L. Penchansky and Felix S. Yelin) at White and Williams LLP’s Virtual Coverage College® on October 22, 2020. Every year, hundreds of insurance professionals come to Philadelphia—this year via our online platform—to participate in a full day of lectures and interactive presentations by White and Williams lawyers and guest panelists about the latest issues and challenges involved in claims handling and insurance litigation. Visit coveragecollege.com for more information and stay tuned for Coverage College® 2021.

With the COVID-19 pandemic and government stay-at-home orders came an unprecedented number of claims for business interruption coverage under first-party property policies—and the inevitable coverage litigation over those claims followed closely behind. As of this writing, we are aware of at least 70 court decisions on motions by insurers to dismiss policyholder lawsuits seeking business interruption coverage for COVID-19 related losses.

Reprinted courtesy of Edward M. Koch, White and Williams LLP and Elizabeth C. Dolce, White and Williams LLP
Mr. Koch may be contacted at koche@whiteandwilliams.com
Ms. Dolce may be contacted at dolcee@whiteandwilliams.com


Federal Court Provides Soothing Comfort for Spa’s COVID-19 Business Income Claim

January 11, 2021
Michael S. Levine & Meagan R. Cyrus - Hunton Insurance Recovery Blog

On December 9, 2020, in Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co., No 2:20-cv-00265-RAJ-LRL (E.D.V.A. Dec. 9, 2020) , a Virginia federal court refused to dismiss a majority of the policyholder’s breach of contract claim and its request for bad faith damages, declaratory judgment and class certification, all stemming from the insurers’ denial of coverage for COVID-19 related business income losses. The policyholder, a spa, purchased an all-risk property insurance policy with coverage for, among other things, loss of business income and extra expense. The spa, a non-essential business, closed on March 16, 2020 as a result of state orders requiring all non-essential businesses to close due to the COVID-19 pandemic. It did not reopen until May 15. Once re-opened, however, the policyholder was required to implement operational controls and precautions to ensure the safety of the public and its employees. Following its closure, the policyholder sought coverage under its all-risk insurance policy. The insurer denied coverage for the claim, contending first that losses due to the COVID-19 pandemic and subsequent closure orders did not constitute “property damage” within the meaning of the policy and, second, even if the losses were because of “property damage,” the claim implicated various exclusions to coverage. The policyholder then initiated suit against its insurers.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Meagan R. Cyrus, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Cyrus may be contacted at mcyrus@HuntonAK.com


Federal Court Remands COVID-19 Case Presenting Novel and Important Issues of State Insurance Law

January 4, 2021
Tred R. Eyerly - Insurance Law Hawaii

The federal district court exercised its discretion under the Declaratory Judgment Act, declining jurisdiction over a case presenting claims arising from COVID-19. Marc Daniel Hospitality, LLC v. AmGuard Ins. Co., 2020 U.S. Dist. LEXIS 191956 (D. N.J. Oct 16, 2020).

Plaintiff operated an upscale sit-down restaurant and whiskey bar offering a full menu. In March 2020, state and local orders limited the scope and hours of operations of all restaurants in the state due to the COVID-19 pandemic. Subsequent orders mandated that New Jersey residents remain at home except under certain exceptions. Plaintiff had to temporarily close its restaurant.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Engineering Coverage for Social Engineering Schemes in Light of New Jersey Federal Court Opinion Finding No Errors and Omissions Coverage for Email Scam

December 29, 2020
Andrea DeField & Michael L. Huggins - Hunton Andrews Kurth

It’s a cautionary tale of cyber fraud. A title agent in a real estate transaction receives an email ostensibly from the mortgage lender providing instructions for transferring the loan proceeds into a settlement bank account. After transferring the funds ($520,000), it becomes apparent that the transfer instructions came from an email address that was one letter off from the mortgage lender’s actual email address – it was a scam. But it’s too late, the scammer has already withdrawn the funds from the settlement account and cannot be traced.

