Wrap-up Exclusion Applies Even if Insured Not Enrolled in Wrap-Up Program

May 22, 2023
Tred R. Eyerly - Insurance Law Hawaii

The Supreme Court of New York, Appellate Division, found that the lower court properly determined that the wrap-exclusion applied to the insured even though it was not enrolled in the Wrap-up Insurance Program for the project. Skanska USA Building Inc. v. Harleysville Ins. Co., 2023 N.Y. App. Div. LEXIS 1893 (N.Y. App. Div. April 11, 2023).

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

Motion to Dismiss COVID-19 Claim Denied

May 15, 2023
Tred R. Eyerly - Insurance Law Hawaii

Finding that a contamiation exclusion was ambiguous, the Court denied the insurer's Motion to Dismiss the insured's COVID-19 claim. C.J. Segerstrom and Sons v. Lexington Ins. Co., 2023 U.S. Dist. LEXIS 33293 (C.D. Cal. Feb. 27, 2023).

Segerstrom owned and operated a shopping mall. It was forced to close the mall due to the outbreack of COVID-19 in order to comply with related closure and stay-at-home orders issued by state and county governmental authorities. The mall was unable to open for several months, resulting in losses over $3,000,000.

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

Florida Enacts Comprehensive Tort Reform, Revamping Framework of Extra-Contractual Bad Faith

May 8, 2023
Bradley S. Fischer & Samantha S. Rhayem - Lewis Brisbois

Fort Lauderdale, Fla. (April 25, 2023) – On March 24, 2023, Florida Governor Ron DeSantis signed a sweeping tort reform bill, CS/CS/HB 837 (HB 837), into law. Among its numerous implications, HB 837 amends Florida Statute §624.155 (the Civil Remedy Statute), heightening the insured’s burden for recovery of extracontractual, i.e. “bad faith,” damages under Florida law.

Preceding Legislation
HB 837 is the second piece of legislation that was passed in the last three months addressing an insured’s right to recover bad faith damages. Prior to HB 837’s enactment, on December 16, 2022, Governor DeSantis signed into law S.B. 2-A, which created Florida Statute Section 624.1551 (“Civil Remedy Actions Against Property Insurers”). This statute prohibits recovery of bad faith damages absent an adverse adjudication that the insurer breached the policy and a final judgment against the insurer. Section 624.1551 also clarifies that acceptance of an offer of judgment or an appraisal award does not constitute an adverse adjudication and does not, on its own, give rise to a cause of action for extracontractual damages.

Reprinted courtesy of Bradley S. Fischer, Lewis Brisbois and Samantha S. Rhayem, Lewis Brisbois
Mr. Fischer may be contacted at Bradley.Fischer@lewisbrisbois.com
Ms. Rhayem may be contacted at Samantha.Rhayem@lewisbrisbois.com

When Does a Claim Become a “Claim”? A Lesson on Timely Notice

May 1, 2023
Matthew J. Revis & Patrick M. McDermott - Hunton Insurance Recovery Blog

On March 20, 2023, the Southern District of New York denied a policyholder’s claim for coverage and granted the insurer’s motion for judgment on the pleadings in Pine Management, Inc. v. Colony Insurance Company. The parties disputed whether a real estate liability insurance policy provided defense and indemnification for Pine Management, Inc. in an underlying lawsuit brought by numerous companies that Pine managed. A simple question proved pivotal in the outcome: whether Pine had timely sought coverage for its claim.

Reprinted courtesy of Matthew J. Revis, Hunton Andrews Kurth and Patrick M. McDermott, Hunton Andrews Kurth
Mr. Revis may be contacted at mrevis@HuntonAK.com
Mr. McDermott may be contacted at pmcdermott@HuntonAK.com

Ninth Circuit Certifies Virus Exclusion Issue to California Supreme Court

April 25, 2023
Tred R. Eyerly - Insurance Law Hawaii

The Ninth Circuit asked the California Supreme Court to address whether the policy's virus exclusion was enforceable to preclude coverage for business income losses due to the present of COVID-19 at the insured's properties. French Laundry Partners LP v. Hartford Fire Ins. Co., 2023 U.S. App. LEXIS 2845 (9th Cir. Feb. 6, 2023).

French Laundry Partners owned two restaurants in Napa County, California. The restaurants were forced to shut down due to the government orders related to the COVID-19 pandemic. It sought coverage for its economic losses, but Hartford denied the claim. French Laundry filed suit.

