Will California Law Permit Insurance Coverage for Civil Penalties Assessed Under the California Consumer Privacy Act?

November 12, 2019
Andrew Lipton - White and Williams LLP

One of the most often discussed (and debated) aspects of the soon-to-be effective California Consumer Privacy Act (CCPA) is that the CCPA provides for statutorily assessed civil penalties against any violators, up to $7,500 per violation per consumer. With many businesses seeking to transfer the risk of third-party actions that might be brought against them pursuant to the CCPA (especially to cyber and privacy liability insurance), an issue to consider is whether an insurance policy would provide indemnity coverage for civil penalties assessed under the CCPA when applicable state law prohibits such coverage.

Mr. Lipton may be contacted at liptona@whiteandwilliams.com


Recommendations for Property Owners After A Hurricane

November 4, 2019
Kelly A. Johnson, Ashley L. Cooper, Stephanie A. Giagnorio & Gregory D. Podolak - SDV Insights

If you suffered damage as a result of a hurricane, you should submit a claim under any insurance policy you have that might apply. This includes:

  • Flood insurance
  • Homeowner’s insurance
  • Renter’s insurance
  • Condo insurance
  • Auto insurance

Reprinted courtesy of Saxe Doernberger & Vita, P.C. attorneys Kelly A. Johnson, Stephanie A. Giagnorio and Gregory D. Podolak
Ms. Johnson may be contacted at kaj@sdvlaw.com
Ms. Cooper may be contacted at alc@sdvlaw.com
Ms. Stephanie may be contacted at sag@sdvlaw.com
Mr. Gregory may be contacted at gdp@sdvlaw.com


ISO Modifies Wrap-Up Exclusion

October 21, 2019
Jeffrey J. Vita - Saxe Doernberger & Vita, P.C.

For those contractors and other parties enrolled in wrap-up insurance programs, one nagging issue frustrating risk transfer has been the Designated Operations Wrap-Up Exclusion found on many contractors' programs. See, for example, ISO CG 21 54 01 96, which provides in relevant parts as follows:

"This insurance does not apply to 'bodily injury' or 'property damage' arising out of either your ongoing operations or operations included within the 'products-completed operations hazard' at the location described in the Schedule of this endorsement, as a consolidated (wrap-up) insurance program has been provided by the prime contractor/project manager or owner of the construction project in which you are involved."

Mr. Vita may be contacted at jjv@sdvlaw.com


Bad Faith Insurance Quote Defeats Summary Judgment

October 15, 2019
Michael S. Levine & Adriana A. Perez - Hunton Andrews Kurth

On Friday, August 9th, an Indiana Court of Appeals reversed a trial court’s ruling and allowed an insureds’ claim for bad faith based on misrepresentations in the insurer’s quote for coverage to proceed to trial.

Metal Pro Roofing, LLC v. Cincinnati Insurance Company, No. 18A-PL-2205, 2019 WL 3756738 (Ind. Ct. App. Aug. 9, 2019) involved a declaratory judgment action brought by the insurer against two insured LLCs after it refused to cover more than $78,000 stolen from the LLC’s bank accounts by computer hackers. The LLCs countered for breach of contract and bad faith against Cincinnati. In particular, the LLCs’ bad faith claim alleged that Cincinnati deceived the LLCs into purchasing the coverage by misrepresenting that the coverage would “protect insured business clients from someone hacking into computers and into their bank accounts to steal money.”

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Adriana A. Perez, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Perez may be contacted at aperez@HuntonAK.com


Legionnaires’ Outbreak Raises Significant Insurance Issues

October 7, 2019
Lawrence J. Bracken II, Michael S. Levine & Alexander D. Russo - Hunton Andrews Kurth

A recent outbreak of Legionnaires’ Disease has been traced to a Sheraton hotel in Atlanta, Georgia. According to the Georgia Department of Public Health, 11 cases are confirmed and 55 more cases are “probable.” The Atlanta Sheraton closed on July 15 to investigate the outbreak. The closure is certain to result in a substantial immediate loss of revenue for the property. The closure and loss of advanced reservations also will likely result in an extended interruption of hotel revenue. Add to that potential stigma-related losses that will result from those afraid to reenter the property after the hotel reopens. Sheraton will likely turn to its insurers to seek payment for its business interruption costs.

