Conditions Precedent to Coverage
Insurance policies typically are subject to certain conditions precedent to coverage. As the name suggests, conditions precedent to coverage are obligations placed on the insured that, in the normal case, must be complied with in order for coverage to attach.
Take a commercial general liability (or “CGL”) policy, for example. An
This article provides an update to a post published on July 23, 2024 by Mark Pring, Andy Moss, and Cristina Shea, which can be found here.
It has now been over a month since cybersecurity technology company CrowdStrike rolled out a defective software update that rendered over 8 million computers around the globe temporarily
Increased litigation alleging exposure to per- and poly-fluoroalkyl substances (PFAS) present potential significant losses for companies in a wide range of industries. PFAS are a group of chemicals commonly used in consumer products and manufacturing applications. After health studies linked PFAS exposure to adverse health impacts, there has been increased regulatory attention and significant litigation. The risks from this litigation to companies that manufactured or sold PFAS-containing products is manifest. And with that increased litigation risk, so too, the need to secure insurance coverage has grown. As is often the case, the ability to secure coverage for PFAS-related claims will depend on the specific facts and language of the policies at issue. Through this post, we identify several of the coverage issues associated with these claims.
What are PFAS?
PFAS are chemicals commonly used in manufacturing, industrial and consumer products such as food packaging, nonstick cook-wear, and cosmetics. PFAS have been used since the 1940s and are commonly referred to as “forever chemicals” due to how long they take to degrade naturally. Because of their popularity, PFAS are found virtually everywhere, including in drinking water, household products, personal care products, and soil and groundwater near waste sites. And because they are slow to break down, PFAS can build up in people and the environment over time. According to the EPA, research suggests that exposure to certain PFAS may lead to adverse health outcomes. See Our Current Understanding of the Human Health and Environmental Risks of PFAS. Continue Reading Insurance coverage implications for PFAS-related liabilities
At least since the California Supreme Court’s ruling in Buss v. Superior Court, 939 P.2d 766 (Cal. 1997), insurance companies have urged courts to let them sue their own policyholders to recoup the costs that the insurance companies paid to defend their policyholders if, at the end of the day, some or all of the claims are excluded from coverage. The Hawaii Supreme Court is the latest state supreme court to reject the Buss approach, instead requiring the insurance company to bear the full cost of its duty to defend.Continue Reading Hawaii Supreme Court rejects insurance company claims for defense expense reimbursement
The landscape of biometric privacy litigation already has changed dramatically in 2023. Last month, the Illinois Supreme Court ruled in Tims v. Black Horse Carriers, Inc., 2023 IL 127801, that claims for violations of the Illinois Biometric Information Privacy Act (BIPA) (which allows individuals to sue companies directly for the wrongful collection or disclosure of their biometric data) are subject to a five-year statute of limitations. Later that month, in Cothron v. White Castle System, Inc., 2023 IL 128004, the court ruled that a BIPA violation accrues each time an individual’s data is improperly collected or shared, not merely the first time. Taken together, these rulings significantly broaden the scope of claims facing companies that have violated BIPA and the damages flowing from such violations.
In recognition of the dystopian risks presented by the rampant, unlawful sharing of biometric data, several more states are jumping on Illinois’ bandwagon, attempting to pass BIPA-like laws. According to Bloomberg, legislation proposed in nine other states also would grant a private right of action to individuals whose biometric data was wrongly collected or shared.
Despite the growing threat of civil litigation related to the mishandling of biometric data, there is a silver lining for corporate policyholders: the opportunity to obtain insurance coverage for biometric privacy liability has never been greater.Continue Reading Key considerations for policyholders after landmark biometric privacy decisions reshape insurance landscape
As a general rule, if a policyholder reasonably attempts to settle a case for an amount at or within the limits of its insurance policy, the insurance company must put the policyholder’s interests above its own. Typically, if the insurance company does not accept a reasonable settlement within limits, then it may be responsible for a judgment amount in excess of the policy limits if the insurance company’s refusal to settle was unreasonable. The insurance company’s failure to settle may result in a bad faith claim. But what if the insurance company refuses to settle and the policyholder prevails at trial? According to a federal district court in New Jersey, if the insurance company’s decision not to settle was unreasonable, it may still be liable for bad faith.