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

Supreme Court Takes on Insurance Dispute

April 18, 2023
Lara Degenhart Cassidy & Adriana A. Perez - Hunton Insurance Recovery Blog

On Monday, March 6, the US Supreme Court agreed to hear an insurance coverage dispute, Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC. Insurance cases are few and far between in the high court, so both policyholders and their insurers will be watching the Great Lakes case with great interest. Notably, while the case involves the specialized area of maritime law, how the Supreme Court chooses to address the choice-of-law issue it presents could have much broader implications.

Reprinted courtesy of Lara Degenhart Cassidy, Hunton Andrews Kurth and Adriana A. Perez, Hunton Andrews Kurth
Ms. Cassidy may be contacted at lcassidy@HuntonAK.com
Ms. Perez may be contacted at pereza@HuntonAK.com

California Court of Appeals Reverses Denial of COVID-19 Claim Based on Virus-Specific Endorsement

April 10, 2023
Tred R. Eyerly - Insurance Law Hawaii

The California Court of Appeal reversed the trial court's grant of the insurer's demurrer on a COVID-19 claim and remanded the case for further proceedings. John's Grill v. Hartford Fin. Servs. Group, 2022 Cal. App. LEXIS 1056 (Cal. Ct. App. Dec. 27, 2022).

John's Grill had two insurers, Hartford and Sentinel. Hartford's motion to quash service of summons was granted by the trial court and affirmed by the appellate court. Sentinel's policy had customised trigger-of-coverage language that was virus-specific. The Sentinel endorsement (1) contained an affirmative grant of coverage specifically for "loss or damage" caused by a virus; and (2) a special definition of 'loss or damage" that included "direct physical loss or direct physical damage to" property, but was broad enough to encompass pervasive infiltration of virus particulates onto the surfaces of covered property, which is what John's Grill alleged here.

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

PFAS Regulation and Insurance Coverage Implications

April 3, 2023
Malcolm C. Weiss, Scott P. DeVries, Syed S. Ahmad, Yosef Itkin & Javaneh S. Tarter - Hunton Insurance Recovery Blog

PFAS Regulation
Per- and polyfluoroalkyl Substances (“PFAS”) are a class of substances that have increasingly become the target of federal and state regulation in everything from drinking water, groundwater, site contamination, waste, air emissions, firefighting foam, personal care products, food and food packaging, and now consumer and commercial products. PFAS are widely-used chemicals that have the unique ability to repel both oil and water, which led to their application in many products including items such as stain and water-repellent fabric, chemical-and oil-resistant coatings, food packaging materials, plastics, firefighting foam, solar panels and many others. The carbon-fluorine bond is the strongest in nature, making these compounds highly persistent in the environment.

Reprinted courtesy of Malcolm C. Weiss, Hunton Andrews Kurth, Scott P. DeVries, Hunton Andrews Kurth, Syed S. Ahmad, Hunton Andrews Kurth, Yosef Itkin, Hunton Andrews Kurth and Javaneh S. Tarter, Hunton Andrews Kurth
Mr. Weiss may be contacted at mweiss@HuntonAK.com
Mr. DeVries may be contacted at sdevries@HuntonAK.com
Mr. Ahmad may be contacted at sahmad@HuntonAK.com
Mr. Itkin may be contacted at yitkin@HuntonAK.com
Ms. Tarter may be contacted at jtarter@HuntonAK.com

Collateral Damage: How to Avoid the Pitfalls of Collateral Agreements

March 27, 2023
Brian J. Clifford & Anna M. Perry - Saxe Doernberger & Vita, P.C.

Although collateral agreements provide security for insurers on policies with large deductibles, they can create hardships for insureds that are out of proportion with the insurers’ security concerns. Insurers require collateral as security for the repayment of insureds’ deductible obligations for large-deductible liability insurance policies. But collateral agreements also can tie up millions of dollars of insureds’ money for long periods of time and leave insureds with no way of recovering their money once the collateral has served its purpose.

Reprinted courtesy of Brian J. Clifford, Saxe Doernberger & Vita, P.C. and Anna M. Perry, Saxe Doernberger & Vita, P.C.
Mr. Clifford may be contacted at BClifford@sdvlaw.com
Ms. Perry may be contacted at APerry@sdvlaw.com

Ninth Circuit Certifies Question to California Supreme Court on COVID-19 Claim

March 20, 2023
Tred R. Eyerly - Insurance Law Hawaii

The Ninth Circuit certified a question to the California Supreme Court asking whether the presence of COVID-19 constitutes "direct physical loss to property.'" Another Planet Entertainment, LLC v. Vigilant Ins. Co., 2022 U.S. App. LEXIS 35763 (9th Cir. Dec. 28, 2022).