Reprinted courtesy of Lawrence J. Bracken II, Hunton Andrews Kurth, Michael S. Levine, Hunton Andrews Kurth and Alexander D. Russo, Hunton Andrews Kurth
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com


Let’s Keep It Civil: Appeals Court Ruling on Napoleonic Civil Code Provision Highlights the Importance of Insurance Coverage Reviews

September 30, 2019
Walter J. Andrews, Michael S. Levine & David M. Costello - Hunton Insurance Recovery Blog

The Eleventh Circuit recently found that an insured had not paid enough to satisfy its policy’s deductible and would thus be required to pay more before coverage would be available. The court’s holding turned on the meaning of a “tenants and neighbors” provision that extended coverage, but only for claims arising in countries that apply a civil law system. As explained below, this ruling underscores the value of retaining experienced coverage counsel to identify potential gaps and deficiencies in coverage.

Reprinted courtesy of Walter J. Andrews, Hunton Andrews Kurth, Michael S. Levine, Hunton Andrews Kurth, and David M. Costello, Hunton Andrews Kurth
Mr. Andrews may be contacted at wandrews@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com


Plan, Prepare, Prevent: How to Smoothly Navigate This Year’s Anticipated Active Hurricane Season

September 23, 2019
Walter J. Andrews, Andrea DeField & Yaniel Abreu - Hunton Andrews & Kurth

In this first alert of a series of three, we address how policyholders can plan for this year’s hurricane season. The second alert will address how to prepare a claim after a loss in order to maximize the potential recovery, including by taking photographs of any damage and tracking curfews that affect your operations. In the third and final alert, we will discuss how to prevent denials of pending claims based on suit limitations periods. Our goal with this series is to give you a comprehensive outline that will guide you before and after a loss.

With hurricane season here, it is important to have a plan in place to mitigate the extent of financial losses from a storm. This year, forecasters are concerned about unusually warm water near the east coast of the United States and the Bahamas. Specifically, they are alarmed because warmer waters cause storms to increase in intensity rapidly—leaving individuals and businesses with less time to prepare for a severe storm. Below, we address how to plan for this year’s hurricane season.

Reprinted courtesy of Hunton Andrews Kurth attorneys Walter J. Andrews, Michael S. Levine and Andrea DeField
Mr. Andrews may be contacted at wandrews@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. DeField may be contacted at adefield@HuntonAK.com


Sixth Circuit Broadly Construes Policy Sublimit, Limits Recovery for Thai Factory Flood

September 16, 2019
Lorelie S. Masters, Michael S. Levine & Geoffrey B. Fehling - Hunton Insurance Recovery Blog

A federal appeals court reversed an auto parts manufacturer’s summary judgment win, construing a policy limitation on flood hazards to apply broadly to all types of losses, even though the limit “does not expressly say what losses it limits.” In Federal-Mogul LLC v. Insurance Company of the State of Pennsylvania, manufacturer Federal-Mogul suffered more than $60 million in property and time-element losses following a 2011 flood in one of its factories in Thailand. Federal-Mogul submitted a claim to its insurer, but the insurer refused to pay more than $30 million because the flood occurred in a high hazard flood zone, to which the insurer argued a sublimit in the policy applied.

Reprinted courtesy of Peckar & Abramson, PC attorneys Lorelie S. Masters, Michael S. Levine and Geoffrey B. Fehling
Mr. Masters may be contacted at lmasters@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com


Can Policyholders Make A Claim Directly Against The Reinsurer Of Their Insolvent Insurance Company?

