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BT Policyholder Protection Blog
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06 Jun 2016 Can a Government Agency Information Demand Trigger a Liability Insurer’s Duty to Defend?

Can a demand from a state agency trigger insurance coverage? A recent decision by the U.S. Court of Appeals for the Ninth Circuit says “yes.” Many, if not most, jurisdictions now recognize that a demand from the Environmental Protection Agency (EPA) or a state agency to investigate and remediate contamination is the functional equivalent of a suit, which triggers a liability insurer’s duty to defend the recipient of the demand. The logic is that a communication from a governmental agency that includes a coercive remediation demand under an environmental statute, with the threat of fines or penalties for non-compliance, sufficiently bears the hallmarks of a traditional court lawsuit that there is no functional distinction between the two. Moreover, public policy dictates that a policyholder need…

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02 Jun 2016 When is “Wrongful” Eviction Intentional and Therefore Not Covered?

On May 23, the Minnesota Court of Appeals issued an unpublished decision addressing what actions by a rental home owner would be considered an “occurrence” triggering coverage and whether the actions would constitute an intentional act to exclude coverage.   In State Farm Fire & Cas, Co. v. Otten, No. A15-1574, 2016 WL 2946110 (Minn. Ct. App. May 23, 2016), the court focused on whether an insurance policy covered or excluded the personal injury resulting from the rental home owners’ wrongful eviction of their tenant. The rental home was insured by State Farm’s Rental Dwelling Policy. This policy allowed coverage for personal injury resulting from an “occurrence,” which specifically included wrongful evictions, but excluded coverage for personal injury resulting from intentional acts. The Minnesota Supreme…

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24 May 2016 Scott Godes quoted in Law360 Article “Policyholders Get Digital Fraud Coverage Boost at 8th Circ.”

Scott Godes, partner and co-chair of the firm’s Data Security and Privacy Practice Group, was recently quoted in “Policyholders Get Digital Fraud Coverage Boost at 8th Circ.,” published by Law360.   On May 20, the Eighth Circuit found that a bank employee’s failure to secure a computer network does not nix insurance coverage for a fraudulent transfer loss caused by a hacker, which in turn bolsters policyholders seeking coverage for digital fraud by blaming the hacker despite the employee’s negligence.   Scott is quoted numerous times in the article, including one note stating “A key point in the decision was the court’s finding that even if employees were negligent, that doesn’t convert a direct loss into an indirect loss. That holding should help policyholders secure…

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20 May 2016 New York Lets Policyholder Choose Which Insurers Must Pay “All Sums” for Claims Spanning Many Years

Businesses facing asbestos or environmental claims may be encouraged by a decision from New York’s highest court earlier this month. This new decision allows the policyholder to choose which of many policy periods should initially be responsible for the policyholder’s asbestos litigation, work its way up that particular coverage tower and then select another period and another as may be necessary. See In re Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, No. 59 (NY May 3, 2016). The policyholder does not have to prorate its claims equally among its many years of possible coverage. Id.   The problem is all too familiar   Your company may already be in a similar situation. If not, imagine your company faces numerous lawsuits by individuals alleging…

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17 May 2016 Does a CGL Insurance Policy Cover a Data Breach? The Fourth Circuit Says ‘Yes’

Introduction   If you have anything to do with cybersecurity, privacy, or insurance, you undoubtedly have heard that the U.S. Court of Appeals for the Fourth Circuit ruled in April that a Commercial General Liability (CGL) insurance policy provides coverage for a data breach, in the case Travelers Indemnity v. Portal Healthcare Solutions.  In the last few years, insurance companies have been marketing cyberinsurance policies as the product designed for cybersecurity and privacy risks.  So how could it be that a CGL insurance policy – which insurance company lawyers proclaim were not “meant” to cover data breaches – provides coverage for data breaches?  We discuss the well-reasoned Portal Healthcare decision, which bolsters policyholders’ rights to collect under CGL policies, below.   The first question when…

