Hunton Insurance Recovery Blog

On December 20, 2016, a New York federal district court granted a petition to compel arbitration, filed by Zurich Insurance Co.’s (“Zurich”), as a subrogee of Adidas Group (“Adidas”), against Crowley Latin America Services LLC (“Crowley”), a transportation and logistics company. The underlying dispute involves losses from a fire-damaged shipment of Adidas clothing.  The Court allowed Zurich to compel arbitration based on its service contract with Adidas.

Two decisions issued on December 21, 2016, drive home the critical significance that policy-based “suit limitations” provisions can have on an insurance claim. In both instances, federal courts rejected policyholders’ attempts to obtain coverage for plainly covered losses simply because they failed to follow their policies and filed their lawsuits after the proscribed cutoff. These decisions serve as sharp reminders that policyholders must not only read their insurance policies, but they must understand how they work and, most importantly, calendar critical dates and time periods.

On December 6, 2016, a Connecticut appellate court held that a contract exclusion in a public entity errors and omissions liability insurance policy did not relieve the insurer's duty to defend when there was at least a possibility of coverage based on the allegations against the insured. The court reasoned that the fact finder could determine that the underlying negligent misrepresentation claim may not have arisen out of contract, thereby putting the claim beyond the scope of the policy's contract exclusion.  For a more detailed analysis of the Town of Monroe v. Discover Prop. & ...

Many communities are breathing a sigh of relief as winter weather kills off a good portion of the Zika-carrying mosquito population – at least in some parts of the US, and at least until next spring.  But dwindling mosquito populations have not diminished business concerns about Zika-related losses.  Since the health effects of Zika may not be apparent until months after birth, businesses in mosquito-popular locales should assess their option to cover the losses caused by Zika, or the mere threat of Zika.  Read my colleagues Walter Andrews, Michael Levine, Andrea DeField’s ...

On December 2, 2016, a Texas federal court ruled that the insurer for the predecessor of CVS Caremark Corp., Revco D.S. Inc. (Revco), must pay $15 million toward a $100 million settlement of a class action lawsuit for the injuries and deaths allegedly caused by a toxic vitamin solution, E-Ferol. Pursuant to the settlement, the plaintiffs received an assignment of Revco’s rights to pursue indemnity insurance coverage from the company’s excess insurer, Federal Insurance Co. (Federal). The Court granted, in part, the plaintiffs’ motion for summary judgment seeking indemnity, by declaring that Revco’s excess insurance policy covered the negligence claims based on its manufacturing and distributing of E-Ferol.

On December 1, 2016, the Florida Supreme Court held that the concurrent cause doctrine applies where multiple perils combined to create a loss even where one of those perils is excluded by the terms of the all-risk property insurance policy. The decision is a significant victory for Florida policyholders, especially where other jurisdictions have struggled to apply the efficient proximate cause doctrine after natural disasters like Hurricane Katrina. For detailed analysis of the Sebo v. American Home Assurance Co., Inc. decision, see Andrea DeField’s client alert

On November 2, 2016, a federal judge in California ruled that a Real Estate Property Managed endorsement in policies issued to a real estate manager negated a standard policy exclusion, but also rendered the policies excess to other available insurance. The case involved a dispute over coverage for a bodily injury claim involving “Pigeon Breeders Disease,” allegedly contracted due to the insured’s failure to keep pigeons away from a condo complex’s rooftop HVAC units. The plaintiff sued the property owners, Jerry and Betty Lee, and the property manager, Sierra Pacific Management Co. Inc. (Sierra Pacific).

On November 14, 2016, a federal judge in California denied summary judgment to Hanover Insurance Co. (Hanover), finding that class claims alleging a failure to reimburse reasonable business expenses were not excluded by a "wage-and-hour" exclusion contained in EPLI policies issued by Hanover. The lawsuit, brought by a former student of the Bellus Academy beauty school, alleged that Poway Academy (the owner of Bellus) and Beauty Boutique, Inc. (BBI) (operator of two other schools under the "Bellus" name), failed to compensate students for working on paying clients at an onsite salon and also failed to reimburse them for out-of-pocket costs to purchase necessary supplies. The lawsuit alleged a variety of wage-related claims. The lawsuit also alleged that the schools failed to reimburse necessary business expenses in violation of Section 2802 of the California Labor Code.

As first reported yesterday by Michael Levine, Tesco Bank (owned by Britain’s biggest retailer) stopped online transactions on Monday after hackers stole money from 9,000 accounts. Tesco Bank has begun refunds, the total cost of which will exceed $3 million. Experts estimate that the biggest hit to the bank will come in the form of reputational damage.

The owner of a fire-damaged warehouse in Florida is battling in the Fifth Circuit to revive a claim alleging that a broker and insurer negligently failed to procure adequate insurance for the warehouse—by arguing that the lower court should have applied a different state’s law to its summary judgment determination. The warehouse owner leased the warehouse to a Florida-based produce distributor, which in turn procured a $5 million insurance policy from Alterra American Insurance Co. A fire later caused $10 million worth of damage to the warehouse, toward which Alterra paid the $5 million policy limit.