September 10, 2019
Syed S. Ahmad, Patrick M. McDermott & Yaniel Abreu - Hunton Insurance Recovery Blog

Insurance companies can become insolvent. This is an ongoing issue in Puerto Rico following hurricanes Irma and Maria. In addition to Real Legacy Assurance Company’s insolvency, Puerto Rico’s Insurance Commissioner reportedly fined various insurers for delays in handling claims. Even if your insurance company is insolvent, it may have purchased reinsurance. While the general rule is that a policyholder cannot make a claim directly against the reinsurer, there are exceptions to the rule. One such exception is when the reinsurance contract contains a “cut-through” provision. Cut-through provisions generally allow policyholders to make claims directly against the reinsurer if the original insurance company is insolvent. For a detailed discussion on this issue, we repost the article by Syed Ahmad, Patrick McDermott, and Yaniel Abreu of Hunton Andrews Kurth LLP. The article is titled “My Insurance Company Is Bankrupt, But Is Reinsured. Can I Make A Claim Directly Against The Reinsurer?” and was published on Law.com’s Eye on the Experts column. The article addresses the enforceability of cut-through provisions under the laws of multiple jurisdictions.

Reprinted courtesy of Sheppard Mullin attorneys Syed S. Ahmad, Patrick M. McDermott and Yaniel Abreu
Mr. Ahmad may be contacted at sahmad@HuntonAK.com
Mr. McDermott may be contacted at pmcdermott@HuntonAK.com
Mr. Abreu may be contacted at yabreu@HuntonAK.com


Firming in the Construction Insurance Market

September 4, 2019
David Bowcott - Construction Executive

To manage risk, companies can draw on two key risk management areas. The first is the use of risk controls or those solutions that prevent and mitigate risk. The second is the use of risk finance solutions which provide capital in the event certain risks manifest and cause damage (financial loss) to organizations. These two risk management areas feed each other. Those solutions that are utilized to prevent and mitigate risk (the risk controls) reduce the likelihood and severity of claims against the risk finance solutions.

From a risk finance perspective, the claims made against the risk finance products are a rich source of data which can be utilized to create new and improved risk controls. The interplay between risk controls and risk finance is a virtuous cycle of risk management, and organizations involved in the construction sector may benefit by ensuring these two risk management areas are closely linked to improve the risk management platform their organizations and for projects they are part of.

Reprinted courtesy of David Bowcott, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Bowcott may be contacted at david.bowcott@aon.ca


OCIP And CCIP Insurance Overview

August 26, 2019
Patti Maluchnik - Construction Executive

In the construction industry, questions and confusion regarding the use of owner-controlled insurance programs (OCIPs) and contractor-controlled insurance programs (CCIPS) have been increasing over the past few years. OCIP and CCIP plans are also commonly referred to as “wrap-up” or “wrapped” insurance plans.

Reprinted courtesy of Patti Maluchnik, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Ms. Maluchnik may be contacted at pattis@georgetownins.com


Hurricane Insurers Must Submit Data Call Worksheet to Hawaii Insurance Commissioner

August 20, 2019
Tred R. Eyerly - Insurance Law Hawaii

The Hawaii Insurance Commissioner has issued Memorandum 2019 3R, requiring insurers writing residential hurricane coverage at any time in the last 15 years to submit a data call worksheet, or completed survey, to the Insurance Division. The Commissioner explains the information is requested to capture Hawaii-specific information on residential hurricane coverage through a separate data call. The worksheet should be submitted to the Insurance Division by August 30, 2019.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Business Risk Exclusions Bar Coverage Whether or Not Operations Completed

August 13, 2019
Tred R. Eyerly - Insurance Law Hawaii

The federal district court found that exclusions j (5), (6) and l barred coverage for damage caused to the city's water main collector system. Sunwestern Contractors, Inc. v. Cincinnati Indem. Co., 2019 U.S. Dist. LEXIS 82642 (D. Ariz. May 15, 2019).

