It is axiomatic that in order to obtain insurance coverage a policyholder must first establish that a claim falls within a policy’s insuring agreement before coverage under the policy is triggered. For construction claims brought under CGL policies, that frequently means showing that the damages at issue constitute “property damage” caused by an “occurrence” (where “occurrence” is generally defined as “an accident”). While this requirement may often seem like a simple factual question, in the context of a subcontractor’s faulty workmanship, the analysis has proven more difficult. Where alleged faulty work causes damage only to the insured’s own work product, is the property damage accidental?
Artificial Intelligence (AI) is a hot topic in industries from manufacturing to the medical profession. Developments in the last ten years have delivered AI technology, once a fiction reserved for the movies, to private corporations and even to everyday homes. Examples include:
- 2004 Defense Advanced Research Projects Agency (DARPA) sponsors a driverless car grand challenge. Technology developed by the participants eventually allows Google to develop a driverless automobile and modify existing transportation laws.
- 2005 Honda’s ASIMO humanoid robot can walk as fast as a human, delivering trays to customers in a restaurant setting. The same technology is now used in military robots.
- 2011 IBM’s Watson wins Jeopardy against top human champions. It is training to provide medical advice to doctors. It can master any domain of knowledge.
- 2012 Google releases its Knowledge Graph, a semantic search knowledge base, likely to be the first step toward true artificial intelligence.
- 2013 BRAIN initiative aimed at reverse engineering the human brain receives $3 billion in funding by the White House, following an earlier billion euro European initiative to accomplish the same.
- 2014 Chatbot convinced 33% of the judges it was human and by doing so passed a restricted version of a Turing Test.
As the adage goes, don’t make a promise you cannot keep. An insurance policy, like any other contract, involves a commitment from both sides. For third-party liability policies, an insurer typically commits to a broad duty to defend the policyholder against any suits alleging claims that have a potential for coverage under the insurance policy. However, when a claim arises, insurers have a financial interest in trying to get off the hook. At times, policyholders need to turn to the courts for help reeling insurers in and forcing them to follow through with their commitments.
Recently, in Hanover Insurance Company v. Paul M. Zagaris, Inc., the Ninth Circuit ruled that an insurer had to defend its insured, a real estate brokerage firm, in a proposed class action suit because there was a potential for coverage for at least one of the alleged claims. The plaintiffs alleged that the real estate brokerage firm had received undisclosed kickbacks from the sale of natural-hazard disclosure reports to its clients. Specifically, they claimed that the firm breached its fiduciary duties, deceived its clients by omission, engaged in constructive fraud, and was unjustly enriched, among other things.
A critical step in a property insurance claim is the investigation undertaken by the insurer to gather information about the claim. Insurers generally have obligations and rights to conduct a prompt investigation of claimed losses, but policyholders often do not fully understand the investigation process or coverage issues it raises. They may not review the policy requirements to understand their obligations with respect to the claims process. This post addresses insurance coverage considerations when the insurer wishes to investigate your claim for loss under a property policy.
Of course, you can’t change the unfortunate fact that you’re facing a loss, but there are certain steps that you can take before, during and after an investigation to put yourself in the best possible position for coverage under your policy.
Regular readers of the Policyholder Pulse know that we often frame coverage issues with a lighthearted or (hopefully) humorous theme, but there’s nothing funny about the opioid crisis that continues to devastate lives and communities across the United States. The extent and impact of opioid addiction are being examined and explained by experts in the field, and we aren’t trying to tackle that subject on an insurance blog. Instead, this post outlines the expanding breadth of opioid liability claims at every level of the industry, and insurance coverage considerations raised by these claims.
In a previous blog post we discussed a New York trial court decision in which the court granted additional insured status to entities that did not contract with the named insured, but were referenced by category in the named insured’s subcontract. But before concluding you’ve got additional insurance, there’s another opinion you should know about. Around the same time, the U.S. Court of Appeals for the Second Circuit came to the opposite conclusion holding that an Additional Insured endorsement did not cover the University of Rochester Medical Center, even though the subcontract specifically provided that the University would be an additional insured, and Harleysville Insurance Co. therefore had no obligation to defend or indemnify it in a suit filed by an injured construction worker.
As James Taylor might say, I’ve seen fire and I’ve seen rain, but will my insurance cover the damage? California has certainly seen plenty of fire and rain. In the aftermath of the state’s most recent devastating events, damages are estimated to top $5 billion. As Californians file insurance claims to cover their losses, coverage for flooding and mudslide damage has come into focus.
Most states apply the rule of contra proferentem, resolving ambiguous policy language against the insurer and in favor of coverage. Insurers, after all, have control over their policy language and it is their responsibility to ensure the language is clear. Some states require the use of extrinsic evidence before resolving ambiguous language in favor of the policyholder, and many consider the reasonable expectations of the parties in interpreting policy language.
Arizona courts have applied a variant of contra proferentem. They first view the language from the standpoint of the average layman untrained in insurance. If the language can be interpreted in more than one way, courts will attempt to determine its meaning by examining (1) the language of the provision, (2) the purpose of the transaction, and (3) public policy considerations. If after that analysis the provision language is still ambiguous, the courts will construe the language in favor of coverage.
Living a life in 0.1 hour increments! Most law firm lawyers begrudgingly accept the necessity of meticulously counting their time, and most in-house lawyers are relieved when they no longer have to think about their days six minutes at a time. But as more in-house legal departments take on their company’s own defense, they are well advised to have time-keeping programs and procedures in place to recover the maximum amount from the insurance companies that have accepted a duty to defend or agreed to indemnify the company for defense costs.
The stopwatch is running. Companies are scrambling to figure out how the EU’s General Data Protection Regulation (GDPR)—due to go into effect on May 25, 2018—will affect how they do business. Uncertainty and speculation abound; no one knows exactly how the law will be enforced, particularly with respect to companies domiciled outside the EU, with no EU footprint, who process and hold the personal data of EU residents. But while publications are awash with advice regarding compliance, few tackle the question whether your business is protected against loss in the event of a data breach or other unintentional failure to comply. We strongly suggest that your due diligence include a review of your insurance coverage for GDPR non-compliance, especially for fines, penalties and lawsuits (individual or class action). Qualified coverage counsel should assist in the review, but key areas of focus include:
Coverage for Costs of Compliance
Many costs that companies will incur to comply with GDPR simply will not be covered by any insurance. Insurance is designed to respond to fortuitous loss or liability, not ordinary costs of doing business. Thus, for example, coverage likely is unavailable for expenses to adopt and implement data security measures, maintain required records, respond to individuals’ requests to access or delete their data, or hire a Data Protection Officer.