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.

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.

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

Washington D.C. (September 28, 2022) - In part one of this three-part series, we focused on the losses and coverage issues that arose in the insurance industry as a result of the Russia-Ukraine conflict. In part two, we focus on a key developing issue for the insurance industry: the availability of insurance to Russian corporations and/or companies doing business with or in Russia.

A Drastic Decline in Available Insurance
There has been a drastic decline in recent months of available insurance policies for companies doing business in Russia or with Russian corporations. One reason for the decline is the amount of sanctions imposed on Russia. Because of the vast number of sanctions – and the fact that there is a lack of harmony among countries regarding sanctions – insurers must err on the side of caution when considering whether to issue new policies of insurance or renew existing ones. This means that insurers may not sign policies with a prospective insured even if it operates in sectors not covered by sanctions.

Reprinted courtesy of Michael Kopit, Lewis Brisbois and Natalya Samsonova, Lewis Brisbois
Mr. Kopit may be contacted at Michael.Kopit@lewisbrisbois.com
Ms. Samsonova may be contacted at Natalya.Samsonova@lewisbrisbois.com

Every commercial property owner, developer, general contractor, subcontractor, and vendor should understand the concept of contractual risk transfer and how it might affect its company and projects.

Contractual Risk Transfer Defined
With any kind of commercial property development, the parties involved face risk. Whether you’re the owner, general contractor, or some other entity involved in the project, there’s always the risk that accidents, injuries, damages, negligence, bad weather, or some other act of God could lead to increased costs and liability exposure. Often, insurance covers these risks. But contractual risk transfer serves as another useful tool that can protect you and the project.

Contra proferentem is one of the few Latin phrases that lawyers remember from law school, in the ranks with res ipsa loquitur, prima facie, and ipso facto. Contra proferentem literally means “against the offeror” and the doctrine is used when courts interpret ambiguous contract language. The contra proferentem doctrine stands for the notion that if the meaning of a contract clause or word is ambiguous, it should be interpreted against the party that drafted the contract. Although the doctrine seems straightforward, its implementation is far from simple.

Although the doctrine has historically been used in many different types of contracts, it is most often used to interpret insurance policy language in disputes between insurers and policyholders.

The labor shortage is one of the biggest challenges contractors are facing today. According to the 2020 Construction Outlook Survey, more than eight in 10 construction firms report difficulty filling positions and more than half believe the problem will continue into next year. Failing to adequately staff a jobsite leads to numerous challenges, including turning down work, postponing projects, overworked employees, quality control issues and increased costs for the company.

Often, construction businesses look to pull in seasonal or temporary labor as a stopgap to keep projects progressing amid industry-wide labor challenges. Demand for seasonal and temporary employees in the construction industry has only increased. While tapping this workforce can seem like a perfect solution to help construction businesses meet growing demands, this approach creates unique challenges in ensuring jobsites are adequately insured. When hiring seasonal or temporary employees, construction businesses will benefit from considering the following.

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

Loss of Income Caused by a Government Mandate to Suspend Business Operations Due to the COVID-19 Virus is not Covered by a Standard Property Insurance Policy Because the Physical Presence of the Virus on Insured Property Does not Constitute Physical Loss of or Damage to the Property

In Apple Annie, LLC v. Oregon Mut. Ins. Co. (No. A163300, filed September 2, 2022 and certified for publication), the Court of Appeal of the State of California, First Appellate District held that an insured’s loss of business income, caused by a government mandate to suspend business operations due to the COVID-19 virus, is not covered by a commercial property insurance policy because the physical presence of the virus on insured property does not constitute physical loss of or damage to the insured property.

The California Court of Appeal reversed the trial court's granting of the insurer's demurrer and found the insured adequately pled a claim of direct physical loss or damage due to the presence of COVID-19. Mariana Pacific Hotel & Suites, LLC v. Fireman's Fund Ins. Co., 2022 Cal. App. LEXIS 608 (Cal. Ct. App. July 13, 2022).

Fireman's Fund issued a general property policy to the Hotel which provided coverage for direct physical loss or damage to the insured property. Business interruption coverage was extended for the actual loss of business income due to the necessary suspension of operations during the period of restoration arising from direct physical loss or damage to covered property.

The court determined there was coverage for business interruption due to COVID-19 under an Environmental policy. Sunstone Hotel Investors, Inc. v. Endurance American Spec. Ins. Co., 2022 U.S. Dist. LEXIS 11147 (C.D. Cal. June 15, 2022).

Sunstone was a real estate investment trust that had an interest in 20 hotel properties with 10,000 guest rooms across the United States. In 2017, Sunstone purchased a "Site Environmental Impairment Liability Coverage" policy from Endurance. The policy provided $25,000,000 of coverage for business interruption losses caused by a biological agent. Coverage D provided that Endurance would pay "the Insureds' Business Interruption Losses and Extra Expenses during the Interruption Period that directly results from . . . Biological Agent Conditions . . ." There was no dispute that COVID-19 was a Biological Agent, but the parties disagreed on coverage provided under Coverage D.

In Dana Incorporated v. Zurich American Insurance Company, Case No. 21-4150 (6th Cir. July 6, 2022), the Sixth Circuit recently addressed whether a “contamination exclusion” included within an insured’s property policy barred coverage for COVID-19 related losses. In Dana, Zurich issued an insurance policy to Dana Incorporated, a company that provided power-conveyance and energy-management solutions for vehicles and machinery. After suffering financial effects from the COVID-19 pandemic, including extra expenses and suspended operations, Dana sought coverage from Zurich under the policy. Zurich denied coverage and Dana sued. The district court dismissed Dana’s complaint, finding the policy’s “contamination exclusion” applied. The Sixth Circuit, on appeal, affirmed.