Hastings Mutual Insurance Co. v. Mengel Dairy Farms LLC arose out of a dispute over coverage between two commercial dairy farmers who manage and care for more than 1,000 cows across farms in Pennsylvania and Ohio, and their business interruption insurer, Hastings Mutual Insurance Co., which insured the farmers' cows against a number of unlikely events - including accidental shooting, attack by wild animals, and - most relevant here - electrocution. In 2018, the ... Keep Reading »
Ninth Circuit Finds Refusal to Accept a Demand, Without More, Is Not a “Claim” Under Policy
On April 9, 2021, the Ninth Circuit Court of Appeals affirmed a lower court’s ruling that Starr Surplus Lines Insurance Co. need not provide coverage for Alorica Inc.’s loss from a 2018 phishing attack because the letter received from Alorica regarding the incident did not constitute a “claim” under Starr’s policy. The policy defined a “claim” as a “written demand for monetary or non-monetary relief.” Alorica contended that a letter from Express Scripts to Alorica, ... Keep Reading »
New Jersey Federal Court Holds Virus Exclusion Bars Coverage for Car Dealerships’ COVID-19 Losses; Rejects Public Policy Argument Based on Pending Legislation
We previously described a proposed New Jersey bill that was introduced to the state assembly in March 2020 that would require insurers to cover business interruption losses related to the novel coronavirus pandemic. Almost a year later, the proposed bill has yet to be voted on by the legislature — and the stalled bill is causing significant roadblocks for policyholders who wish to rely on it to escape the application of virus exclusions in property insurance policies to ... Keep Reading »
Louisiana, Pennsylvania, and South Carolina Join in Introducing Legislation That Would Force Insurers to Retroactively Cover COVID-19 Losses
An increasing number of state legislatures have recently introduced measures that would require the insurance industry to bear much of the burden of business interruption and other losses due to the economic downturn brought on by the global COVID-19 pandemic. Louisiana, Pennsylvania, and South Carolina are among the latest states to join in proposing legislation that would require retroactive coverage for business interruption losses related to COVID-19, despite ... Keep Reading »
New York Federal Court Finds Insured’s Failure to Provide Notice of Subpoena Did Not Bar Coverage for Later Lawsuit
Applying New York law, the U.S. District Court for the Southern District of New York held that because a subpoena duces tecum previously issued to the insured by a post-judgment creditor of a non-insured entity was not a "claim" against the insured, the subpoena and a later-filed lawsuit against the insured could not qualify as "related claims" deemed first made when the subpoena was issued. The court also held that the "warranty exclusion" in the application for the ... Keep Reading »
New York Among the Latest States to Propose Legislation That Would Require Insurers to Cover COVID-19 Business Interruption Losses
We previously described here proposed New Jersey legislation that would also compel coverage of business interruption claims based on COVID-19 losses. The New Jersey bill was voted out of the New Jersey Assembly’s Homeland Security and State Preparedness Committee but continues to be the subject of negotiation among insurance industry representatives and the bill’s sponsors. Ohio, Massachusetts, and now New York have since followed New Jersey’s lead, introducing bills ... Keep Reading »
New Jersey Proposes Bill That May Require Insurers to Cover COVID-19 Business Interruption Losses
As the United States faces a surge in confirmed cases of COVID-19, New Jersey is proposing a bill that would require property insurers that cover risks in New Jersey to pay for business interruption losses due to the disease, despite their policies expressly excluding coverage for losses due to viruses or bacteria. The law, which would take effect immediately and be retroactive to March 9, 2020, is aimed at reducing the financial impact of the coronavirus on New Jersey’s ... Keep Reading »
Seventh Circuit Finds “Based Upon or Arising Out of” Language in Contract Exclusion Renders Coverage “Illusory”
In Crum & Forster Specialty Insurance Co. v. DVO, Inc., No. 18-2571 (7th Cir. Sept. 23, 2019), the Seventh Circuit reversed a decision of the U.S. District Court for the Eastern District of Wisconsin, finding that the contractual liability exclusion in an E&O policy containing “based upon or arising out of” language rendered coverage under the policy “illusory” and therefore must be reformed to match the policyholder’s “reasonable expectations.” The appeal ... Keep Reading »
Colorado Federal Court Rejects Attorney-Client Privilege for Communications Between Insurer’s Claims Adjuster and In-House Counsel
In Olsen v. Owners Insurance Co., No. 1:18-cv-01665, 2019 WL 2502201 (D. Colo. June 17, 2019), the U.S. District Court for the District of Colorado found that neither the attorney-client privilege nor the work-product doctrine protected documents containing communications between the insurer's claims adjuster and its in-house counsel, where such documents did not contain legal advice or the insurer's strategy for defending against the civil action. In this case, the ... Keep Reading »
Coverage Issues Relating to Drones Take on New Heights: A California District Court Finds Drone-Related Injury Falls Within Policy’s Aircraft Exclusion
In Philadelphia Indemnity Insurance Co. v. Hollycal Production Inc. et. al., No. 5:18-cv-00768-PA-SP (C.D. Cal. Dec. 7, 2018), a California district court held that Philadelphia Indemnity Insurance Co. was not obligated to defend or indemnify a photography firm whose drone blinded a wedding guest in one eye, finding that the drone-related injury fell within the policy’s aircraft exclusion. Darshan Kamboj, a guest at a California wedding, claimed that she lost sight in ... Keep Reading »