Reprinted courtesy of Andrea DeField, Hunton Andrews Kurth and Michael L. Huggins, Hunton Andrews Kurth
Ms. DeField may be contacted at adefield@HuntonAK.com
Mr. Huggins may be contacted at mhuggins@HuntonAK.com


How COVID-19 Has Affected Risk in the Construction Industry

December 21, 2020
Gary Clevenger - Construction Executive

More eyes are on the growth and response of the construction industry than ever before. A McKinsey report distinguished construction as one of the industries that has the potential to help both communities and economies recover following COVID-19. The steps construction companies take in the coming months could lead to the industry coming back stronger and more innovative. However, with any rapid transition, comes new risk.

The onset of COVID-19 introduced many new challenges to construction professionals. On top of a shortage of trained construction professionals that has been prevalent in the industry, companies are now facing restrictions on how many workers can be on a jobsite—all leading to a sudden increase in fatigue among workers. There is an increased focus on job safety training and physical fitness, as time off from the job during quarantine likely depleted some workers’ skills. Additionally, from mental distractions due to the stress of the pandemic to additional PPE requirements—there are many new obstacles workers in the construction industry are now facing.

Reprinted courtesy of Gary Clevenger, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Clevenger may be contacted at gary.clevenger@cna.com


Wildfires Are Close to Torching the Insurance Industry in California

December 14, 2020
Leslie Kaufman & Eric Roston - Bloomberg

Dave Sapsis went to bed on Sunday, Aug. 16, with a sense of foreboding. As the head of risk mapping at the California Department of Forestry and Fire Protection, he’d seen the readouts from the agency’s high-precision weather forecasting system showing broad bands of clouds that could produce lightning without rain. After a wet spring, the state had spent the summer months baking under record-high temperatures, turning all those spring shoots into dry tinder.


Insurance Companies Drop Appeal Against the London High Court’s Ruling in the FCA’s “Test-Case”

December 7, 2020
Lorelie S. Masters & Jorge R. Aviles - Hunton Insurance Recovery Blog

As we explained in our earlier post, in a decision that could influence how policyholders and insurers around the world address business-interruption coverage for COVID-19 losses, the London High Court recently handed down its much-anticipated judgment in the Financial Conduct Authority’s “Test Case,” The Financial Conduct Authority (FCA) v. Arch et al. Because the judgment provided that coverage was available for COVID-19 business-interruption losses under most of the policy wordings at issue, it was highly anticipated that the insurance companies at issue would challenge the judgment in a fast-tracked “leapfrog” appeal to the Supreme Court of the U.K., expected to be heard by the end of the year. Yesterday, however, six of the insurance companies subject to the judgment decided not to pursue an appeal in connection with some of the policies, and one of the insurers stated that it would instead begin to make payments where appropriate.

Reprinted courtesy of Lorelie S. Masters, Hunton Andrews Kurth and Jorge R. Aviles, Hunton Andrews Kurth
Ms. Masters may be contacted at lmasters@HuntonAK.com
Mr. Aviles may be contacted at javiles@HuntonAK.com


MDL Panel Denies Consolidation for COVID-19 Insurance Cases for All Insurers (with One Exception)

November 30, 2020
Scott P. DeVries & Rachel E. Hudgins - Hunton Insurance Recovery Blog

As we reported in a prior blog, on August 14, the Judicial Panel on Multidistrict Litigation rejected plaintiffs’ request for a consolidation of all COVID-19 insurance coverage federal litigation, agreeing to consider mini-MDLs as respects five specific insurers, which accounted for roughly one-third of the federal cases. On October 2, the Panel rejected the concept of mini-MDLs as respects four of these five insurers and accepted an MDL for the fifth insurer.

Reprinted courtesy of Scott P. DeVries, Hunton Andrews Kurth and Rachel E. Hudgins, Hunton Andrews Kurth
Mr. DeVries may be contacted at sdevries@HuntonAK.com
Ms. Hudgins may be contacted at rhudgins@HuntonAK.com


Beyond General Liability Insurance: Other Liability Exposures to Be Aware Of

November 23, 2020
Jeffrey Cavignac - Construction Executive

Every contractor of any size likely carries commercial general liability insurance. Not only is it prudent to carry, nearly all contracts require it. Auto liability and employers liability (part of a workers' compensation policy) are also mandatory in most agreements. There are, however, a number of other liability exposures that exist for a construction company and should be evaluated and considered.

