Policyholder Pulse
On July 13, 2022, the California Second District Court of Appeal issued a published decision reversing a trial court’s dismissal of a policyholder’s COVID-19 coverage claim. In Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund Insurance Company, the Court took two remarkable steps in the context of nationwide COVID-19 litigation. First, the Court recognized that courts must accept as true properly alleged facts when deciding a pleading challenge. Second, the Court did not merely recite the long-established rules of construction for insurance policies that apply in California and most states; rather, it followed those rules by engaging with the actual policy language.
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A key component of a company’s risk management function is to keep a close eye on new and developing sources of liability and to put in place appropriate insurance to respond in the event those liabilities ripen. In recent years, there has been a significant increase in legal and regulatory attention on per- and polyfluoroalkyl substances, more commonly known as “PFAS” or “forever chemicals.” PFAS are used in countless applications, and many companies across the country bear potential liability, from chemical companies to manufacturers to retailers to corporate end users. PFAS-related enforcement is focused on remedying impacts to both the environment and human health. Importantly, a company’s liability for PFAS-related contamination or bodily injury may be covered under historic general liability policies and/or modern-day pollution liability policies. As regulation and litigation relating to these ubiquitous substances continues to surge, corporate policyholders with potential exposure should be proactive to examine their insurance portfolios and position themselves for potential insurance coverage in the event they become a PFAS liability target.
For both good and ill, the COVID-19 pandemic has altered every facet of personal and professional life. For example, many employees have enjoyed unprecedented freedom to work remotely. However, with vaccines becoming more readily available, the time is soon approaching when people will return to their offices and places of work. With this return comes the potential for workplace-related disputes and, in their aftermath, claims for insurance coverage for the actions of employees, such as sexual harassment.
Location matters. Some states are more protective of policyholder or consumer interests than others. And so, where the case is ultimately litigated, and what law applies, can have profound implications for a policyholder’s recovery.
Insurers generally have a statutory duty to provide a legitimate factual and legal basis to deny a claim, and to discharge this duty sometimes engage in-house or outside counsel to assist in the investigation and handling of policyholders’ claims for coverage, including ghostwriting coverage correspondence and denials of coverage. The decision to outsource ordinary claims investigation and handling to legal counsel (putting aside that many claims handlers are lawyers) comes at a price. Two recent court rulings highlight that insurers’ decision to use in-house or outside counsel to ghostwrite coverage correspondence can come back to haunt them by waiving any alleged privilege.