A federal court in Florida recently adopted the now well-developed consensus that data breach losses are not covered under standard Commercial General Liability (CGL) policies. As the Department of Homeland Security’s officially designated 15th annual Cybersecurity Awareness Month comes to a close, the case stands as yet another stark warning that companies of all sizes – any company that uses, collects, stores or handles confidential personal information such as credit ... Keep Reading »
About John C. Pitblado
Sixth Circuit Weighs in on Coverage for Marijuana-related Property Loss
The Sixth Circuit Court of Appeals issued a colorful opinion in a property insurance coverage dispute affirming a denial of coverage for loss arising out of an illicit marijuana growing operation in Michigan. The case is captioned K.V.G. Properties Inc. v. Westfield Ins. Co., No. 17-2421 (6th Cir. Aug. 21, 2018). The insured was the lessor of commercial properties, including a property leased to certain tenants who, unbeknownst to the lessor, built a large-scale ... Keep Reading »
New Opinions From Second and Sixth Circuit Courts Rock Phishing Loss Coverage Landscape
On July 6, the Second Circuit Court of Appeals set off some fireworks in the insurance coverage litigation field when it found coverage for a “social engineering”/phishing scheme loss, bucking the trend among its sister courts. The appellate court affirmed a Southern District of New York decision that had been a relative outlier, finding coverage under a crime/fidelity policy for a scheme where fraudsters used spoof emails to trick company employees into changing wiring ... Keep Reading »
Eleventh Circuit Affirms No Coverage Under Computer Fraud Provision of Insurance Policy
On May 10, the U.S. Court of Appeals for the Eleventh Circuit affirmed the decision of the U.S. District Court for the Northern District of Georgia in InComm Holdings, Inc. v. Great American Insurance Company. The Eleventh Circuit agreed that Great American’s computer fraud coverage did not apply to holders of prepaid debit cards who exploited a coding error in the insured’s computer system and fraudulently increased the balances on the cards which caused InComm to incur ... Keep Reading »
Fidelity Coverage for Social Engineering Scams: The Ninth Circuit Upholds an Authorized Use Exclusion
Losses from social engineering schemes continue to grow exponentially. According to FBI data published in early 2017, losses from these schemes totaled over $3 billion between 2013, when the FBI started tracking data, and the end of 2016. One recent estimate suggests projected growth to over $9 billion in 2018 alone. The problem is not going away; it's getting much, much worse. Under these schemes, perpetrators trick company employees into believing that they have ... Keep Reading »
First Circuit: The Best Offense Is a Good Defense?
In Mount Vernon Fire Ins. Co. v. VisionAid, Inc., No. 15-1351P2-01A (1st Cir. Nov. 15, 2017), the First Circuit Court of Appeals ended long-running insurance coverage litigation arising from policyholder VisionAid, Inc.’s termination of a former vice president, Gary Sullivan. Sullivan sued his former employer, alleging age discrimination. VisionAid tendered the claim to its employment practices liability insurer, Mount Vernon Fire Insurance Company. Mount Vernon ... Keep Reading »
War: What is it good for? Business Loss and the War Exclusion
In summer 2014, Israel and Hamas were engaged in armed conflict. Thousands of residents of Gaza and Israel were killed or injured, and much of Gaza City was destroyed by rocket fire and other heavy weapons. The Israeli Defense Force dispatched tens of thousands of ground troops to the area, and international attention from the United Nations and other interested parties, including the United States, focused on the “conflict.” But was it a “war?” The United States has ... Keep Reading »
Texas Appeals Court affirms Class Certification in Case Alleging Roofer Violated Insurance Code
Texas homeowners Joe and Stacci Key sued their roofer, Lon Smith Roofing Contractors (“LSRC”), alleging LSRC violated the Texas Insurance Code by acting as an unlicensed public insurance adjustor. The trial court granted class certification, and LSRC sought interlocutory review. The Texas Court of Appeals affirmed in a case captioned Lon Smith & Assocs., Inc. v. Key, No. 02-15-00328-CV (Tex. Ct. App. Aug. 3, 2017). When it Hails… The Keys retained LSRC to make ... Keep Reading »
District Courts Buck Trend on Fidelity Coverage for Social Engineering and Business Email Compromise Schemes
The FBI continues to warn that losses are on the rise from business email compromise (BEC) or “social engineering” schemes, which the Bureau describes as: Carried out by transnational criminal organizations that employ lawyers, linguists, hackers, and social engineers, BEC can take a variety of forms. But in just about every case, the scammers target employees with access to company finances and trick them into making wire transfers to bank accounts thought to belong to ... Keep Reading »
Connecticut Appellate Court Addresses Trigger, Allocation, Exclusions, and Other Issues of First Impression in Coverage Litigation Over Long-Latency Asbestos Injury Cases
Connecticut’s intermediate appellate court addressed a number of novel issues in a wide-ranging opinion regarding primary and excess insurers’ respective duties to defend and indemnify their common insured for long-tail asbestos-related injury claims. The opinion was rendered unanimously and authored collectively by the three-judge panel of Robert Beach, Douglas Lavine, and Stuart Bear (ret.). The case, styled R.T. Vanderbilt Company, Inc. v. Hartford Accident and ... Keep Reading »
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