Another Planet was an event promoter and venue operator that owned event venues in California and Nevada. It held a commercial property policy with Vigilant Insurance Company. After the COVID-19 pandemic began in early 2020, government closure orders forced Another Planet to suspend its operations, close its venues and cancel events, resulting in substantial financial losses. Another Planet submitted a claim to Vigilant. After the claim was denied, Another Planet filed suit

Court Orders Limited Discovery Before Ruling on Insurers' Motions to Dismiss COVID-19 Claims

March 13, 2023
Tred R. Eyerly - Insurance Law Hawaii

Conceding it was an unusual step, the federal district court ordered that limited discovery take place before ruling on the insurers' motions to dismiss the insureds' business interruption claims due to COVID-19. Philadelphia Eagles Limited Partnership v. Factory Mut. Ins. Co., 2022 U.S. Dist. LEXIS 225729 (E.D. Pa. Dec. 15, 2022).

The Philadelphia Eagles submitted claims to its insurer, Factory Mutual Insurance Company, for large loss of of revenue due to COVID-19. Similarly, the Philadelphia 76ers submitted claims to Hartford Fire Insurance Company for losses due to COVID-19. The insurers denied claims. When suits were filed, the two insurers moved to dismiss.

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

An Introduction to Workers' Compensation Insurance for Construction Companies and Contractors

March 6, 2023
Saxe Doernberger & Vita, P.C.

Workers’ compensation insurance is one of the most important coverages for construction companies and contractors. A workers’ compensation policy typically provides insurance for accidents on-site or in the workplace, and other injuries sustained while working. This coverage includes medical expenses, lost wages, worker death, and related costs. Although independent contractors might not be required to carry workers’ compensation insurance, they should also obtain this coverage if they have any employees. In some states, construction companies who employ independent contractors could also be required to provide workers’ compensation coverage to them.

SDV’s attorneys may be contacted at coverage@sdvlaw.com

Broker's Motion to Dismiss Denied

February 27, 2023
Tred R. Eyerly - Insurance Law Hawaii

The broker's argument that its liability could not be established until after the insurer was found to have breached the policy failed. Pedernal Props., LLC v. Marsh United States Inc., 2022 U.S. Dist. LEXIS 207618 (N. D. Okla. Nov. 16, 2022).

Marsh procured a property policy from Markel American Insurance Company naming Pedernal as the insured. Pedernal suffered a loss and submitted a claim to Market. Markel denied the tender and refused payment to Pedernal. Pedernal then filed suit against Markel for breach of contract and bad faith in its claim handling. Pedernal also alleged Marsh omitted certain information from Markel in connection with the insured property. Pedernal sought damages from Marsh for negligence.

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

California Court of Appeal Again Reverses Dismissal of COVID-19, Business Interruption Claim

February 20, 2023
Tred R. Eyerly - Insurance Law Hawaii

Consistent with its prior decision in Marina Pacific Hotel and Suites, LLC v. Fireman's Fund Ins. Co., 81 Cal. App. 5th 96 (2022), the California Court of Appeal again reversed the lower court's dismissal by demurrer of the insured's business interruption claim due to the presence of COVID-19. Shusha, Inc. v. Century-Nat'l Ins. Co., 2022 Cal. App. Unpub. LEXIS 7667 (Cal. Ct. App. Dec. 14, 2022).

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

Hawaii Supreme Court To Decide Agent's Alleged Negligence in Failing to Submit Claim

February 14, 2023
Tred R. Eyerly - Insurance Law Hawaii

The Hawaii Supreme Court granted certiorari in a case involving an agent's alleged negligence in deciding not to submit a claim. Pflueger, Inc. v. AIU Holdings, Inc., 2023 Haw. LEXIS 3 (Haw. Ct. App. Jan. 6, 2023). Our post on the Intermediate Court of Appeals decision is here

The insured received a subpoena and informed the agent. The agent responded that a subpoena was not considered a "claim" and did not submit the claim to the insurer. Later, the insured's attorney submitted the claim which was denied as untimely. The insured settled with the insurer, but continued the lawsuit against the agent.

