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iStock_21656161_MEDIUM-egg-mcsomething-300x199If you believe the news, I may be lucky to make it out of the driveway alive on my morning commute tomorrow. That microwave-ready triple egg breakfast sausage sandwich I stuff into an increasingly jowly face on my way to the car? Recalled. The overpriced technology-assisted car that practically backs itself out of the driveway as I struggle to wipe away the remnants of my savory breakfast? Recalled. Each morning brings fresh product recall announcements involving everything from contaminated sunflower seeds to exploding toilets. This year contamination recalls in Food and Drug Administration (FDA) regulated industries alone rose 167% from the first quarter to the second quarter. The exponential rise of product recalls stems from a convergence of factors, including increased governmental regulation and more extensive and technologically sophisticated testing of products.

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Over the past four months, a trio of cases has introduced a policyholder-friendly breath of fresh air to Iowa insurance coverage law as Iowa state and federal courts have found that defective workmanship may constitute a covered occurrence under the plain language of CGL policies.

Black weathervane in the form of a rooster

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Since 1979, commercial general liability (CGL) insurers have relied on the New Jersey Supreme Court case of Weedo v. Stone-E-Brick, Inc. and its progeny to argue that a subcontractor’s defective work can never qualify as an “occurrence” under a standard form ISO CGL policy. This argument is contrary to both the language of standard CGL policies and the trend in recent case law, but courts in New Jersey and elsewhere have continued to cite Weedo for this proposition. With its new decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC, the New Jersey Supreme Court has now finally relegated Weedo to its proper status as an historical footnote based on outdated policy language.

family business care toy insurance

Cypress Point involved claims for rain water damage to a condo building. When the condo association began noticing the damage, it brought claims against the developer/general contractor and several subcontractors. The association alleged that the subcontractors’ defective work on the exterior of the building allowed water leaks that damaged steel supports, sheathing and sheetrock, and insulation. When the developer’s CGL insurers refused to cover the claims, the association sued the insurers, seeking a declaration that the association’s claims against the developer were covered.

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Phishing is a criminal hacker’s favorite sport, and for good reason. It’s a tried and true way to land the big one, over and over again. Whether using a spoofed bank website and stolen email addresses to trick customers into divulging account information, sending email messages purporting to be from a senior company official to deceive employees into providing personal health records, or posing as a trusted vendor and transmitting wire transfer instructions to fraudulently divert funds, hackers are reeling in the catch and making it look easy.

Malware phishing data concept

But a well-managed company should have sophisticated safeguards in place. And if these fail, there is insurance coverage, right? The prudent policyholder buys all kinds of insurance: It has up-to-the minute “Cyber” coverage. It has Crime and Fidelity coverage with Computer Fraud riders. It has Professional Liability coverage. And of course it has regular old Commercial General Liability and Property coverage. Surely it’s covered for this type of fraud. Or is it?

While seeming to offer products that respond to the latest risks, insurers often provide limited coverage and seek to exclude the most obvious and inevitable losses. A series of recent cases highlight some of the biggest holes in the insurance safety net.

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While the fast-paced world of insurance evolves every day, some advice stays golden. Partners Peter Gillon and Alex Hardiman opined on the importance of maximizing the return on your D&O insurance for the Kevin LaCroix-run D&O Diary blog last summer, and the words in their post remain relevant. Click here to read “Maximizing the Return on Your D&O Insurance for Merger Objection Lawsuits.”

 

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Business Interruption insurance provides the policyholder with important peace of mind—it covers lost business arising from unexpected damage to the policyholder’s property. But what if the damage isn’t to the policyholder’s own property—what if the losses arise because of damage a supplier or customer suffers? When a link in your supply chain breaks, Contingent Business Interruption or “CBI” coverage can step in to replace it.Weak Link

CBI coverage, like Business Interruption coverage, is a property insurance extension that addresses lost income suffered due to an interruption of business. Instead of focusing on loss or damage suffered by the insured on its own property, however, CBI coverage addresses “contingent” losses, or losses that involve suppliers or customers. A CBI loss is a loss that results from damage to a supplier or customer that prevents the supplier from providing its goods or services to a policyholder or prevents a customer from receiving the policyholder’s goods or services. This coverage is crucial for policyholders whose business depends upon supply chains, customers or other “streams of commerce” for commercial success. Over the past few years, we’ve seen a spike in the number of CBI claims made by policyholders. During the same timeframe, however, we’ve also seen an increase in the number of coverage disputes related to CBI coverage. Although the concept is fairly straightforward, recovering for CBI losses often isn’t.

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In what resembles a kabuki dance of sorts, insurers often fire off reservation of rights letters as an automatic response to any and all claims-related correspondence. A policyholder sends notice of circumstances that could give rise to a claim? Reservation of rights. A policyholder requests defense coverage? Reservation of rights.Dance-steps A policyholder requests consent to settle with the underlying claimant? Reservation of rights.

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The era of the self-driving car has arrived, with the shiny promise of fewer auto collisions—and the inevitable potholes of a transformative technology. Despite the significant concerns raised by a recent accident involving a driver’s reliance on Driverless Cars Aheada partially autonomous automatic braking and steering system on the Tesla Model S—one of 70,000 such vehicles now on the roads—the auto industry is roaring ahead with autonomous vehicles (AVs). Google is testing its driverless cars extensively on U.S. roads; General Motors has teamed up with car-sharing company Lyft to develop a driverless taxi service; and most major automakers will be releasing fully or partially autonomous vehicles in the next five years.

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As we edge further into the summer months, many contractors see an increase in work volume with longer days and universally better weather. That said, Mother Nature is not always predictable, and an unexpected storm can quickly lead to a flash flood, or other natural disaster that might result in what insurers may classify as a pollution event. Even something seemingly as innocuous as water run-off from a job site following a summer shower has the potential to result in a third-party claim against a contractor for damage.Colorful macro of local automotive pollution Thus, it is imperative that contractors have the right pollution coverage in place to remain secure and profitable.

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When an insurer pays a claim by its insured, it acquires a legal right to pursue a so-called “subrogation” claim against another party who may be responsible for the damage. But public policy dictates that an insurer, claiming subrogation for amounts paid to an insured under one policy, is barred from suing another on the same construction project whom it has also insured, even if under a separate insurance policy. Although this antisubrogation doctrine was first recognized some 25 years ago, it’s not often invoked. But this implied waiver of subrogation both prevents the insurer from passing the incidence of loss to its own insured, and protects against the potential for conflict of interest that may compromise the insurer’s incentive to properly defend its insureds. In other words, Pickpocketit prevents the insurer from “pass[ing] the incidence of loss, at least in part, from itself to its own insured and thus avoid[ing] the coverage which the insured purchased.”

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