Summary of recent New Jersey federal court decision
BrightView Enterprise Solutions, LLC v. Farm Family Casualty Insurance Company, No. 20cv7915 (EP) (AME), 2023 U.S. Dist. LEXIS 20764 (D.N.J. Feb. 7, 2023) is not your typical bad faith “failure to settle” case. It involved three different companies that were insured under a single commercial general liability insurance policy issued by Farm Family. The three companies were involved in a project to overhaul an irrigation system at a Bank of America branch in New Jersey. A Bank of America employee “slipped and fell” on a puddle of water and hit her head. The injured employee filed suit against all three companies, alleging that her “slip and fall” caused a permanent disability. Farm Family agreed to defend and provide coverage for all three defendants up to its $1 million policy limit.Continue Reading An insurance company’s refusal to settle can be bad faith, even if the policyholder ultimately prevails at trial
Following the February 3, 2023 derailment of 38 train cars carrying hazardous materials, resulting in a chemical spill and controlled burn in East Palestine, Ohio, several lawsuits have been filed seeking medical monitoring for people living in the affected areas.
Medical monitoring programs may allow for the early discovery and treatment of latent injuries even years after exposure to toxic substances, but such programs also present a substantial expense for any company. Medical monitoring claims may be covered by insurance, but coverage heavily depends on the underlying facts, policy language, and the law governing policy interpretation.Continue Reading Coverage issues for medical monitoring claims
A concert promoter cancels a sold-out show of a world-renowned recording artist, reimbursing millions of dollars in ticket sales as a result. If the reason for the cancellation was COVID-19, does insurance cover that?
Event Cancellation Insurance Basics
Event cancellation insurance generally provides coverage only when there has been a triggering event under the policy. Some policies are written, for example, to only cover cancellations caused by rain or bad weather. Other event cancellation policies are all-risk policies, meaning that coverage may be triggered by any cause that is not specifically excluded. For all types of event cancellation insurance, the triggering event must have been fortuitous, or outside of the policyholder’s control.
Good News for Policyholders
The good news for policyholders is that many all-risk event cancellation policies do cover cancellations caused by COVID-19 related shut-down orders. For such policies, a shut-down order should qualify as a fortuitous triggering event. Across the United States, nearly every jurisdiction has enacted some kind of order that caused the cancellation of large-scale events.
Notes of Caution
Policyholders should be cautious concerning the scope of exclusions in respect of viruses and communicable diseases. Although these types of exclusions may bar coverage related to COVID-19, it is important to be mindful of variations in the exclusion language used. Some exclusions apply to only specific named viruses, such as SARS and MERS. Other exclusions contain carve-outs that may be applicable to COVID-19.Continue Reading COVID-19 event cancellation insurance – good news and bad news
Like any business, a business operating in the U.S. cannabis industry needs both first-party and third-party liability insurance. Unlike other types of businesses, however, a cannabis-related business’ insurance needs may be dictated at least in part by state regulations. Although not every state that has legalized cannabis for medical and/or adult use has promulgated specific insurance requirements for this industry, a number of states, via their cannabis regulations, have done so. Accordingly, it is imperative for any cannabis-related business to carefully review the regulations in each jurisdiction in which it does business to ensure that it has obtained all required insurance.
Continue Reading Review state cannabis regulations for insurance requirements
Every policyholder in every industry should make sure that it in fact has obtained insurance covering the actual, specific risks presented by its line of business.
That point is the critical one driven home by the U.S. District Court for the Central District of California in United Specialty Insurance Company v. E-Cig Vapor Emporium, LLC, No. EDCV 18-0002 JGB (SHKx), 2018 WL 5098859 (C.D. Cal. Oct. 15, 2018). While applicable to any business in any industry, this lesson is particularly valuable to businesses in certain newer industries – such as the vaping, e-cigarette, and cannabis industries – where the market for insurance may be more limited and the coverages offered may be more restrictive.Continue Reading Federal court’s E-Cig decision provides cautionary tale