Reprinted courtesy of Jeffrey Cavignac, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Failure to Plead Physical Loss or Damage Leads to Dismissal of COVID-19 Claim

November 16, 2020
Tred R. Eyerly - Insurance Law Hawaii

The insured's claim for business interruption losses due to COVID-19 was dismissed for failure to plead direct physical loss of or damage to property. Malaube LLC v. Greenwich Ins. Co., 2020 U.S. Dist. LEXIS 156027 (S.D. Fla. Aug 26, 2020).

The insured restaurant had to suspend operations when local and state orders closed all onsite dining due to COVID-19. The insured submitted a claim for business interruption losses to its carrier. Greenwich denied the claim because the insured did not experience any physical loss or damage to the insured property. The insured sued.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Court Denies Remand of COVID-19 Case

November 9, 2020
Tred R. Eyerly - Insurance Law Hawaii

The federal district court rejected a challenge to its diversity jurisdiction and rejected the insured's attempt to remand the COVID-19 claims back to state court. Vandelay Hospitality Group LP v. Cincinnati Ins. Co., 2020 U.S. Dist. LEXIS 149196 (N.D. Tex. Aug. 18, 2020).

Vandelay purchased a commercial property policy from Cincinnati through Swingle Collins, its registered broker, and its employee, Baron Cass. The policy was "all risk" and purported to insure three of Vandelay's restaurants for, amoung other things, direct physical loss and loss incurred due to business interruptions.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Insuring Against Climate Change: How Traditional Insurers and Start-Up Companies are Implementing Innovative Technologies to Address Climate Risks

November 2, 2020
Adam M. Berardi & Marianne Bradley - Complex Insurance Coverage Reporter

Over the last decade, there has been a global increase in the focus on climate change and the risks and dangers associated with it. And for good reason. Damage from climate-related disasters was in the billions of dollars in 2019 alone. California wildfires caused $25 billion in property damage, while Typhoon Hagibis in Japan cost an estimated $15 billion. Other extreme weather events, including rampant brush fires in Australia, widespread droughts in East Africa and severe flooding in South Asia, have had devastating consequences.

Insurers seeking to underwrite weather-related risks face growing challenges. While the availability of insurance can help mitigate some of the impacts of climatic shifts, insurers stand to lose billions of dollars from catastrophic weather events. As a result, some insurers have had to significantly increase premiums in particularly risk-prone areas, while others have found it difficult — if not impossible — to economically write or renew coverage.

Reprinted courtesy of Adam M. Berardi, White and Williams LLP and Marianne Bradley, White and Williams LLP
Mr. Berardi may be contacted at berardia@whiteandwilliams.com
Ms. Bradley may be contacted at bradleym@whiteandwilliams.com


COVID-19 Halts Construction on $200M Anchor Project at Heartwood Preserve in Omaha

October 26, 2020
Star-Herald - Engineering News-Record

Construction is about to stall on a roughly $200 million anchor office project at the Heartwood Preserve site, in light of the COVID-19 crisis.
California -based Applied Underwriters, a national workers' compensation insurer, confirmed that it is suspending construction temporarily in part to "protect" workers and suppliers involved in building its new office complex on a 50-acre stretch southwest of 144th and Pacific Streets .

ENR may be contacted at ENR.com@bnpmedia.com


New York Appellate Court Confirms Insurers Must Advance Defense Costs Under D&O Policies

October 19, 2020
Sergio F. Oehninger, Geoffrey B. Fehling & Meagan R. Cyrus - Hunton Insurance Recovery Blog

A New York appeals court recently granted partial summary judgment in favor of the insureds, finding that excess directors and officers insurers, Westchester Fire Insurance Co., Aspen American Insurance Co. and RSUI Indemnity Co., must advance the defense costs for former executives of the insured entity. The decision is the most recent victory for policyholders in connection with D&O insurance claims asserted in the wake of alleged securities violations and accounting fraud at related real estate investment firms, which have resulted in millions of insurance recoveries for the company and its officers and directors (as previously reported here and here).

