Stadium Owners Watching Closely To See if Insurer Fumbles Reggie Bush Claim

San Francisco 49ers running back Reggie Bush reportedly intends to sue the city of St. Louis after slipping on a concrete surface behind the St. Louis Rams’ bench during a recent game, injuring his knee and ending his season. If a lawsuit is brought, St. Louis (which owns the Rams’ stadium where the injury occurred) likely will look to its liability insurer to pay for its defense and for any damages awarded to Bush at trial. While the insurer may dispute St. Louis’s claim, the city has a strong argument for coverage, and stadium owners across the world—who have a duty of care to the hundreds of multi-millionaire professional athletes who compete on their fields and pitches—will be watching closely to see if the insurance company fumbles the claim. Continue Reading

Eastern District of New York ultimately arrives at right outcome when interpreting “Employer’s Liability” exclusion in CGL policy

In Hastings Development, LLC v. Evanston Insurance Company, No. 14-cv-6203 (ADS)(AKT) (Oct. 30, 2015), the U.S. District Court for the Eastern District of New York correctly determined that an “Employer’s Liability” exclusion in a commercial general liability (“CGL”) policy only applied and precluded coverage when an insured is sued by its own employee(s) and not by an employee(s) of a co-insured. Believing that the exclusion was ambiguous, and based on “the lack of any probative extrinsic evidence” concerning the parties’ intent, the district court applied “the rule of contra preferentem” and found it “appropriate to adopt the Plaintiff’s interpretation of the exclusion because the Plaintiff is the insured and its interpretation of the exclusion is the narrower interpretation.” Continue Reading

PA Policyholders May Find Road Blocks In Obtaining Coverage For Misappropriation of Advertising Ideas under CGL Policies

Last week, the United States Court of Appeals for the Third Circuit issued a ruling that may make it more difficult for Pennsylvania policyholders to obtain coverage for the misappropriation of advertising ideas under standard commercial general liability policies. In The Hanover Insurance Company v. Urban Outfitters, Inc., No. 14-3705 (Oct. 23, 2015), the Third Circuit adopted a standard for the “prior publication” exclusion – an exclusion that precludes coverage for misappropriation of material that was first published before the insurance policy incepted – that may prove difficult to overcome.

In a recent client alert, members of Reed Smith’s Insurance Recovery Group discuss the Third Circuit ruling, and its potential impact on Pennsylvania insureds.

Beware of Good Intentions: Insurer Cannot Escape Duty to Defend by Interpleading Policy Limits That Were Not Subject to Competing Claims

On October 6, 2015, the United States District Court, Northern District of California held that an insurer breached its duty to defend by interpleading remaining policy limits and ceasing its defense of its insured.  Doublevision Entertainment, LLC v. Navigators Specialty Insurance Company, N.D. Cal., No. C 14-02848 WHA. Despite language in the policy stating that the insurer was not obligated to defend after it had deposited remaining policy limits with a court, the district court held that Navigators could not simply interplead the funds and abandon its insured “at the moment of her greatest peril.”

Navigators issued an errors and omissions policy to Commercial Escrow Services (“CES”) and its principal, Antoinette Hardstone. Beginning in 2010, CES and Hardstone were sued by a number of customers alleging improper escrow handling. After CES and Hardstone tendered to Navigators, Navigators assumed the defense of the claims.  While the claims were pending, the California Department of Corporations conducted an investigation into CES and determined that it had a shortage of $195,750. The Department of Corporations appointed a receiver, who had authority to collect any insurance proceeds needed to cover the shortage.

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Third Circuit Holds That Terms of Insurance Policy Renewal ‘Must be the Same or Nearly the Same as the Initial Contract’

Recently, resolving an insurance-coverage dispute, the U.S. Court of Appeals for the Third Circuit held that “for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract.”  The court’s precedential ruling in Indian Harbor Insurance Co. v. F&M Equipment, Ltd., No.14-1897 (Oct.15, 2015), which is likely to have effects outside of the insurance-coverage context as well, means at the very least that when an insurance company promises to offer its insured a “renewal,” it cannot simply offer a subsequent insurance policy with new terms, even if the insurer provides the policyholder notice of the changes.

In a recent client alert, members of Reed Smith’s Insurance Recovery Group discuss the Third Circuit ruling and its implications for policyholders and insurers both.

Will it Cost More To Protect Your Company and Board from Cyber Attacks?