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

2023 Outlook on the Construction Industry and Liability Insurance

February 6, 2023
Brian O'Connell - Construction Executive

The U.S. construction industry is on a post-pandemic rally, with the sector spending $1.7 trillion in October 2022–that’s 9.2% better than October 2021. Furthermore, the entire insurance liability market is expanding significantly, projected to grow from $252.3 billion in 2021 to an estimated $432.8 billion in 2028, according to Allied Market Research.

With more government money and more building projects in play going into 2023, one area where the construction industry is finding firm footing is with liability insurance, albeit with some major risks in play.

Reprinted courtesy of Brian O'Connell, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

New York Governor Vetoes Grieving Families Act

January 31, 2023
Lewis Brisbois Newsroom

New York, N.Y. (January 31, 2023) - Following up on our previous updates regarding the pending New York legislation known as the Grieving Families Act, just before the deadline on January 30, 2023, Governor Hochul vetoed the piece of legislation.

For months, the New York legal and business communities had been following the progress of Bill S74A, also known as the “Grieving Families Act,” which was passed by the New York legislature in June 2022. After Governor Hochul was reelected and sworn in, we learned that she had until January 30, 2023 to sign the current or an amended version of the bill, send it back to the legislature for more changes, or veto it. Although the legislature and plaintiffs bar had been pressuring the governor to sign the bill, other groups launched a concerted effort to veto or at least amend the bill.

Court: “Literal” Reading Of Insurance Statute Is “Poppycock”

January 23, 2023
Patrick M. McDermott & Kevin V. Small - Hunton Insurance Recovery Blog

The Fourth Circuit recently held that a “literal” interpretation of a North Carolina insurance law was “poppycock.” Whitmire v. S. Farm Bureau Life Ins. Co., No. 21-1643 (4th Cir. 2022). The case involved a North Carolina statute that required an insurer to provide notice by mail addressed to the insured’s “last known post-office address in this State.” The person that was to receive notice under the statute had lived in North Carolina but then moved to South Carolina. The insurer provided notice at the person’s South Carolina address. It did not provide notice at the person’s last known address in North Carolina. So the beneficiary of the life insurance argued that notice did not meet the North Carolina statute because it was not provided at “last known post-office address in this State,” i.e. North Carolina.

Reprinted courtesy of Patrick M. McDermott, Hunton Andrews Kurth and Kevin V. Small, Hunton Andrews Kurth
Mr. McDermott may be contacted at pmcdermott@HuntonAK.com
Mr. Small may be contacted at ksmall@HuntonAK.com

Top 10 Insurance Cases of 2022

January 17, 2023
Jeffrey J. Vita, Grace V. Hebbel & Michael A. Amato - Saxe Doernberger & Vita, P.C.

Federal and state courts tackled a myriad of interesting insurance-related issues this past year. Over two years into the pandemic, we saw the first state high court decision regarding whether property policies provide coverage for COVID-19 losses. Elsewhere, as our country continues to grapple with the opioid epidemic, courts are confronted with whether commercial general liability policies provide coverage for various opioid-related damages. In a very interesting policyholder friendly decision, the Supreme Court of Washington found a claims-made CGL policy to be violative of public policy. The Court of Appeals of North Carolina was tasked with evaluating coverage for a disease contracted through a hot tub display. And - on the more mundane side, yet still important for the industry - the Texas Supreme Court refined its application of the eight-corners rule. These are merely a sampling of the impactful insurance decisions rendered in 2022.

Reprinted courtesy of Jeffrey J. Vita, Saxe Doernberger & Vita, P.C., Grace V. Hebbel, Saxe Doernberger & Vita, P.C. and Michael A. Amato, Saxe Doernberger & Vita, P.C.
Mr. Vita may be contacted at JVita@sdvlaw.com
Ms. Hebbel may be contacted at GHebbel@sdvlaw.com
Mr. Amato may be contacted at MAmato@sdvlaw.com

Mercury Insurance Recognized as 'Best of the Southland' by Los Angeles Times' Readers

January 9, 2023
Mercury Insurance

LOS ANGELES, Calif. (November 29, 2022) – Mercury Insurance (NYSE: MCY) has been recognized by Los Angeles Times readers as the overall best insurance service in the Southland.

