A Maryland federal court recently weighed in on the still-murky world of insurance coverage for cybersecurity losses, finding replacement costs necessitated by a ransomware attack were “direct physical loss or damage” to a computer system within the meaning of a business owner’s policy. Even as insurers continue efforts to develop cyber insurance products, National Ink demonstrates potential exposure to carriers under existing non-cyber ... Keep Reading »
Actual Cash Value/Replacement Cost
Tennessee Supreme Court Holds That Replacement Cost Less Depreciation Does Not Allow for Depreciation of Labor When Calculating Actual Cash Value of a Property Loss
Insurance policies are designed to indemnify an insured by putting the policyholder in the same position he or she would have been in had no loss occurred. In the context of property insurance policies, damaged property is typically valued based on its estimated actual cash value (ACV) if it is not repaired or replaced. In order to calculate ACV, an insurer will often calculate the replacement cost (RCV) based on the cost to repair or replace the property with materials ... Keep Reading »
Oregon Supreme Court Revives Century-Old Statute to Award Attorney’s Fees to Policyholder
The general rule regarding a party’s responsibility for legal fees in U.S. courts, known as the “American Rule,” provides that, barring a contrary contractual obligation or statute, each party is responsible for its own legal fees, regardless of a dispute’s outcome. Although statutory exceptions to this rule are many, the overwhelming majority of those exceptions require that the person receiving a fee award at least be the prevailing party. Not so in Oregon — or at ... Keep Reading »
In Overhead and Profit Class Actions, The Third Trade’s No Longer The Charm
When repairs to a damaged home reach a certain level of complexity, they call for supervision by a general contractor, who receives a percentage of the actual repair costs as "general contractor's overhead and profit" or "GCOP." Under "replacement cost" policies, insurers must pay GCOP for appropriate claims, even if the insured chooses not to use a contractor or elects not to make repairs. In the past, this obligation has been the subject of class action suits, in ... Keep Reading »
Property Insurance Law 101 – A Primer from Texas
On the Fourth of July in 2011, a fire damaged a nightclub in Beaumont, Texas. The fire was not unusual, but the lawsuits it generated—O’Quinn v. General Star Indemnity Company, No. 1:13-CV-471 (E.D. Tex. Aug. 5, 2014), and Debes v. General Star Indemnity Company, No. 09-12-00527 (Tex. Ct. App. July 10, 2014)—review many of the ABCs of property insurance law in the Lone Star State. Everybody Goes to Alibi’s Alibi’s, a nightclub and restaurant, was open nightly from ... Keep Reading »
Louisiana’s Direct Action Statute Does Not Modify Terms of Coverage
"Direct action" statutes permit an injured plaintiff to sue an insurer for coverage under someone else’s policy—the liability insurance policy of the tortfeasor who caused the injury. They have been enacted in only a minority of states, because they abrogate the common law, which bars suits by plaintiffs who are not in privity with the insurer. Louisiana’s statute, which dates from 1918, was one of the earliest. It expresses the long-held policy of the Bayou State ... Keep Reading »