Reprinted courtesy of Sergio F. Oehninger, Hunton Andrews Kurth, Geoffrey B. Fehling, Hunton Andrews Kurth and Meagan R. Cyrus, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
Ms. Cyrus may be contacted at mcyrus@HuntonAK.com


Ninth Circuit Narrowly Construes IP Exclusion, Reaffirming Rules of Insurance Policy Construction

October 12, 2020
Scott P. DeVries & Michael L. Huggins - Hunton Insurance Recovery Blog

On August 19, 2020, the Ninth Circuit issued its decision in My Choice Software, LLC v. Travelers Casualty Insurance Co. of America, No. 19-56030, 2020 WL 4814235, holding that longstanding rules of insurance policy construction required reversal of a district court holding denying a duty to defend. Specifically, the Court determined that the Intellectual Property Exclusion in a Travelers policy did not unambiguously preclude the possibility of coverage for a claim against the Insured, My Choice, and that Travelers accordingly had a duty to defend.

Reprinted courtesy of Scott P. DeVries, Hunton Andrews Kurth and Michael L. Huggins, Hunton Andrews Kurth

Mr. DeVries may be contacted at sdevries@HuntonAK.com
Mr. Huggins may be contacted at mhuggins@HuntonAK.com


South African Insurers Agree to Pay for COVID-19 Losses

October 5, 2020
Sergio F. Oehninger & Daniel Hentschel - Hunton Insurance Recovery Blog

Over the past couple of months, we have written on decisions by various European insurers to pay policyholders for their COVID-19 related losses. That positive trend is now moving across continents.

In response to COVID-19, South Africa’s government imposed restrictions allowing only essential services to operate under a lockdown imposed in March 2020, resulting in substantial losses for corporations and small businesses. In response to policyholders’ claims, South African insurance companies Santam, Hollard Insurance Company, and Guardrisk Insurance Co. Ltd. have agreed to pay certain business interruption losses resulting from COVID-19 and related government orders. The insurance companies recently announced that they will offer settlements and interim relief to thousands of its insured businesses under business interruption insurance policies that provide coverage for losses resulting from contagious and infectious diseases.

Reprinted courtesy of Sergio F. Oehninger, Hunton
Andrews Kurth
and Daniel Hentschel, Hunton
Andrews Kurth

Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com


Ninth Circuit Rejects Excess Insurer's Attempt to Dispute Exhaustion of Underlying Insurance

September 28, 2020
J. Kelby Van Patten & Jared De Jong - Payne & Fears

This week, in AXIS Reinsurance Co. v. Northrop Grumman Corp., ____ F.3d ____, 2020 WL 5509743 (9th Cir. Sept. 14, 2020), the Ninth Circuit addressed an important question of first impression: When can an excess insurer second-guess an underlying insurer’s decision to pay a claim? Prior to AXIS Reinsurance, there had been no California or the Ninth Circuit case discussing an excess insurer’s right to make a covered-claims challenge to the exhaustion of underlying insurance, even though policyholders frequently encounter such arguments.

Reprinted courtesy of J. Kelby Van Patten, Payne & Fears and Jared De Jong, Payne & Fears
Mr. Van Patten may be contacted at kvp@paynefears.com
Mr. De Jong may be contacted at jdj@paynefears.com


Remand Denied for COVID-19 Business Interruption Claim

September 21, 2020
Tred R. Eyerly - Insurance Law Hawaii

The district court refused to remand plaintiff's claim for business losses due to COVID-19 shut down orders. Mark's Engine Co. No. 28 Restaurant, LLC v. Traveler's Indem. Co. of Conn., 2020 US. District. LEXIS 132841 (C.D. Calif. July 27, 2020).

Plaintiff restaurant sued Traveler's in state court. Los Angele Mayor Eric Garcetti was also named as a defendant for his part in issuing the shut down orders. An Executive Order issued on March 15, 2020 directed all non-essential businesses to close. Plaintiff argued that this triggered its coverage because plaintiff was forced to close by order of Civil Authority. Further, the denial of coverage would not have occurred absent the mayor's order, the propriety of which was an significant issue that allegedly had to be resolved.

Mr. Eyerly may be contacted at te@hawaiilawyer.com



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