Articles Posted in Claims

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America is facing a reckoning. Many brave individuals have stepped forward over the last several months to speak truth about sexual harassment and assault in workplaces, in entire industries, andiStock-879075804-metoo-300x200 even in Congress. For a very long time, companies dealt with sexual assault and harassment allegations quietly and in backrooms, and these allegations often were not taken seriously. However, thanks to the turning tide, more companies are reexamining their internal policies, encouraging change in corporate culture, and addressing sexual assault, harassment, and discrimination claims more directly. As part of this effort, companies should also look at their corporate insurance programs to confirm insurance is in place should any such claim arise.

Only about 41 percent of companies with more than 1,000 workers report having some kind of insurance plan to cover sexual harassment and discrimination, and only about 33 percent of companies with at least 500 employees carry any insurance coverage for claims resulting from sexual harassment or assault. The numbers are even starker for startup companies, with only three percent of companies with fewer than 50 employees carrying such coverage. Therefore, while more and more companies are instituting anti-sexual harassment and anti-discrimination policies, many companies remain ill-prepared to handle the inevitable challenges that await individuals, executives, and companies alike, as a result of this watershed moment in American culture.

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Third-party intervention may now prove unnecessary when interpreting and enforcing contract provisions—at least this is what proponents of smart contracts believe. The overall goal, they argue, is iStock-484198042-smart-contracts-300x225to provide security unattainable through traditional contract law, and to reduce additional transaction costs that come with the traditional process. Will insurance policies become the laboratory to test their thesis?

First imagined by computer scientist Nick Szabo in 1996, smart contracts are computer protocols meant to facilitate a contract’s implementation and performance. They can carry out only the specific instructions given to them, and all transactions are traceable and irreversible. Regarding functionality, experts have likened smart contracts to a vending machine; contract terms are first coded and placed within the block of a blockchain (the same technology Bitcoin uses). Once the triggering event occurs, the contract is performed consistent with all designated terms. Continuing the analogy, the individual inserting money in the vending machine sets off a chain of events, unable to be undone or halted midway. (Granted, this last part isn’t like the traditional vending machines we know.) The machine keeps the money and dispenses the item. The contract has been fully performed.

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In the aftermath of events like 2017’s hurricanes, especially for companies that were impacted multiple times, there are usually more things in need of attention than there is attention to go around.iStock-151562870-300x225 Reviewing insurance policies is one—but still only one—of those things. In the initial stages of dealing with these kinds of events, it is natural to focus on big-picture policy items like limits, deductibles, coverages and exclusions. Only in the second pass do companies usually focus more closely on the substantive wording of various provisions. In undertaking this second (or third or fourth) pass, it is important to zero in on the exact words of the policy to avoid overlooking details that may make all the difference as to whether coverage exists or not.

Here are some examples that are likely to come up in the wake of storms like Harvey, Irma, Maria and Nate.

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An unexpected or catastrophic loss can force any company out of business, even if it is insured.  You must understand your company’s risks and how your insurance policies cover those risks in order to manage them and maintain stability.

Having the correct insurance in place is only the first step. Property and business interruption insurance policies are often complex, and your suppliers, customers and other business partners’ insurance situation may have a direct impact on you as well.  Even if your business doesn’t suffer any direct physical damage to its facilities following a natural disaster or other loss, your customers or suppliers may have, and that could result in what is known as a “supply chain” or “contingent business interruption” loss of revenue and sales.  If you are unprepared when a disaster strikes, you may miss out on substantial amounts of insurance coverage to which you may be entitled.  The time to prepare is before a disaster occurs.  Take the time now to understand your insurance coverage and other risk transfer methods and opportunities.  Know your rights.  And put a plan in place to protect yourself, your employees, and your property before the loss occurs.  Then, if disaster strikes, you’ll be in a better position to make it through and to access your insurance coverage to help restore operations.

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As the powerful storm that is Hurricane Harvey looms in the Gulf of Mexico, Houston attorneys Vince Morgan and Tamara Bruno discuss what businesses and other organizations in the affected area should do immediately in order to maximize insurance recovery.

