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GettyImages-1051720322-300x200For both good and ill, the COVID-19 pandemic has altered every facet of personal and professional life. For example, many employees have enjoyed unprecedented freedom to work remotely. However, with vaccines becoming more readily available, the time is soon approaching when people will return to their offices and places of work. With this return comes the potential for workplace-related disputes and, in their aftermath, claims for insurance coverage for the actions of employees, such as sexual harassment.

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Evening picture of Space Needle in SeattleLocation matters. Some states are more protective of policyholder or consumer interests than others. And so, where the case is ultimately litigated, and what law applies, can have profound implications for a policyholder’s recovery.

In an effort to secure the application of a body of jurisprudence they perceive to be more favorable to them, insurance companies will sometimes include provisions in policies mandating either that cases arising under the policy be filed in a certain court or conducted under a specified state’s laws. We have previously noted the limits of such choice-of-law provisions, especially when the selected state’s laws conflict with the fundamental public policy of the state in which a coverage suit is filed. Now, a recent decision from a New York State court illuminates the limits of forum-selection clauses in an insurance policy.

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EPS image of container ship blocking waterway meant to represent, generically, Ever GivenA few weeks have passed since the Suez Canal was cleared of the now infamous Ever Given, the quarter-mile-long, 220,000-ton cargo ship that ran aground, clogging one of the world’s most crucial shipping arteries for over six days. For almost a week, the world was captivated by an 869-foot-wide portion of the historic canal built in 1869 to connect the Mediterranean Sea to the Red Sea through the Isthmus of Suez. Ordinary people from all walks of life instantly became armchair marine engineers, nautical scientists and tugboat captains, offering advice on how to free the ship in a matter of minutes, while hundreds of massive cargo vessels sat stranded at either end of the canal. Finally, on March 29, 2021, after around-the-clock efforts by international teams, salvage crews extricated the ship, allowing the rest of us to turn (reluctantly) back to our day jobs.

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In the finance world, Special Purpose Acquisition Companies (SPACs) are proliferating like Dutch tulips. This year alone, they’ve exploded in popularity, with multitudes of celebrities, politicians, and influencers sponsoring SPACs of their own. The list includes the likes of Colin Kaepernick, Shaquille O’Neal, Alex Rodriguez and Tony Hawk. Even amidst new concerns from the SEC, which reportedly opened an inquiry into the investment risks of SPACs and issued a bulletin warning prospective investors to exercise caution investing in celebrity-sponsored SPACs, SPACs have raised staggering amounts of capital.

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overhead image of a contract on a clipboard, construction helmet, gloves, edge of laptopIn a previous post, we addressed blanket additional insured endorsements and the role they play in passing insurance obligations downstream. In short, the purpose of a “blanket” endorsement is to grant additional insured status to any company as required in a written contract with the named insured. This obligation often begins in the prime contract where the owner requires additional insured status on the general contractor’s insurance. However, the general contractor typically attempts to pass this obligation downstream to its subcontractor by including a requirement in the subcontract that both the general contractor and owner are named as additional insureds. But what happens if there is no written agreement between the named insured and the company seeking additional insured status, or if there are multiple required additional insured entities and only some have contractual privity with the subcontractor?

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Pressure gauge with broken glassOn March 13, 2020, three plainclothes police officers forced entry into an apartment and fired some 32 shots. A woman sleeping in her bed was shot six times and died.

On May 25, 2020, a Black man was killed during a routine arrest when a police officer knelt on his neck for 9 minutes and 29 seconds.

On September 3, 2020, a woman drove her car into a crowd of Black Lives Matter protesters, injuring several people.

On December 12, 2020, four people were stabbed in the Nation’s capital following a day of protesting by competing groups over the results of a democratic election.

On January 6, 2021, thousands of insurrectionists pushed past a police blockade to breach the U.S. Capitol building while lawmakers were certifying the votes of a democratic election.

On March 29, 2021, an elderly Asian woman was physically and verbally attacked on her way to church.

On April 2, 2021, a man rammed his car into the security barrier near the U.S. Capitol building, killing one officer and injuring another.

Unfortunately, as we all know, these brief summaries are merely a snapshot of the political and racial unrest that has been unfolding in the United States over the last year. During these trying times, various companies, from Nike to Estée Lauder, have begun speaking out in support of Black lives, police reform and the Asian community. Many companies also wrote to Congress in support of free and fair democratic elections and urged Congress to certify the electoral vote following the United States’ 2020 presidential election. This type of corporate soul searching is commendable. And, for many companies, showing public support for racial justice and equality and/or other democratic principles is fundamental to their culture and positioning as leaders in their marketplace.

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A recent article in Law360 shines a spotlight on an Amended Complaint filed by Pillsbury’s award-winning Insurance Recovery and Advisory Group in a significant insurance recovery action seeking coverage for COVID-19 business interruption. In it, the Amended Complaint is described as a “beefed-up filing” where our colleagues have “unleashed a deluge of scientific studies on COVID-19.” The article  suggests that the “the arguments outlined in Tuesday’s filing could be a potential avenue around Mama Jo’s v. Sparta Insurance Co., a heavily cited decision in which the Eleventh Circuit held that policyholders must show their properties required physical repairs to constitute direct physical loss. A number of insurers have pointed to that ruling in shooting down COVID-19 insurance cases.”

For more information on this or related issues, please contact Joseph Jean, Scott Greenspan, Benjamin Tievsky or Janine Stanisz.

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Red sign hanging at the glass door of a shop saying: "Going out of business".In recent weeks, two insurers with significant legacies of occurrence-based general liability coverage took important steps to liquidate their estates.

Bedivere Insurance Company (OneBeacon) Liquidation

The first insurers are associated with Bedivere Insurance Company, formerly known as OneBeacon Insurance Company (OBIC). OBIC’s history stretches back to the 1800s but is most well known as the successor to the General Accident and Commercial Union families of insurers. These companies wrote many policies from the 1960s through the 2000s and include Commercial Union Assurance Company, Employers Commercial Union Insurance Company, Employers’ Surplus Lines Insurance Company, Employers’ Liability Assurance Corporation Limited, General Accident Insurance Company, and CGU Insurance Company (and many other smaller companies). OBIC stopped writing new business in 2010 and entered run-off, paying claims from its historic exposures. In 2014, OneBeacon Group, OBIC’s parent, sold its run-off business to a Bermuda entity called Armour Group. The transaction included OBIC and other subsidiaries (Potomac Insurance Company, OneBeacon America Insurance Company, and The Employers Fire Insurance Company). OBIC changed its name to Bedivere Insurance Company in 2015, and in October 2020, absorbed its subsidiaries by merger.

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Suited person with ghost sheet onInsurers generally have a statutory duty to provide a legitimate factual and legal basis to deny a claim, and to discharge this duty sometimes engage in-house or outside counsel to assist in the investigation and handling of policyholders’ claims for coverage, including ghostwriting coverage correspondence and denials of coverage. The decision to outsource ordinary claims investigation and handling to legal counsel (putting aside that many claims handlers are lawyers) comes at a price. Two recent court rulings highlight that insurers’ decision to use in-house or outside counsel to ghostwrite coverage correspondence can come back to haunt them by waiving any alleged privilege.

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As those who experienced the Texas winter storm crisis are likely discovering, vital questions of coverage and recovery linger—and in some cases, first appear—long after the ice has melted and power has been restored. In “Texas Winter Storms: Evaluating Business Interruption Claims Following a Large-Scale Disaster,” Joseph D. Jean, and Tamara D. Bruno examine some of the challenging questions about business interruption insurance coverage raised in the aftermath of the storms.