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Do not assume insurance coverage is unavailable  

Today’s insurance market is complex.  It encompasses a wide range of insurance policies covering all manner of events and circumstances.  Beyond more traditional coverage for personal injury or property damage (under commercial general liability (CGL) policies), companies now routinely purchase Directors & Officers (D&O) policies, Errors & Omissions (E&O) policies, and Employment Practices Liability (EPL) policies, among others.  These policies can cover everything from claims of wrongful termination (EPL) to breach of contract (E&O) to shareholder class actions (D&O).  Further, many CGL policies are “occurrence” based.  This means that if the loss occurred during the policy period, the policy may provide coverage even if the claim is not made until decades later (presuming you recently learned about the loss).  Accordingly, when you or your company faces a lawsuit, never assume insurance coverage is unavailable.

Immediately notice the claim to all relevant insurers 

Beyond identifying potential coverage under existing policies, it is important to promptly place the insurers on notice of the lawsuit.  A failure to give timely notice could result in a waiver of coverage.  Many policies require the insured to give notice “as soon as practicable” or even “immediately” after learning about the occurrence (e.g., accident harming another’s person or property) or claim (e.g., a lawsuit).  These policies often treat delayed notice as a breach of a condition precedent to providing coverage under the policy.  The insurer will likely then deny coverage based on this breach.  While most jurisdictions require an insurer to show prejudice from a delayed notice of an occurrence, claim or suit, some do not.  Providing prompt notice avoids what could be a costly dispute, especially if the insurers succeeds in avoiding coverage.  Therefore, even where you believe a lawsuit will resolve quickly, it is still imperative to give timely notice (and, thereby, avoid forfeiting the coverage purchased).  Continue Reading You’ve been sued: An insurance attorney’s top tips for securing (and preserving) coverage

It has long been acknowledged that typical Employment Practices Liability Insurance (EPLI) policies exclude coverage for “wage and hour” claims.[1] [2]  However, a recent California Court of Appeal decision, Southern California Pizza Co., LLC v. Certain Underwriters at Lloyd’s, London Subscribing to Policy Number 11EPL-20208,[3] narrows the definition of what is a wage and hour claim, and improves the possibility of obtaining coverage for broad-brush wage and hour claims that tack on claims for failure to reimburse employees for business-related expenses.

In Southern California Pizza, the Court of Appeal held that claims brought under California Labor Code Sections 2800 and 2802 for failure to reimburse employee expenses did not fall within the wage and hour exclusion in a Lloyd’s of London EPLI policy that excluded coverage for claims “based upon, arising out of, directly or indirectly connected to or related to, or in any way alleging violations of any foreign, federal, state, or local, wage and hour or overtime law(s), including, without limitation, the Fair Labor Standards Act.”  In doing so, the Court reversed the lower court’s dismissal of the insured’s coverage case and rejected prior federal court decisions that had denied coverage for Labor Code Sections 2800 and 2802 claims under similar exclusionary language, stating that the California Courts of Appeal are “not bound by those federal decisions, nor do we find them persuasive.”[4]

Accordingly, policyholders who previously would not have had coverage for these types of reimbursement-related claims may now be able to trigger an insurer’s broad defense obligations and also obtain indemnification for some claims, depending on the language of their EPLI policy.Continue Reading Will your EPLI policy cover “wage and hour” claims in the wake of the California Court of Appeal’s decision in Southern California Pizza?