Insurers have recently argued that environmental property damage claims for “closure” costs arising out of historic pollution are not covered, because the claimed damages are just “ordinary costs of doing business.” Policyholders should strongly resist denials based on this argument, which is unsupported custom and practice in the insurance industry and contradicts the terms of standard-form third-party liability policies, applicable environmental laws, and insurance law in nearly all jurisdictions.
A little over a month ago, a judge in Franklin County, Ohio, held that Bitcoin—a popular form of cryptocurrency—constitutes covered “property” under the terms of a traditional homeowner’s policy.
In Kimmelman v. Wayne Insurance Group, an insured, James Kimmelman, sought coverage from his personal insurer for a loss of $16,000 in Bitcoin that was purportedly stolen from Kimmelman’s online account. Kimmelman argued that the Bitcoin constituted covered property under his homeowner’s policy. The insurer argued that Kimmelman was only entitled to recover $200 under a policy sublimit for monetary losses.
Imagine your organization has suffered significant property damage and interruption to your business as a result. The cause could be anything—a natural disaster, severe mechanical breakdown or a cyberattack. You notify your property insurance carrier and adjust the claim, submitting calculations of your losses based on the policy’s coverages and other terms. But in response, your carrier only agrees to pay a fraction of the losses, claiming that otherwise your organization would be better off than before the damage—“unjustly enriched”—and that insurance is not meant for gain, but only to put the insured in the position it would have been without the damage.
A recent case in the Fifth Circuit, Certain Underwriters at Lloyd’s of London v. Lowen Valley View, L.L.C., provides a valuable reminder to policyholders of the importance of promptly investigating any event that could cause damage, documenting that damage shortly after it occurs, and putting insurers on notice of the potential claim. Failure to do so could forfeit the insurance available for otherwise covered losses.
Volcanoes, hurricanes, and polar vortexes—oh, my! From the ongoing eruption of the Kilauea volcano in Hawaii, to huge winter storms, massive mudslides, and the unfortunately reliable hurricane season, it seems like natural disasters have been near constant over the past year. In addition to the catastrophic toll these events take on people and communities, the toll on a business can be high. Understanding the full range and implications of your company’s risks, and putting the right coverage in place to protect against those risks, is vital. When a natural disaster strikes, having appropriate levels of property damage, business interruption and contingent business interruption insurance can be three keys to stability.
Insurance agreement language that precludes coverage in CGL policies for “expected or intended” injuries has been analyzed in nearly every jurisdiction, and courts have consistently held that bodily injury or property damage is excluded only if the insurer can demonstrate resulting damage was expected or intended by the insured. In Certain Underwriters at Lloyd’s, London v. Connex Railroad LLC, an insurer-friendly variation of these provisions was called into question in possibly the worst texting and driving scenario imaginable. Still, a California Court of Appeal applying New York law refused to bar coverage.
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.
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.
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.
A critical component of any insurance policy is of course its limit, which is usually the most an insurance company must pay for a loss. But many property insurance policies include “sublimits” that provide a lower limit for particular losses.
Identifying the sublimits in a policy is usually straightforward since they typically appear in a list or chart in the policy’s declarations section. Sublimits generally fall into one of two types: (1) sublimits that apply to particular perils, like flood, Named Storm or earthquake; and (2) sublimits that apply to a type of damage or cost, like debris removal or preservation of property. There are many different perils and costs that a policy may sublimit, and sublimits appear in many types of policies (including, for example, sublimits for coverage for wage and hour claims under an employment liability policy). However, this blog will focus on property policy sublimits. Because many property policies include sublimits that apply to storm-related losses, they may particularly be an issue for companies damaged by hurricanes like 2017’s Harvey, Irma, Jose and Maria.