Hunton Insurance Recovery Blog

Congratulations to Hunton Andrews Kurth LLP insurance recovery lawyer, Geoffrey Fehling, on his confirmation by the DC Bar Foundation’s Board of Directors to the organization’s Young Lawyers Network Leadership Council.

A Florida district court recently held that an insurer wrongfully refused to defend a Miami-based strip club in a lawsuit filed by 17 models claiming that the club used their images to promote its business without their authorization. The insurer was required to defend the club for allegations of defamation under the policy’s personal and advertising coverage even though 16 of the 17 plaintiffs’ claims alleged conduct outside the covered policy period and no plaintiffs brought a cause of action for “defamation.” The decision highlights the broad duty to defend, in Florida and elsewhere, that policyholders should emphasize when pursuing coverage.

On September 18, 2019, a Texas federal court vacated its prior ruling and entered summary judgment for the insured, finding that after a hacker impersonating the customer convinced the insured to wire $1 million out of the customer’s account, the insurer had a duty to defend its insured against claims by its customer because the potential for coverage existed.  See Quality Sausage Company, LLC, et al. v. Twin City Fire Insurance Co., Civil Action No. 4:17-CV-111 (S.D.TX) (Dkt. No. 110).  The prior order was based on disputed extrinsic evidence, which the court considered in deciding the duty to defend, even though Texas’ narrow exception to the “eight corners” rule is limited to only undisputed extrinsic evidence.

Energy industry: is your insurance sufficient to handle a major cyber event? Larry Bracken, Mike Levine, and I address this question and more in our recent article for Electric Light & Power, found here.  In the article, we identify three major gaps in cyber insurance that we routinely see when analyzing coverage for energy industry clients. The first major gap is coverage for bodily injury or property damage caused by a cyber event. Most cyber insurance policies exclude coverage for both bodily injury and property damage, even if caused by a cyber event. Meanwhile, many commercial general liability insurance policies now exclude cyber-related risks, thus creating a gap in coverage for these losses. The second gap we identify is coverage for fines and penalties, including those issued under the European Union’s General Data Protection Regulation (GDPR). Even where cyber insurance policies expressly purport to cover fines and penalties, it is unclear if these may be deemed uninsurable as a matter of public policy in certain jurisdictions. Finally, we identify a gap in coverage for business income losses when the insured’s network, or that of a vendor on which they rely, goes down. That coverage is a key component of a robust cyber program, but one that is typically only offered for an additional premium.

The Third Circuit ruled on Friday that differing “occurrence” definitions can have materially different meanings in the context of whether product defect claims constitute an “occurrence” triggering coverage under general liability insurance policies. The Court held in Sapa Extrusions, Inc. v. Liberty Mutual Insurance Company, that product claims against Sapa may be covered under policies that define an “occurrence” as an accident resulting in bodily injury or property damage “neither expected nor intended from the standpoint of the insured.”  However, the Court affirmed that coverage was not triggered under policies lacking the “expected” or “intended” limitation, reasoning that, under those policies, there was no question that the intentional manufacturing of Sapa’s product was too foreseeable to amount to an “accident.”

As the 2019 hurricane season peaks, the Bahamas and the Southeast United States have already endured a catastrophic storm. Hurricane Dorian not only tragically caused loss of life and substantial property damage, but it also led to the cancellation or postponement of major events, resulting in considerable economic losses for affected companies.

Real estate investment trust VERIET, Inc. (formerly known as American Realty Capital Properties) announced this week that it agreed to a $765.5 million settlement to resolve shareholder class action and related lawsuits arising from a host of alleged securities violations and accounting fraud at ARCP since the company went public in 2011. Defendants in the class action settlement have agreed to pay more than $1 billion in compensation, including millions from ARCP’s former manager and principals, chief financial officer, and former auditor.

In an insurance coverage action pending in the S.D.N.Y., Hunt Construction Group (Hunt) contends that Berkley Assurance Company wrongfully denied defense coverage for claims arising out of the renovation of Hard Rock Stadium (home to the Miami Dolphins and Miami Hurricanes football teams).

On August 27^th, a California Appellate Court held that an employment practices liability insurance policy’s “wage and hour” exclusion must be construed narrowly to bar coverage only for claims related to “laws concerning duration worked and/or remuneration received in exchange for work.” In doing so, the court made clear that “wage and hour” exclusions do not preclude coverage for claims that go beyond the employee’s actual remuneration received in exchange for work.

A Massachusetts federal court ruled last week that Allied World Insurance Co. must pay for a Boston law firm’s defense of counterclaims asserted against it in a lawsuit over, among other things, the proper ownership of client files and materials.