Articles Posted in General Liability

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91509892-b-coverage-e1504651099803-199x300Coverage B under traditional Commercial General Liability (CGL) policies may be the least understood coverage that nearly every company carries. Coverage B provides liability protection for claims of Personal and Advertising Injury, such as false arrest, libel or slander, and violation of a person’s right to privacy, among others. Yet with so much recent focus on cyber liability insurance and the protection that these policies can provide for the inadvertent exposure of personal information stored electronically, Coverage B gets little attention. This is mostly deserved, as many CGL policies expressly exclude coverage for the loss or exposure of electronic data, and Coverage B applies in mostly non-traditional circumstances. Nonetheless, it is important to remember that for many claims, particularly those involving non-traditional facts, Coverage B will apply.

Recent events highlight the importance and continued relevance of Coverage B. For example, a recent case in the news involves a health insurer being sued by its insureds for mailing them information regarding HIV medication in transparent envelopes, thereby exposing their identity and the medication they were seeking. The suit alleges that the insurer negligently revealed confidential information and, given the reported facts, should trigger Coverage B (as well as other coverages).

Coverage B also applies in circumstances beyond improper disclosure of confidential information. In another recent case, a developer was sued by one of its occupying tenants because construction equipment necessary to expand the development blocked the ingress and egress to the tenant’s property. The CGL insurer initially denied the developer’s request for defense, contending that there were no allegations of “personal injury” or “property damage” necessary to trigger Coverage A. The insured correctly responded that the claims brought against it included “invasion of the right to private occupancy,” thereby triggering the duty to defend under Coverage B. Upon further consideration, the CGL insurer agreed and provided the insured with a defense. The duty to defend one claim is the duty to defend all.

In another case, a general contractor working in a war zone was sued by one of its subcontractors for unpaid contract balance. In addition to seeking payment of the alleged outstanding balance, the subcontractor claimed that it was held against its will for a period of an hour by a group of armed mercenaries working on behalf of the general contractor. This allegation, although wholly unrelated to the underlying dispute of unpaid fees, was sufficient to trigger Coverage B under the general contractor’s CGL policy, providing the general contractor with defense and indemnity.

In short, Coverage B applies in many non-traditional circumstances (as well as more traditional ones), and should always be considered by companies when facing liability for claims other than “personal injury” or “property damage.”

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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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In two posts earlier this year—South Carolina May No Longer Hold Insurers’ Reservations and The Insurer’s Mixed-Coverage Burden—we told you about an important decision issued by the South Carolina Supreme Court in Harleysville Group Insurance v. Heritage Communities, Inc. Those posts were written shortly after the court issued its original opinion on January 11, 2017. But on July 26, 2017, the court issued a new opinion replacing the original. So what has changed? Not much … and that’s a good thing for policyholders.iStock-817281638-update-300x232

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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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The Flint, Mich., water crisis returned to the news recently as criminal charges were brought against additional government employees resulting from the crisis. Meanwhile, a federal court in iStock-172241371-drain-200x300Pennsylvania recently issued a ruling in an insurance case that, like Flint, related to alleged contamination in drinking water stemming from corroded pipes. The decision rejects two insurers’ attempts to avoid coverage and serves as a good reminder of some fundamental insurance law principles—the duty to defend is broad, ambiguous policy language usually is construed against the insurer, and policies should be interpreted in favor of their purpose to provide coverage. It is also a reminder that the pollution exclusion is not nearly as all-encompassing as insurers like to think it is.

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Say you want to make a reservation for a nice dinner. Do you call the restaurant and simply say you plan to come sometime in the next two weeks? Of course not. If you want your reservation to doiStock-516720550-reservations-200x300 any good, you give the restaurant a date, time, and number of people. So why should insurers be able to issue reservations of rights where they quote half the policy and say they may deny coverage at some time, based on some unspecified provision? The South Carolina Supreme Court was presented with that question and decided that insurers need to provide greater specificity or risk losing their reservations completely.

 

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Texas is not a place known for surrendering. (Remember the Alamo!). But like their compatriots in other states, Texas policyholders sometimes see the advantage of surrendering their liability iStock-522384399-alamo-300x200insurance policy rights to their litigation adversaries in order to retreat from the dispute. Whether they may have to stand and fight first is a question that the Texas Supreme Court may finally answer in Great American Ins. Co. v. Hamel. In that case, the Texas Supreme Court has agreed to review whether an insurer may be responsible for a judgment entered against its insured that is the result of a non-adversarial trial. This will be an important decision that will have significant repercussions for insureds and insurers alike.

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We’ve come a long way since the days of Timothy Leary—both in terms of marijuana legalization, and in the diversity of business insurance products that have reached the market to insure marijuana-related risks. As of this blog post, more than 20 states have legalized marijuana for medical use, including eight states that have also legalized it recreationally. At the federal level, however, marijuana continues to be a Schedule I controlled substance, making it illegal for any purpose. Whether and to what extent the federal prohibition will be enforced by the Trump administration is not yet known. As the legal marijuana industry continues to grow apace, industry participants would do well to consider the insurance products available to them and potential pitfalls for the unwary.

Hand Holding Small Marijuana Leaf with Cannabis Plants in Background

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Pennsylvania policyholders need to keep their eyes on the details when it comes to defending faulty workmanship claims. What you see—or think you see—is not always what you get. In Bealer v Nationwide Mutual Insurance Company, the U.S. District Court for the Eastern District of Pennsylvania held on November 16, 2016 that an insurance company did not have a duty to defend its policyholder after determining that the claims assertedMonochrome portrait of senior man peering through magnifying glass, grimacing in the underlying litigation were for faulty workmanship and did not constitute an “occurrence.” But other Pennsylvania decisions provide opportunities to find coverage for policyholders who might be in similar situations.

William Tierney entered into a contract with Robert Bealer for the purchase of a lot and construction of a residence. About six months after Tierney moved in, a rainstorm flooded the basement of his home—after which he noticed cracks on several foundation walls, and then brought suit against Bealer.

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The failure to include and/or accurately describe property locations is among the most common points of tension we see in litigation over wide-area catastrophe loss issues (earthquakes, floods, hurricanes) between the insured and its property insurance carriers. However, many first-party property policies offer devices to ensure that the policyholder is properly protected. When coverage for a location becomes disputed, the policyholder can put pressure on the carrier by resorting to “gap-filler” endorsements that are widely available, if underutilized.

Mind the gap sign

The insurance company may have prospectively protected itself the day your policy went into effect by adding an “occurrence limit of liability” endorsement. This clever insurance carrier device, which has become common in the last decade, is intended to limit the carrier’s exposure at each particular location, placing the onus on the insured to put every “location” on a master list with correctly reported values for each category of exposure (e.g., business interruption, property damage, contents exposure, etc.).

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