In a unanimous decision, the Ohio Supreme Court found that appellee EMOI Services, LLC’s (“EMOI”) businessowners insurance policy does not cover losses resulting from a ransomware attack on EMOI’s computer software systems.Continue Reading Ohio Supreme Court Holds that Insurance Policy Does Not Cover Ransomware Attack on Software
When seeking insurance coverage for “long-tail” mass tort and environmental claims that involve alleged exposures and injuries spanning multiple years, businesses often look to their occurrence-based commercial general liability (“CGL”) policies. These policies are designed to provide broad coverage for defense costs, settlements, and potentially adverse judgements. However, CGL policies generally cover “occurrences” during one-year policy periods and renew on an annual basis, which can complicate efforts to seek coverage for claims involving alleged injuries or property damage spanning decades. Moreover, for severe claims, businesses may need to obtain access to one or more of their excess CGL policies. Therefore, determining which policies to pursue, whether policies in multiple policy periods will respond, and how to access valuable excess coverage are factors that should always be considered with coverage counsel when facing long-tail exposures. Courts across the country are divided on how these questions should be answered. A recent decision issued by the Supreme Court of North Carolina in Radiator Specialty Co. v. Arrowood Indemnity Co., provides guidance to North Carolina policyholders attempting to maximize coverage for long-tail claims.Continue Reading North Carolina Supreme Court Provides Guidance to Policyholders Attempting to Maximize Insurance Coverage for Long-Tail Claims
In May 2022, the Illinois Supreme Court heard oral arguments in Cothron v. White Castle System, Inc. — a case that will have a substantial impact on the liability for violating the Illinois Biometric Information Privacy Act (“BIPA”). BIPA is considered to be among the most robust law in the U.S. governing biometric privacy, and Illinois is among the few jurisdictions permitting private suits for the unlawful collection, storage of such data. Since its inception in 2008, BIPA has been the source of a flurry of lawsuits, many of which have resulted in substantial settlements. The court is set to determine how to calculate the number of individual BIPA violations, whether damages accrue each time an employee scans her fingerprint, or whether the first recorded scan is the sole violation. If the Illinois high court determines that damages accrue with each scan and BIPA violations are ongoing, then the potential damages for BIPA lawsuits would increase exponentially and open a flood of new claims. Fortunately, insurance policyholders have had recent success arguing that coverage exists for BIPA violations under Commercial General Liability (“CGL”) policies. A plaintiff-friendly ruling in the Cothron case would make the ability to recover under these policies even more important, and potentially open additional avenues for recovery. In anticipation of this important ruling, this article provides a brief background on BIPA and summarizes the key decisions relating to insurance recovery of BIPA damages.
In several states, an insured that prevails in a coverage dispute against its insurer is entitled to statutory “penalty interest” added to the amount owed by the insurer. A June 8, 2022 decision from the United States District Court for the Western District of Michigan illustrates the importance of meeting the “proof of loss” requirements of such statutes.
In Alticor Global Holdings, Inc. v. American International Specialty Lines Insurance Co., an insured filed an action against its insurer after the insurer refused to reimburse the costs of defending and ultimately settling copyright infringement claims asserted against the insured. The District Court found that the insured was entitled to coverage under an Internet and Network Security Insurance Policy for $24 million in costs incurred in the underlying lawsuit and then considered the amount of interest that should be paid by the insurer on top of the breach of contract damages awarded to the insured.
On March 14, 2022, Russian President Vladimir Putin signed a law allowing the seizure of foreign-owned aircraft in Russia. Many aircraft in Russia are owned by international firms and leased for use in Russia. Such seizures are a likely source of insurance claims by the planes’ owners and financers.
Most commercial air carriers do not own the aircraft they operate, preferring instead to lease them for tax and accounting purposes. Many aircraft used in Russia for passenger traffic were built by Western firms and are owned and financed internationally. For example, according to news reports, 740 Bermuda-registered airplanes operated in Russia are now subject to seizure.
The Russian invasion of Ukraine and the resulting sanctions Western countries have imposed on Russia have already caused potentially catastrophic losses for businesses with assets and investments in Ukraine, Russia and neighboring countries impacted by the attack. These losses could accelerate, based on a March 9, 2022, announcement by Russia’s ruling party.
According to that announcement, a Russian government commission has begun the approval process toward Russia nationalizing the assets of foreign businesses that leave Russia in light of the economic sanctions. This could create dire economic consequences for foreign businesses that leave Russia.
In two recent decisions, the Texas Supreme Court defined the limited parameters in which Texas courts can look beyond the “four corners” of the complaint against the policyholder and the “four corners” of the insurance policy (i.e., the “eight-corners rule”) when determining whether an insurer’s “duty to defend” is triggered.
Permitting exceptions to the “eight-corners rule” and, in limited instances, allowing the use of extrinsic evidence to determine whether the duty to defend applies, requires policyholders to pay extra care to whether their insurers are properly accepting or denying defense of a suit. Application of fact-intensive tests like the Texas Supreme Court just announced varies from state to state.
Entering 2020, corporate policyholders already faced a hardening insurance market. But as the COVID-19 pandemic continues to wreak havoc on global markets and sow civil unrest throughout the globe, and the insurance industry faces unprecedented losses, the market has further deteriorated entering 2022.
In fact, Reuters reported COVID-19 losses of $44 billion so far, which represents the third-largest cost to insurers of any catastrophe to date (behind Hurricane Katrina and the 9/11 terrorist attacks). These factors have not only made some insurance companies reluctant to extend new coverage, but have also incentivized insurance companies to deny or delay claims until their balance sheets recover.
As COVID-19 continues to spread, recent news has highlighted the risk of “take-home” COVID-19 cases and the potential for “never-ending” liability for businesses. So-called take-home lawsuits are filed by employees’ domestic relatives for diseases or illnesses caused by exposures that allegedly traveled home through the employee.
On Jan. 12, 2022, Reuters reported “at least 23 take-home COVID-19 lawsuits” have been filed in the United States, including lawsuits against employers in the travel, retail and food-processing industries.
On Nov. 23, 2021, the New York Court of Appeals sided with the policyholder, resolving a decades-long insurance coverage dispute, J.P. Morgan Sec. Inc. v. Vigilant Ins. Co., __ N.E.3d __, 2021 N.Y. Slip Op. 06528, 2021 WL 5492781 (Nov. 23, 2021). It held that a $140 million disgorgement payment to the Securities and Exchange Commission (SEC) was a covered “loss” rather than an uninsurable “penalt[y]” under the error and omissions/professional liability policies at issue.
The 6-1 majority opinion is a landmark decision on the insurability of disgorgement and restitution damages that will likely have ramifications for policyholders seeking to recover similar losses from their insurers in disputes in New York and throughout the country.