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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.

iStock-535435283-sub-300x200Identifying 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.

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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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In the wake of Hurricanes Harvey and Irma, policyholders can expect insurers to put forward strong objections to some of the most consequential claims asserted by insureds. In a recent client alert, our colleagues Joe Jean, Geoffrey Greeves and Vince Morgan provided insight into business interruption insurance and dealing with the aftermath of wide-impact catastrophes.

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It’s now accepted wisdom that virtually all public company mergers and acquisitions will be challenged with at least one lawsuit—over 95% of them are. A less well-publicized form of challenge—and one that is both fascinating and perplexing for those interested in securities litigation—is the unique creature of Delaware law known as the appraisal proceeding. Under Delaware General Corporation Law §262, shareholders dissenting from a merger on grounds that the share price they’ll receive is inadequate “shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock.” If the court finds that the deal price is lower than fair market value, the acquiring corporation must pay the difference to the dissenting shareholders, plus interest. The court may also award their attorneys’ and experts’ fees, which can be significant. This process has created a cottage industry of “appraisal arbitrage,” in which hedge funds purchase shares in hopes of securing a higher price for those shares through appraisal. Fortunately, D&O insurance might be available to cover the acquired company’s defense and other costs.

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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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Cloudy-300x168Last week, I had the great fortune of going to Cancun with my family. Sun, white sand beaches, amazing Mayan ruins (and traditions) intact. I’m sure you know what it’s like—kids buried in sand, beaming smiles, you relaxing in the sun (perhaps a touch of pink on the shoulders and nose), and an umbrella drink (or two).

Paradise.

And then, with little more than 30 minutes warning, came the rain. And I mean RAIN. Tons of it. Don’t believe me? See for yourself.

That is road, not a river. Those are cars, not boats.

Being in the insurance recovery business, after family concerns my mind immediately started accounting for the losses arising from the storm-related floods. Who was ready for this? Who thought they were ready for this? Who was totally unprepared? And did any of that matter?

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In our previous post, we started answering the question whether specialty cyber policies are likely to respond to two of the top five cyber threats for 2017 identified by Experian Data Breach Resolution in its industry forecast. In this one, we examine the remaining three.

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It’s a jungle out there. Penalties imposed under the Foreign Corrupt Practice Act for bribery charges proliferated like vines in 2016. In the dramatic conclusion of the Brazil-based Operation Car Wash probe, Brazilian construction giant Odebrecht-Braskem agreed to pay U.S., Brazilian and Swiss authorities $3.5 billion for paying bribes to government officials around the world. Teva, the international pharmaceutical company, was revealed to have paid bribes to Russian, Ukrainian and Mexican officials, and would have to pay nearly $500 million in penalties.iStock-512289218-jungle-path-300x200

But while these penalties are eye-catching, the internal investigations that responsible corporations undertake to avoid them can be even more expensive. A thorough internal investigation includes hiring outside attorneys, accountants, experts and consultants and sending them around the globe to probe potential bad acts in a company’s foreign offices. Sometimes, the fees continue to roll in even after settlement, when companies are ordered to pay outside monitors to make sure they are still complying with their FCPA obligations. A company may easily find itself on the receiving end of a multi-million dollar bill.

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No matter the industry, businesses continue to face ever-escalating workers’ comp insurance premiums. In an effort to keep costs down, many companies are turning to an increasingly popular alternative to traditional “guaranteed cost” or “retrospective premium” workers’ comp programs: “large deductible” (LD) policies. LD policies theoretically give businesses greater Chain And Padlock Around Dollar Bundlecontrol over claims exposure and costs while at the same time satisfying regulatory requirements by having an insurance company as the ultimate guarantor of claims payments. But while some businesses may save money with LD policies, they may also find their assets tied up for years unless they challenge some common—and often problematic—terms and conditions of their LD policy programs.

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