Sunwestern contracted with the city of Tucson for the construction of a water main collector system. During the project, Sunwestern conducted a pressure-test of the pipeline when several flanges, which connected the pipe sections, came apart. The flange failure caused water to tear out gaskets, seriously damage the pipeline, components of the pipeline, and surrounding areas. Four million dollars in damage was caused.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Summary Judgment for Partial Collapse Granted to Insurer

August 6, 2019
Tred R. Eyerly - Insurance Law Hawaii

The partial collapse of an exterior brick veneer of an apartment building was found not to be covered under the apartment policy. Keyser v. State Farm Fire & Cas. Co., 2019 U.S. Dist. LEXIS 81194 (W.D. Pa. May 14, 2019).

Norene Keyser was insured by State Farm for a six-unit apartment building. The exterior brick veneer of the property's west-facing wall partially collapsed while a maintenance staff attempted remedial repairs. Keyser filed a claim and State Farm hired Jon Nedley, an engineer, to determine the cause of the loss, and a contractor, Dave Wahl, to estimate the cost to repair the damage.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Insurance Frauds Prevention Act Applies Broadly to Claims “Characterized in Any Way by Deceit”

July 30, 2019
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP

In People ex rel. Allstate v. Suh (No. B280293; filed 6/17/19), a California appeals court upheld a jury’s award of over $6 million in civil penalties for insurance fraud under Insurance Code section 1871.7.

In Suh, Allstate and other insurers brought an action under Insurance Code section 1871.7, on behalf of the People of the State of California, against Suh and others for insurance fraud in violation of Penal Code section 550, which makes it unlawful to submit false or fraudulent claims to an insurance company. Allstate alleged that Suh set up sham law firms, then procured auto insurance policyholders of Allstate as clients of the sham law firms, submitted insurance claims on behalf of the insureds, and absconded with settlement proceeds. The jurors found in favor of Allstate and imposed over $6 million in civil penalties.

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


Insurer Not Required to Pay Twice When Contractor Cashes Jointly Payable Check Under Authority Granted in Construction Contract

July 22, 2019
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP

In Jozefowicz v. Allstate Ins. Co. (No. G055643, filed 5/28/19), a California appeals court held that Allstate was not required to pay the insured where his contractor negotiated a jointly payable check under a lost or stolen check provision of the Commercial Code, because the insured’s construction contract had authorized the contractor to cash the check, which negated a requirement for application of the statute.

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


Few Insurance-Related Bills Passed by 2019 Session of Hawaii Legislature

July 15, 2019
Tred R. Eyerly - Insurance Law Hawaii

Only four insurance-related measures were enacted by the Hawaii Legislature in the recently concluded 2019 session. The legislation is as follows:

HB 273 - This bill establishes an exemption for insurers issuing group policies from the required annual privacy notice to individual customers under certain circumstances. The bill was transmitted to the Governor on April 24, 2019.

SB 25 - Related to health insurance, the measure amends portions of the Hawaii Insurance Code under title 24 to update and improve existing code provisions. It allows the Insurance Division to create stopgap measures to implement the National Association of Insurance Commissioners' Health Benefit Plan. The bill was enrolled to the governor on May 6, 2019.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Construction Bonds Explained

July 9, 2019
Todd Bryant - Construction Executive

Surety bonds play a vital role in the construction industry. They guarantee that contractors perform on jobs in compliance with contractual conditions and legal requirements. They protect project owners, other contractors and the public by playing the role of a financial security mechanism. However, they also provide contractors with legitimacy and help build up their capacity and industry reputation.

Yet, for many contractors, especially those new to the industry, surety bonds and their purpose remain somewhat unclear.

Reprinted courtesy of Todd Bryant, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Go Phish: Texas Lawsuit Highlights Need for Tailored Cyber Policies

July 1, 2019
Lorelie S. Masters, Michael S. Levine & Leah B. Nommensen - Hunton Insurance Recovery Blog

Phishing has been around for decades. But now, the long-lost ancestor claiming to be a foreign prince is stealing more than your grandmother’s savings. Phishers are targeting corporations—small and big, private and public—stealing sensitive data and money. When Policyholders take the bait, they had better have a tailored insurance policy to keep their insurers on the hook as well.

