Hunton Insurance Recovery Blog

Hunton & Williams insurance lawyers, Mike Levine and Sergio Oehninger, were quoted today in a Law360 article analyzing the impact of the recent decision in P.F. Chang's bid for coverage for certain losses stemming from a 2013 cyber breach. In a June 1, 2016 blog post, Levine and Oehninger criticized the court's decision and forewarned policyholders that disputes of this sort are likely to be common, given the continually evolving nature of cyber coverages. According to Levine in a subsequent comment, "until insurance markets arrive at policy language that clearly sets forth the ...

On May 27, 2016, the U.S. District Court for the Western District of Washington allowed a declaratory judgment action filed by the Seattle Times Company for excess coverage to proceed to trial despite the insurer's arguments that the underlying policies had not been exhausted.

In a May 31, 2016 decision, a federal court in Arizona rejected P.F. Chang's attempt to recover an additional $2 million it paid following a 2013 breach in which hackers obtained and posted on the Internet approximately 60,000 credit card numbers belonging to P.F. Chang's customers.  P.F. Chang's was insured under a "CyberSecurity by Chubb Policy," which it had purchased from Federal Insurance Company for an annual premium of $134,000.  On its website, Federal marketed the policy as "a flexible insurance solution designed by cyber risk experts to address the full breadth of risks associated with doing business in today's technology-dependent world" including "consequential loss resulting from cyber security breaches."

On May 20, the Eight Circuit held that the State Bank of Bellingham was covered for losses following the criminal third party wire transfer of $485,000 from the bank to a foreign account. The money was stolen by hackers in 2011 after a bank employee inadvertently left one of three security measures disabled and computers running overnight.

Last month, I wrote about State Farm's "Dirty Little Secret." After a non-jury trial, Florida's Second Judicial Circuit (Leon County) declared that data submitted by State Farm Florida Insurance Company ("State Farm") to Florida's Office of Insurance Regulation ("OIR"), as required by Fla. Stat. 624.424(10), constituted a "trade secret" under Florida law. The Circuit Court released its written opinion on May 2, 2016.

Andrea DeField’s update, and her original post discuss portions of the proposed Restatement of the Law on Liability Insurance and how they may alter the consequences for breaching the duty to defend. The proposed Restatement contains many other provisions that may prove relevant to future coverage disputes, particularly ones governed by state law that is less developed than in states like New York, California, and Florida.

In an article recently published in Bloomberg/BNA Privacy and Security Law Report, Hunton lawyers Syed Ahmad, Sergio Oehninger and Patrick McDermott discuss a recent decision finding insurance coverage for a cyber-related incident.  In the article, the authors dissect whether information made available on the internet is “published” if there is no evidence that anyone ever accessed the information.  As the authors and the court conclude, coverage is indeed available under the general liability policy at issue, demonstrating that general liability insurance can provide ...

As a follow-up to my post yesterday concerning the New York Court of Appeals' decision in In the Matter of Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, where the New York high court confirmed that policyholders may allocate all amounts of loss to a single policy and a single policy year, Syed Ahmad, a partner in our Insurance Coverage Counseling and Litigation team, was interviewed by Law360 about the decision's broad-ranging implications. As Mr. Ahmad explained in an article appearing today in Law360, titled NY Allocation Ruling Speeds Policyholders' Road To ...

On Tuesday, May 3, 2016, the New York Court of Appeals held that each of several excess liability insurers can be wholly responsible for the entire extent of their policyholders' asbestos liabilities.  The Court further held that "vertical" exhaustion would apply; rejecting the insurers' attempt to apply "horizontal" exhaustion before upper-layer policies must respond.  The decision, in In the Matter of Viking Pump, Inc. and Warren Pumps, LLC, Insurance Appeals, comes in response to two questions certified from the Delaware Supreme Court:

The Eleventh Circuit confirmed in First Mercury Insurance Company v. Excellent Computing Distributors, Inc., No. 15-10120 (11th Cir. Apr. 20, 2016), that policyholders need not await adjudication of underlying liability litigation before obtaining a confirmation of coverage. The decision arose from a declaratory judgment action concerning the availability of insurance coverage for an underlying negligence suit against the policyholder. The district court dismissed the declaratory judgment action, finding it "inappropriate to exercise jurisdiction over an action seeking a declaration of the plaintiff's indemnity obligations absent a determination of the insureds' liability.” The court also noted that "significant factual questions necessary for a resolution of [the] declaratory judgment action are at issue in the state [court] action, and have yet to be resolved.” But the court did not identify the factual questions.