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BT Policyholder Protection Blog
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19 Dec 2017 Who Gets Coverage? Cyber Insurance and Credit Card Risks: Will Coverage Apply After the P.F. Chang’s Denial?

Authored by Scott Godes & Devin Stone   When a retailer or merchant purchases a broad cyber insurance policy to cover hacks or breaches of its point of sale systems, it could be forgiven for thinking that its insurance policy would cover the costs of fraudulent charges and card replacement costs – which can represent the majority of damages generally incurred in a payment card incident – demanded by the payment processor or the card brands. But one recent decision in the Federal District Court of Arizona has held that certain cyber insurance policies do not provide coverage for those damages. P.F. Chang’s China Bistro, Inc. v. Federal Ins. Co., 2016 WL 3055111 (D. Ariz. May 31, 2016), appeal dismissed pursuant to settlement, No. 16-16141, Dkt….

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15 Dec 2017 The Importance of Attention to Risk Allocation Provisions in Contracts

  A recent Indiana Court of Appeals decision illustrates the importance of having an overall risk allocation strategy in contracts where appropriate, and paying close attention to the language used to express that strategy, particularly when multiple contracts and parties are involved. Contractual risk allocation provisions previously have been a focus of this blog and webinars offered by our Insurance Recovery and Counseling Group.   In Performance Services, Inc. v. Hanover Ins. Co., 85 N.E.3d 655 (Ind. Ct. App. 2017), a school district submitted a property insurance claim to its insurer, Hanover, for damage that occurred during a construction project at a high school. Hanover paid nearly $700,000 to settle the claim. Hanover later asserted a subrogation claim against two contractors who had worked on…

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27 Nov 2017 When Should an Accident be an Accident?

  Standard commercial general liability (CGL) insurance policies provide coverage for damages the policyholder is legally obligated to pay because of property damage or bodily injury caused by an “occurrence.” CGL policies typically define “occurrence” as an “accident.” Courts define an accident as “an unexpected happening without an intention or design.” Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1283 (Ind. 2006).   Simple, right? Unfortunately, a trilogy of cases from the Indiana Supreme Court have caused confusion on this issue, particularly where the policyholder may have errors and omissions (E&O) coverage.   In Harvey, a 16-year-old girl, Brandy, fell into a river and drowned after being intentionally pushed during an altercation with a boy, Toby. Toby admitted that he intended to push Brandy, but…

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15 Nov 2017 Tenth Circuit Holds that Governmental Investigation of Potential Criminal Violations is Not a ‘Claim’ Under a D&O Policy

  D&O insurance policies are key components of a corporation’s risk transfer portfolio, purchased to protect it against lawsuits presenting significant liability exposure to itself and its key officers and directors.   In recent years, as an alternative to targeted formal litigation and discovery in uncovering corporate wrongdoing, federal and state governments have increasingly utilized informal investigations. This trend has created an expensive new financial exposure in the business world, particularly for large corporations, which are often the targets of such inquiries, and corresponding questions about how D&O insurance policies cover such costs. Although many D&O policies have evolved to explicitly protect policyholders from the costs of responding to government investigations, many have not been amended, forcing courts to determine whether the existing language is…

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03 Nov 2017 Daubert Challenge Resolves Coverage Dispute on Summary Judgment

  Daubert challenges are common in commercial disputes and often have a powerful impact on litigation results. As established by Federal Rule of Evidence 702 and the U.S. Supreme Court case Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 589 (1993) certain requirements were set forth for expert testimony to be admissible, like the expert’s qualifications and whether the testimony is based on sufficient facts and reliable methods.   However, it is not often that you see a Daubert challenge resolve an entire insurance coverage dispute – let alone at the summary judgment phase. Yet, the recent case Varlen Corporation v. Liberty Mutual Insurance Company, No. 13-cv-05463 (N.D. Ill. Sept. 25, 2017), did just that.   This case involved a coverage dispute stemming from environmental contamination that hinged on whether the pollution…

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17 Oct 2017 Insurance Carriers Exclude Color Matching Requirements from Policies

  The summer of 2017 saw a number of severe storms in the Midwest, with resulting insurance claims. As policyholders have made those claims, some have been surprised to see new provisions in their insurance contracts.   Things are not always black and white in insurance policies, especially when it comes to the impact of a Minnesota court decision that required insurers providing replacement cost coverage to reasonably match replacement siding. Since the Minnesota Supreme Court issued its opinion in Cedar Bluff Townhome Condominium Association, Inc. v. American Family Mutual Insurance Company, insurers have begun inserting language in their policies that expressly precludes the coverage requirement of matching based upon color, a change in product specifications, or other factors, in an attempt to circumvent this…

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13 Oct 2017 Clock Keeps Running on Insurers’ Good Faith and Fair Dealing Obligations in California

  Imagine this: Your insurer denied coverage, forcing you to file a lawsuit to secure policy benefits. The insurer retains litigation counsel and begins engaging in unreasonable litigation conduct to attempt to force you to abandon the case and to justify the insurer’s prior denial of coverage. What should you do?   Don’t ignore the ongoing bad faith conduct that may be occurring during litigation. In fact, under California law, the implied covenant of good faith and fair dealing in every insurance policy does not cease upon the filing of litigation and instead continues unabated. The standard dates back to 1985, when, in White v. Western Title Ins. Co., the California Supreme Court held “[i]t is clear that the contractual relationship between insurer and the…

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09 Oct 2017 Four Things to Know About Certificates of Insurance

  One day, you’re asked to provide a Certificate of Insurance (COI) to someone with whom you’re doing business. The next day, you request a COI from another business. Do you know exactly what you’re giving and receiving in these seemingly routine transmissions? Do you get charged a fee for a COI? Here are four key points to keep in mind.   A COI is not an insurance policy   A COI is a form, usually completed by an insurance broker or insurance company, to document the existence of the insurance policy(ies) it describes. A COI often will include language indicating that it does not constitute a contract with the certificate holder, confers no rights on the certificate holder, and does not amend, alter or…

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08 Sep 2017 Anti-Concurrent Causation Clauses: Why the Value of Your Property Coverage May Depend on Your State

A powerful storm pummels your city with high winds and heavy rains. After more than two days of intense wind and rain, the saturated hill behind your factory finally gives way and crashes into it. The building is severely damaged and your business operations are put on hold pending repairs. You need insurance money fast and file a claim with your property carrier.   Even though the policy doesn’t exclude property damage caused by wind or rain, it does contain an exclusion for earth movement “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” The carrier denies coverage because of the earth movement exclusion.  Is the carrier right? As it turns out, the answer may depend on…

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01 Sep 2017 Preparing for and Responding to a Major Weather Event or Catastrophe

  The recent flooding in Houston in the wake of Hurricane Harvey serves as a vivid reminder that losses caused by weather events and natural disasters are becoming all too familiar sights.  According to numbers compiled by Munich Re, insured losses due to natural disasters in the United States in 2016 totaled $23.8 billion, a nearly 48 percent increase over the $16.1 billion total for 2015. The number of catastrophes (43) was the highest number of catastrophes in the 10 years from 2007 to 2016.   Results for 2017 remain uncertain based on Munich Re’s reporting so far this year. After a first quarter with record losses, the total at the half-way mark of 2017 was significantly below historical levels. The Houston flooding has caused…

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