The Los Angeles Times invited readers to nominate their favorite businesses for the Times' "Best of the Southland" awards for 2022. Businesses and services throughout the Greater Los Angeles area were rated throughout five regional zones. More than 5,000 businesses in 85 categories were nominated. Mercury won the overall in the Best Shopping and Services category for insurance. Mercury also won three "Best of Southland" awards for the areas of Orange County, San Gabriel Valley/Inland Empire and Westside/Downtown/East Los Angeles, and achieved two finalist distinctions for the San Fernando Valley/Ventura and South Bay/South Los Angeles/Southeast Los Angeles/Long Beach communities.

About Mercury Insurance
Mercury Insurance (NYSE: MCY) is a multiple-line insurance carrier offering personal auto, homeowners, and renters insurance directly to consumers and through a network of independent agents in Arizona, California, Illinois, Georgia, Nevada, New Jersey, New York, Oklahoma, Texas and Virginia, as well as auto insurance in Florida. Mercury also writes business owners, business auto, landlord, commercial multi-peril and mechanical protection insurance in various states.

Even Sophisticated Policyholders Can Miss a Simple Claims Notice Requirement

January 4, 2023
Leena Phaguda - Saxe Doernberger & Vita, P.C.

Following the basic notice requirements to provide timely and adequate notice of a claim contained in all insurance policies seems elemental to triggering an insurer’s duty to defend a policyholder. However, even sophisticated insureds can sometimes miss the simple notice provisions in their policies. This is why all insureds, no matter the level of their legal knowledge, need to pay close attention as to when and how to place their insurance companies on notice of a potential claim. If not, policyholders can easily lose out on significant coverage.

Harvard’s failure to meet this simple notice requirement lost the school $15 million of insurance coverage from its excess carrier for a claim stemming from a 2014 lawsuit filed against Harvard alleging unconstitutional admission policies. After the admission case was filed, Harvard tendered its defense to its primary insurer, AIG, with a policy limit of $25 million. Harvard additionally maintained an excess policy with Zurich with coverage of $15 million.

Ms. Phaguda may be contacted at LPhaguda@sdvlaw.com

Whose Burden is It Anyway: All Risk vs. Covered Peril Policies

December 26, 2022
William S. Bennett - Saxe Doernberger & Vita, P.C.

First-party insurance coverage is typically structured on the basis of one of two types of insuring agreements: “All Risks” and “Covered Peril.” While the difference may seem innocuous, the ramifications of having one versus the other can be monumentally important in a disputed claim scenario. For the reasons discussed in this article, we recommend that, in almost every situation, the insured should aim to secure an “all risks” policy form.

What is the difference?
In an “all risks” policy form, the insuring agreement of the policy’s main coverage will typically state something to the effect of, “this policy insures all risks of direct physical loss or damage, except as excluded herein.” In other words, the insurance company is assuming “all risks” of physical loss and is not outright limiting the coverage to specific causes of loss.

Mr. Bennett may be contacted at wsb@sdvlaw.com

A Cybersecurity Primer for Contractors: Threats, Liability and Insurance

December 18, 2022
James T. Dixon - Construction Executive

One of the most publicized security breaches was the 2013 hack of Target’s payment and security system. What's not as well known is that access credentials were stolen from an HVAC contractor that was working with Target. The data connection that was accessed was being used for electronic billing, contract submissions and project management. An employee of the HVAC company fell victim to a phishing attack by clicking on an email that contained malware. The rest is cybersecurity history.

While the construction industry does not generally face the same information security regulatory requirements as the healthcare and financial sectors, it does face the same threats. At a time when remote work is increasing risks, many sources report that the construction industry lags behind others in bolstering its security systems. That lack of security can lead to liability for significant losses.

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

It’s Not You, It’s Them: Dealing With Insurance Coverage Denials

December 13, 2022
Latosha M. Ellis & Olivia G. Bushman - Hunton Insurance Recovery Blog

If your company has an emergency response plan—and it likely does—filing an insurance claim needs to be included in that plan. But what if your insurer stretches out the consideration process by making continuous, costly information requests without making a coverage determination? Or decides to deny coverage under one clause of the policy, but accept coverage under another? Or outright denies coverage? Policyholders should be prepared to comply with policy obligations (which may vary depending on the controlling state law), such as the sharing of relevant information and documentation or participating in arbitration or a mediation prior to suing the insurer, but also understand the responsibilities insurers have to policyholders when a claim is tendered.

Reprinted courtesy of Latosha M. Ellis, Hunton Andrews Kurth and Olivia G. Bushman, Hunton Andrews Kurth
Ms. Ellis may be contacted at lellis@HuntonAK.com
Ms. Bushman may be contacted at obushman@HuntonAK.com


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