Businesses may find it more challenging to purchase or renew cyber liability insurance coverage, according to recent articles by Advisen¹, Reuters, and follow-up communications with Robert Parisi, managing director and National Cyber Risk Product Leader at Marsh. Brokers are warning that policyholders should expect sharp increases in premiums and deductibles, coupled with declining limits. Although cyber insurance coverage has been around for a number of years, about “75% of commercial entities still don’t buy the coverage,” according to Parisi. Marsh expects the cyber insurance market to continue growing faster than any other line of commercial insurance. Despite the overall growth, “some carriers have retreated from certain sectors” in the cyber insurance marketplace because the risks and costs associated with cyber attacks continue to be unpredictable for businesses and insurers alike. In part because of recent high-profile attacks, some cyber liability insurance carriers are less willing to take on certain risks, particularly in large health care and retail, or are simply charging as much as triple the premiums for renewals of coverage. Parisi noted that before issuing a policy, carriers may subject a policyholder to more intrusive underwriting – “asking a lot of questions” about the nature of a policyholder’s cyber defenses. Carriers may also in some cases require policyholders to undergo costly improvements, such as requiring retailers to invest in sophisticated encryption technology to protect payments from hackers. As the cyber insurance market continues to mature and evolve, policyholders should be aware and seek assistance when negotiating new or renewal cyber coverage to ensure they obtain the most comprehensive coverage available to fit their needs.


  1. Chad Hemenway, Hardening Market, Shifting Players Make Building A Cyber Insurance Tower Challenging, Advisen News (Oct. 12, 2015), available with subscription at

Insurers Beware: Respond Promptly or Lose the Right to Control the Defense

The tables may be turning. Insurers often seek to avoid their coverage obligations by invoking time limitations in their policies for providing claim notifications. On the other hand, these same insurers routinely take their sweet time in responding to claims, contending that they need time to “investigate” even before making a decision whether or not to provide a defense to a lawsuit, which in most cases simply requires the insurer to review the allegations in the complaint to determine whether there is a potential for coverage under their policies. Once they decide to provide a defense (which in some cases can be weeks if not months after the insured has had to retain its own defense counsel to respond to a suit), insurers claim they have the right to control the insured’s defense, including the selection of defense counsel, and will force the insured to accept new defense counsel that are not up to speed on the case. Not so fast, according to a recent decision from the United States District Court for the Northern District of California. Continue Reading

If not “determinative,” then at least compelling: Other, specific exclusionary language available on market undermines application of pollution exclusion

Recently, in a non-precedential order, an Illinois appellate court correctly held that a “Pollution and Health Hazard Exclusion” in a commercial general liability policy did not preclude coverage for mold-related bodily injury claims. See In re Liquidation of Legion Indem. Co., 2014 IL App (1st) 140452-U (Sept. 30, 2015) (applying Texas law).

That court held, inter alia, that “the plain language of the [p]olicy does not specifically exclude mold related claims.” Id. at ¶ 16. It continued: “While the policy does not need to specifically list the terms ‘mold’ and ‘fungi’, the intent to exclude coverage must be expressed in clear and unambiguous language. Here the alleged intent to exclude mold related claims was not clearly stated in the [pollution e]xclusion.” Id. at ¶¶ 17-18 (internal citation omitted).  The court later stated: “It is undisputed that the [p]olicy’s [e]xclusion did not include the words ‘mold,’ or ‘fungi’ although [the insurer] could have easily inserted the words in the [p]olicy’s [e]xclusion to avoid different interpretations.” Id. at ¶ 21. All good points.

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Data Breaches Are Not Academic: Colleges and Universities Should Take Appropriate Steps To Avoid or at Least Minimize Their Exposure

Data breaches at colleges and universities are on the rise. These institutions are targets because their networks have access to a large amount of private information, including educational and medical records, as well as employees’ personal data. But in other instances, their systems are being attacked for malicious sport.

In a recent Client Alert members of Reed Smith’s Insurance Recovery Group and Information Technology & Privacy and Data Security Group discuss how data breaches will happen, but academic institutions should take certain measures now to protect – or at the very least minimize – their exposure in the event of a breach.

Evaluating Insurance Coverage In The Rapidly Evolving World of 3D Printing

As 3D printing becomes more prevalent, liability risks to individuals and businesses will likely rise.  Corporate policyholders should explore whether their existing insurance provides adequate coverage or whether additional coverage is needed. This technology presents many types of risks, including design and intellectual infringements, product liability risks and environmental liability risks, to name a few.

Policyholders can take steps to reduce the risk to their businesses by employing these risk management strategies detailed in Reed Smith’s white paper 3D Printing of Medical Devices: When a Novel Technology Meets Traditional Legal Principles.