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13 May 2016 Scott Godes Quoted in Law360, “4 Tips for Law Firms to Maximize Cyber Coverage”

Scott Godes, partner and co-chair of the firm’s Data Security and Privacy Practice Group, was recently quoted in “4 Tips for Law Firms to Maximize Cyber Coverage,” published by Law360.   The article notes that law firms handle a wide variety of confidential client data, and comments on the importance of having insurance to cover related risks.  The article gives tips about policy terms, conditions, and exclusions that, in a perfect world, law firms should think about when buying coverage.   Law360 asked Scott about using the cloud and outsourcing data storage and processing.  Scott is quoted saying, “To the extent a law firm is relying on cloud providers for storage, processing or some other service, ‘cloud’ or ‘outsourced support’ should be included in the…

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12 May 2016 Georgia Supreme Court Expands Scope of Absolute Pollution Exclusion

The Georgia Supreme Court recently addressed and reversed the Georgia Court of Appeals on the question of whether lead paint is a “pollutant” for purposes of an exclusion within a commercial general liability.   In a recent case, Georgia Farm Bureau Mutual Insurance Company v. Smith, a tenant sued her landlord for personal injury after her daughter ingested lead-based paint found in the home.  The landlord’s commercial general liability insurer brought a declaratory judgment action to determine whether the personal injury claim was excluded under the policy’s absolute pollution exclusion.  See 2016 WL 1085397 (Ga. Mar. 21, 2016).   The policy defined “pollutant” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”  Id. at…

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06 May 2016 When a “Pollutant by Any Other Name” Is Not a Pollutant

In most jurisdictions, determining whether a pollution exclusion in a commercial general liability (CGL) policy precludes coverage for a particular claim can be a thorny issue. Under some historical policies, coverage may depend on factual arguments over whether the pollution was “sudden and accidental” or gradual. Under others containing so-called “absolute” pollution exclusions, coverage may depend on whether or not the claim arises out of “traditional” environmental pollution (for example, cleanup of groundwater in response to a governmental demand vs. toxic tort claims based on workplace exposure).   Indiana has traditionally taken a different approach to the pollution exclusion than most other jurisdictions. Rather than become entangled in factual thickets over whether pollution is sudden or gradual, or arises in a “traditional” environmental context, Indiana…

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26 Apr 2016 Does a CGL Insurance Policy Cover a Data Breach? The Fourth Circuit Says ‘Yes’

If you have anything to do with cybersecurity, privacy, or insurance, you undoubtedly have heard that the U.S. Court of Appeals for the Fourth Circuit ruled in April that a Commercial General Liability (CGL) insurance policy provides coverage for a data breach, in the case Travelers Indemnity v. Portal Healthcare Solutions.  In the last few years, insurance companies have been marketing cyber insurance policies as the product designed for cybersecurity and privacy risks.  So how could it be that a CGL insurance policy – which insurance company lawyers proclaim were not “meant” to cover data breaches – provides coverage for data breaches?  We discuss the well-reasoned Portal Healthcare decision, which bolsters policyholders’ rights to collect under CGL policies, below.   The first question when reviewing…

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25 Apr 2016 Scott Godes quoted in Legaltech News Article “Cyberinsurance: A Necessary Protection in the Digital Era?”

Scott Godes, partner and co-chair of the firm’s Data Security and Privacy Practice Group, was recently quoted in a Legaltech News article, “Cyberinsurance: A Necessary Protection in the Digital Era?”   Between 2005 and 2015, more than 5,000 must-report data breach incidents were tracked; and since 2002, breach notification laws have been enacted in 47 states. Given the rising number of breaches and response costs, companies are turning to cyberinsurance for remediation.   Scott is quoted numerous times within the article, including one note stating, “A data breach, and several courts have agreed, particularly when the information is put online, involves the publication of materials that violates a person’s right to privacy. And yet, notwithstanding this good case law, for policyholders, insurance companies continue to…

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