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 »
Defining ‘Logical Connection’: NC Federal Court Tackles ‘Related Claims’
Insurance carriers and policyholders often argue about the scope of policy provisions. Generally, policyholders take an expansive view of insuring agreements, while carriers often construe them more narrowly. But not all coverage arguments follow these familiar lines. Take, for instance, the “related claims” debate. Most third-party liability policies contain aggregation language. Such policies deem “related claims” to be a single claim “first made” when the first ... Keep Reading »
To Defend or Not to Defend? Northern District of Ohio Provides Guidance for Determining Whether to Defend an Arbitration
While the rules for determining whether a liability insurer has a duty to defend a lawsuit are generally well-known, questions can arise when an insurer is asked to defend an arbitration. For example, can an insurer’s duty to defend be determined by looking solely at the initial request for arbitration even if that document is not required to fully clarify the claims asserted and damages sought? According to the Northern District of Ohio’s decision in Maxum Indemnity ... Keep Reading »
The Sentinel Strike: The Hartford’s Gift to New York Insurers in the War to Stop Policyholder Experts from Claiming Ambiguities Exist in Clear Policy Exclusions
In this age of exponentially increasing technology, we can rely on one certainty in property casualty jurisprudence – that is, bold policyholder assertions supported by even bolder “expert” opinions. In BF Advance, LLC v. Sentinel Insurance Company, No. 16-cv-5931 (E.D.N.Y. Mar. 20, 2018), decided in New York federal court this past March, the policyholder argued that a CGL policy’s Software Exclusion does not apply to injuries caused by software, and hired an insurance ... Keep Reading »
Eleventh Circuit Applies Realignment Doctrine to Undo Years of Coverage Litigation Between Primary and Excess Insurers
In St. Paul Fire and Marine Insurance Co. v. National Union Fire Insurance Co. of Pittsburgh, PA, No. 16-12015 (11th Cir. May 29, 2018), a battle between excess and primary carriers, the Eleventh Circuit applied the so-called “realignment doctrine” to long-running coverage litigation and held that the district court never had jurisdiction over the matter in the first place. The underlying dispute arose out of several explosions at an Imperial Sugar Co. refinery in ... Keep Reading »
An Expert Is Only as Good as His Actual Experience
Experts are often used to address issues of causation and scope of damages in insurance coverage matters. It is well established, however, that an expert must be qualified through specific training or actual experience. Without such training or experience, a purported expert’s affidavit may not be sufficient to create an issue of material fact sufficient to defeat summary judgment. Such was the lesson in Superhost v Selective Ins (NY App 2018-04-12), Case No. 525034 (NY ... 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 »
New York’s Highest Court Rejects ‘Unavailability of Insurance Exception’ Under ‘Pro Rata Time on the Risk Allocation’
On March 27, the New York Court of Appeals unanimously ruled that under a “pro rata time on the risk allocation,” insurers are not liable for years outside their policy periods when there was no insurance available to the insured in the marketplace. See KeySpan Gas East Corp. v. Munich Re. Am., Inc., 2018 N.Y. Slip Op. 02116 (N.Y. Mar. 27, 2018). The decision is a significant victory for insurers faced with long-tail environmental claims, and may also lend support to ... Keep Reading »
Drawing a Line in the Sand: The Second Circuit Tries to Define Where D&O Coverage Ends and E&O Coverage Begins
Policyholders often obtain both errors and omissions (E&O) and directors and officers (D&O) liability insurance policies because they provide complementary coverage. E&O policies provide coverage for claims for wrongful acts arising from the provision of "professional services," and while D&O policies also provide coverage for claims for wrongful acts, they often exclude coverage for such claims arising from the provision of professional services. Despite ... Keep Reading »
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