Key Takeaways:

  • Category 3 Hurricane Harvey is projected to have sustained winds of 120 m.p.h. and disastrous amounts of rain, with a possible storm surge.
  • Business interruptions are already happening in advance of Harvey’s landfall.
  • Policyholders should take key steps to maintain and maximize insurance coverage for Harvey-related losses.
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Fashion is sexy; insurance is not. So it’s easy to think of the two separately. But there are many points of intersection. Some of those intersections are not industry-specific: iStock-511438211-fashion-insurance-300x200like other industries, fashion—design houses, retailers, textile manufacturers, modeling agencies—carries property, D&O, cyber, and many other lines of insurance. But unique aspects of the fashion world, and recent litigation trends affecting it, underscore the importance for the fashion industry to understand insurance in order to maximize successful recovery of insurance assets. Here, we comment briefly on three areas: IP, employment, and antitrust.

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Imagine you are a prime contractor to a Department of the United States of America supplying logistical support for the war on terrorism in Afghanistan. As the prime, you are kicking on all cylinders, including purchasing comprehensive Employer’s Liability, Workers’ Compensation and Defense Base Act (DBA) insurance to cover your own employees against a worker injury claim abroad.

Then the phone rings.

iStock-187940286-falling-ladder-300x224A 30-year-old American worker hired by your subcontractor working on base encountered a swarm of bees while painting; he fell and was crippled. The sub isn’t paying his medical expenses and is apparently nowhere to be found. The injured employee’s bulldog lawyer is on the line threatening to sue your company directly for his client’s devastating injuries.

How can this be?

DBA coverage is workers’ compensation insurance that employers may turn to in the event that an employee is injured while working on a contract financed by the U.S. Government and performed outside the United States. Section 5(a) of the Act provides that “a contractor shall be deemed the employer of a subcontractor’s employees if the subcontractor fails to secure the payment of compensation.”

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A few weeks back, we told you how South Carolina May No Longer Hold Insurers’ Reservations. In that post we left you with a teaser: “There’s more to this case.”iStock-537435705-burden-200x300

In fact, Harleysville Group Insurance v. Heritage Communities, Inc. does more than just take insurers to task with regard to their vague reservations of rights. Reaffirming that, in a case involving both covered and excluded losses, the insurer bears the burden of proving which damages are excluded from coverage, Harleysville shows how easily an insurer can find itself in a bind when trying to prove “no coverage” at the same time and in the same proceedings that it is providing a defense for its insured.

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When an insurance company pays a claim by its insured, the insurance company acquires a legal right to pursue a so-called “subrogation” claim against another party who may be responsible for the damage. The insurance company “stands in the shoes” of its insured to seek damages from whoever caused the loss. Typically, construction contracts include a “waiver of subrogation” clause that limits the right of the insurer to file a subrogation action against another participant in the construction project.

businesman facing a challenge

These waiver of subrogation clauses are good public policy and generally benefit all project participants insofar as they (1) avoid excessive finger pointing among parties who are involved in an ongoing commercial relationship (and thereby encourage immediate repairs in lieu of a lawsuit) and (2) are economically efficient because only one party needs to value and insure the risk.

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Spring is upon us, which means the return of baseball. It seems only fitting that with a new season of America’s pastime just underway, we discuss another area where the performance in the lead-off position can be vital: leading off the claims process by providing notice to your insurer.

FEBRUARY 26, 2010: Cal State Fullerton gymnastics at in Fullerton, CA. Photo by Matt BrownSay your company’s just been sued, received a demand letter, suffered massive property damage, or incurred some other type of substantial loss. If your routine practice in these high-stress situations is to consider potentially applicable insurance, you’re ahead of the curve and should pat yourself on the back. Because too often, even if understandably, insurance is an afterthought to companies in the midst of a crisis. Unfortunately, in such situations, when a company does get around to making an insurance claim, the insurer commonly denies coverage on the basis of late notice.

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