By statute, California law holds that willful misconduct—where an insured intends to cause someone harm—is not insurable as a matter of public policy. For years, insurance companies have sought to expand this prohibition to exclude coverage where anyone acts deliberately, regardless of the intent of the insured, or the insured’s intent to cause harm.
Artificial Intelligence (AI) is a hot topic in industries from manufacturing to the medical profession. Developments in the last ten years have delivered AI technology, once a fiction reserved for the movies, to private corporations and even to everyday homes. Examples include:
The stopwatch is running. Companies are scrambling to figure out how the EU’s General Data Protection Regulation (GDPR)—due to go into effect on May 25, 2018—will affect how they do business.
Uncertainty and speculation abound; no one knows exactly how the law will be enforced, particularly with respect to companies domiciled outside the EU, with no EU footprint, who process and hold the personal data of EU residents. But while publications are awash with advice regarding compliance, few tackle the question whether your business is protected against loss in the event of a data breach or other unintentional failure to comply. We strongly suggest that your due diligence include a review of your insurance coverage for GDPR non-compliance, especially for fines, penalties and lawsuits (individual or class action). Qualified coverage counsel should assist in the review, but key areas of focus include:
Coverage for Costs of Compliance
Many costs that companies will incur to comply with GDPR simply will not be covered by any insurance. Insurance is designed to respond to fortuitous loss or liability, not ordinary costs of doing business. Thus, for example, coverage likely is unavailable for expenses to adopt and implement data security measures, maintain required records, respond to individuals’ requests to access or delete their data, or hire a Data Protection Officer.
America is facing a reckoning. Many brave individuals have stepped forward over the last several months to speak truth about sexual harassment and assault in workplaces, in entire industries, and
even in Congress. For a very long time, companies dealt with sexual assault and harassment allegations quietly and in backrooms, and these allegations often were not taken seriously. However, thanks to the turning tide, more companies are reexamining their internal policies, encouraging change in corporate culture, and addressing sexual assault, harassment, and discrimination claims more directly. As part of this effort, companies should also look at their corporate insurance programs to confirm insurance is in place should any such claim arise.
Only about 41 percent of companies with more than 1,000 workers report having some kind of insurance plan to cover sexual harassment and discrimination, and only about 33 percent of companies with at least 500 employees carry any insurance coverage for claims resulting from sexual harassment or assault. The numbers are even starker for startup companies, with only three percent of companies with fewer than 50 employees carrying such coverage. Therefore, while more and more companies are instituting anti-sexual harassment and anti-discrimination policies, many companies remain ill-prepared to handle the inevitable challenges that await individuals, executives, and companies alike, as a result of this watershed moment in American culture.
What happens when you have a claim arising from circumstances that unfolded over many policy years—like environmental property damage or asbestos bodily injury claims? Which policies are triggered? How much coverage does each policy provide? Unsurprisingly, insurers and policyholders disagree on the answers. And courts across the country have been grappling with the issue for decades.
Some courts apply the “all sums” approach, which allows a policyholder to recover in full—subject to policy limits—from any insurer whose policy has been “triggered.” Other courts apply the “pro rata” approach, under which each triggered insurer must pay only a portion of the loss allocated to its policy periods. This is a closely watched issue among the insurance bar as it can dramatically impact the amount of a recovery depending on the contours of the policyholder’s insurance program.
Coverage B under traditional Commercial General Liability (CGL) policies may be the least understood coverage that nearly every company carries. Coverage B provides liability protection for claims of Personal and Advertising Injury, such as false arrest, libel or slander, and violation of a person’s right to privacy, among others. Yet with so much recent focus on cyber liability insurance and the protection that these policies can provide for the inadvertent exposure of personal information stored electronically, Coverage B gets little attention. This is mostly deserved, as many CGL policies expressly exclude coverage for the loss or exposure of electronic data, and Coverage B applies in mostly non-traditional circumstances. Nonetheless, it is important to remember that for many claims, particularly those involving non-traditional facts, Coverage B will apply.
Recent events highlight the importance and continued relevance of Coverage B. For example, a recent case in the news involves a health insurer being sued by its insureds for mailing them information regarding HIV medication in transparent envelopes, thereby exposing their identity and the medication they were seeking. The suit alleges that the insurer negligently revealed confidential information and, given the reported facts, should trigger Coverage B (as well as other coverages).
Coverage B also applies in circumstances beyond improper disclosure of confidential information. In another recent case, a developer was sued by one of its occupying tenants because construction equipment necessary to expand the development blocked the ingress and egress to the tenant’s property. The CGL insurer initially denied the developer’s request for defense, contending that there were no allegations of “personal injury” or “property damage” necessary to trigger Coverage A. The insured correctly responded that the claims brought against it included “invasion of the right to private occupancy,” thereby triggering the duty to defend under Coverage B. Upon further consideration, the CGL insurer agreed and provided the insured with a defense. The duty to defend one claim is the duty to defend all.
In another case, a general contractor working in a war zone was sued by one of its subcontractors for unpaid contract balance. In addition to seeking payment of the alleged outstanding balance, the subcontractor claimed that it was held against its will for a period of an hour by a group of armed mercenaries working on behalf of the general contractor. This allegation, although wholly unrelated to the underlying dispute of unpaid fees, was sufficient to trigger Coverage B under the general contractor’s CGL policy, providing the general contractor with defense and indemnity.
In short, Coverage B applies in many non-traditional circumstances (as well as more traditional ones), and should always be considered by companies when facing liability for claims other than “personal injury” or “property damage.”
As the powerful storm that is Hurricane Harvey looms in the Gulf of Mexico, Houston attorneys Vince Morgan and Tamara Bruno discuss what businesses and other organizations in the affected area should do immediately in order to maximize insurance recovery.
Key Takeaways:
In two posts earlier this year—South Carolina May No Longer Hold Insurers’ Reservations and The Insurer’s Mixed-Coverage Burden—we told you about an important decision issued by the South Carolina Supreme Court in Harleysville Group Insurance v. Heritage Communities, Inc. Those posts were written shortly after the court issued its original opinion on January 11, 2017. But on July 26, 2017, the court issued a new opinion replacing the original. So what has changed? Not much … and that’s a good thing for policyholders.
Fashion is sexy; insurance is not. So it’s easy to think of the two separately. But there are many points of intersection. Some of those intersections are not industry-specific: 
like other industries, fashion—design houses, retailers, textile manufacturers, modeling agencies—carries property, D&O, cyber, and many other lines of insurance. But unique aspects of the fashion world, and recent litigation trends affecting it, underscore the importance for the fashion industry to understand insurance in order to maximize successful recovery of insurance assets. Here, we comment briefly on three areas: IP, employment, and antitrust.
The Flint, Mich., water crisis returned to the news recently as criminal charges were brought against additional government employees resulting from the crisis. Meanwhile, a federal court in 
Pennsylvania recently issued a ruling in an insurance case that, like Flint, related to alleged contamination in drinking water stemming from corroded pipes. The decision rejects two insurers’ attempts to avoid coverage and serves as a good reminder of some fundamental insurance law principles—the duty to defend is broad, ambiguous policy language usually is construed against the insurer, and policies should be interpreted in favor of their purpose to provide coverage. It is also a reminder that the pollution exclusion is not nearly as all-encompassing as insurers like to think it is.
Policyholder Pulse