Reprinted courtesy of Hunton Andrews Kurth attorneys Lorelie S. Masters, Michael S. Levine and Leah B. Nommensen
Ms. Masters may be contacted at lmasters@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Nommensen may be contacted at leahnommensen@HuntonAK.com


Professional Liability Insurance in Today’s Construction Industry

June 25, 2019
Frank G. Murphy and Nicholas R. Maxwell - Construction Executive

General liability insurance protects businesses against worksite bodily injury or property damage claims, but what about claims by property owners seeking purely economic damages for negligent design, construction or supervision?

As the lines between construction and design blur, more and more businesses in the building industry need errors and omissions professional liability insurance to protect against these types of claims. But based on misunderstandings about the scope of coverage afforded by commercial general liability policies, a surprising number of industry players either do not have E&O in the first place, or have an E&O approach that fails to provide sufficient protection when a negligence suit arrives.

Reprinted courtesy of Frank G. Murphy and Nicholas R. Maxwell, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Protect Against Wood-frame Construction Hazards With CPL Insurance

June 18, 2019
Drew Rothman - Construction Executive

Low cost and availability have combined in recent years to make wood-frame construction extremely popular for building everything from apartment complexes to mixed use facilities. In addition to conforming easily to the designs of most structures, cedar, pine and other types of softwood are currently meeting the growing demands of owners and developers for green building and sustainability products.

However, a learning curve does exist in the United States for wood-frame contractors looking to overcome the safety, project management, structural, moisture and design challenges that can plague these projects—many of which can result in pollution conditions. This includes the implementation of risk management strategies such as the adoption of insurance forms to control wide-ranging pollution problems and better schedule planning to avoid the adverse effects of seasonal weather conditions. Other strategies entail the negotiation of contract terms that protect against delayed claims; combating mold through procedures that ensure the building’s dryness; and protecting against moisture problems during the wood’s transport and storage.

Reprinted courtesy of Drew Rothman, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Court Upholds Insurance Commissioner’s Penalties for Broker’s Fees, Which Constituted Premiums in Excess of Approved Rates

June 10, 2019
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP

In Mercury Insurance Co. v. Lara (No. G054496, filed 5/7/19), a California appeals court ruled that the California Insurance Commissioner had the authority to impose penalties of $27,593,550 against Mercury Insurance Company for fees charged by brokers issuing its policies, because the brokers were de facto agents of the insurer, and the fees constituted premium in excess of the insurer’s approved rate.

Under insurance regulations, an insurance broker can charge a fee for services, but an agent cannot. (10 Cal. Code Regs., § 2189.3(c).) After Proposition 103 passed in 1988, and following adoption of regulations pursuant to the law, insurers were required to obtain approval of rates, meaning the premium charged. (Ins. Code, §§ 1861.01, et seq.) That was later defined as both direct and indirect costs associated with providing insurance coverage and any profit or additional assessment charged. (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305.)

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


Subrogation, Insurance Code Section 11580, and the Craziness We Call Insurance Law

June 3, 2019
Garret Murai - California Construction Law Blog

If you want to geek out on insurance law the next case is for you. The Insurance Company of the State of Pennsylvania v. American Safety Indemnity Company, 2nd District Court of Appeals, Case No. B283684 (March 1, 2019), is an interesting case involving Insurance Code Section 11580, which in essence provides that if a judgment is entered against an insured (and there is coverage for that insured) the insured may sue the insurance company to pay for the judgment.

However, in this case, the party doing the suing was the insurer of a general contractor that had a judgment entered against it, and the party being sued was the insurer of subcontractor, on subrogation basis.

Mr. Murai may be contacted at gmurai@wendel.com


When Virginia Insurance Brokers Sought to End EMR Misuse

May 27, 2019
Jim Parsons - Engineering News-Record

Virginia is the only state that has solved the EMR misuse problem with a law. Since 2016, the state has prohibited use of a particular EMR as a condition for eligibility to participate in solicitations for construction services, including private construction projects not covered by the state’s public procurement rules. The state’s Dept. of Transportation does gather EMRs from prospective contractors, but they are a small part of the overall safety evaluation.

ENR may be contacted at ENR.com@bnpmedia.com



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