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The District Court of Massachusetts’ January 6, 2015 opinion in Biochemics, Inc. v. Axis Reinsurance Co., 2015 WL 71493 (D. Mass. Jan. 6, 2015), reaffirms the importance of providing timely notice of all D&O liability claims – including subpoenas. In Biochemics, the policyholder sought coverage from its primary D&O liability insurer, Axis, for defense costs it incurred in an SEC enforcement action commenced during the AXIS policy period. Judge Rya Zobel held that Biochemics had no coverage for the SEC enforcement action because it related back to two deposition subpoenas that the SEC served on Biochemics before the AXIS policy incepted. Because those deposition subpoenas indicated on their face that the SEC had commenced a formal investigation against Biochemics, each subpoena was a “Claim” that should have been reported to Biochemics’ prior D&O carrier. Because the Claim was “first made” before the AXIS policy period, Judge Zobel granted AXIS’ motion for summary judgment and found that AXIS owed Biochemics no coverage under its policy.
Continue Reading Lessons Learned: Report All Potential D&O Liability Insurance Claims Without Delay

Insurance companies often look to the pollution exclusions in their commercial general liability policies in attempts to exclude coverage for many types of claims. They will try to fit all sorts of things within the definition of “pollutants.” Just last Friday, though, the U.S. District Court for the Eastern District of Louisiana made that more difficult, offering a common-sense understanding of the term “pollutant.” That court found that “under Louisiana law, Legionella and Pseudomonas aeruginosa bacteria” – the bacteria which cause Legionnaire’s disease – “do not qualify as ‘pollutants’ within the meaning of [pollution] exclusions.”…
Continue Reading Court’s reasoning that “bacteria” is not a “pollutant” favorable for policyholders in other cases

The Ebola crisis has raised numerous issues worldwide. Many of the concerns sparked by the crisis – particularly in the insurance coverage context – are not unique to that disease, however. For example, coverage concerns relating to Ebola-related claims would be similar to those for many other disease-related claims. Many different types of insurance policies, including general liability policies, could be implicated by such claims.
Continue Reading General Liability Insurance and Disease-Related Claims

In life, sometimes even the law imitates art. As if copied straight out of the script of “Catch Me If You Can,” the U.S. District Court in South Carolina issued a ruling on October 21, 2014 in which it held that despite a false application for professional liability insurance submitted by an applicant pretending to be a doctor, the insurance afforded to the company and other doctors and nurses identified as named insureds under the policy remained in force and was not void ab initio as to the innocent co-insureds.
Continue Reading Catch Me If You Can: Fake Doctor’s Application Voids Coverage For Himself But Not For Innocent Co-Insureds

The evolving market for cyberliability insurance coverage reveals significant differences in the scope of coverage afforded under available policies. A coverage gap that may exist under some policies is for insider cyber attacks. While external attacks receive substantial news coverage, a recent study finds that businesses may be far less equipped to stave off attacks involving insiders: employees, vendors, suppliers and others who may have authorized access to critical or sensitive data.
Continue Reading Beware Of Gaps In Your Cyber Risk Policy – Are You Covered In the Event of an Insider Attack or Data Breach?

The insurance industry reacts not only to real losses, but it reacts with equal concern to perceived risks, particularly where those perceived risks could, at least in theory, amount to significant financial loss for policyholders and/or insurers. The Ebola “crisis” is the latest example of the insurance market reacting to a perceived risk that may never amount to an actual insurable loss.
Continue Reading Perception versus Reality: ACE Adds an Ebola Exclusion Just in Case