Second Circuit Reverses Judgment for Cedent and Finds Reinsurer Not Liable for Asbestos Losses

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In a significant reversal of a judgment for a cedent after a jury verdict, the Second Circuit Court of Appeals has held in favor of the reinsurer in an important follow-the-settlements case.  The court agreed with the reinsurer that, as a matter of law, it was not obligated to the cedent because the losses did not exceed the attachment points for the reinsured umbrella policies.

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COVID-19 Insurance-Related Blogs and Articles for March and April 2020

During March and April, the Squire Patton Boggs insurance group has authored several blog posts, alerts and articles on the insurance and reinsurance issues arising from the novel coronavirus pandemic.  These range from regulatory updates, to business interruption coverage analysis, to reinsurance issues.  We thought it might be good to list them here in one blog post for easy reference.  We hope that these have been of value to you as you consider the various insurance issues arising from the pandemic.

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Does the Novel Coronavirus Cause Direct Physical Loss of or Damage to Property?

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In previous blog posts and articles, we have discussed “business interruption” insurance and the typical requirement that there be “direct physical loss of or damage to property” for that coverage potentially to apply.  In this blog post, we examine the physical damage trigger further.  Why?  Because it is a central issue in the rapidly multiplying court proceedings brought throughout the country by policyholders seeking coverage for COVID-19-related business interruption.

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Fighting State COVID-19-Related Insurance Coverage Mandates

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The novel conronavirus pandemic and the massive number of COVID-19 diagnoses have led to governmental orders closing down most non-essential businesses throughout the country.  These closures have also brought about thousands of business interruption claims by these businesses against their commercial property insurance policies.  Because most of these policies do not provide coverage for a global pandemic—resulting in coverage denials—a number of states have proposed legislation requiring that insurers provide retroactive business interruption coverage, ignoring clear policy language requiring direct physical loss or or damage to property, virus exclusions, and recognition that no premium was collected to pay for claims arising out of a global pandemic.

Should any of these bills become law, it is clear that the insurance industry will bring actions to enjoin these laws on a wide variety of grounds.  In an Expert Analysis for Law360, we discuss some of the issues that may arise should any of these bills pass and challenges are brought.  You can also find our analysis on the Squire Patton Boggs website here.

The COVID-19 DJ Wars Are Escalating

For several weeks we have seen straightforward declaratory judgment actions filed by policyholders seeking coverage for COVID-19 business interruption-type losses.  As time went on, new cases were filed by policyholders alleging bad faith and violations of claims handling and other consumer statutes along with the request for declaratory relief.  Those cases were followed by putative class actions filed against insurance companies asking for similar relief for themselves and others.  Just recently, a petition was filed by policyholders with the federal multi-district panel to bring all COVID-19 business interruption actions before a single judge the Eastern District of Pennsylvania.  This is all happening with the backdrop of state and federal legislative efforts to address business interruption coverage, some of which would, if enacted, cause severe disruption to the insurance industry and very possibility numerous insolvencies.  Now the next shoe has dropped.

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No Coverage for Telemarketing Litigation Under Commercial Umbrella Policies

Lawsuits brought against satellite and other television broadcasters for telemarketing violations typically spark requests for insurance coverage to defend and ultimately indemnify the broadcaster in those lawsuits.  More often than not, the request for coverage ends up in litigation over whether the insurance policy covers the allegations in the underlying lawsuit.  A Colorado federal court recently addressed this issue and granted summary judgment to the insurer.

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Is a Failure-to-Accommodate Discrimination Claim an Occurrence for Duty to Defend Purposes?

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General liability policies insure against fortuitous events, otherwise known as accidents or occurrences.  Intentional acts generally are not covered except under limited circumstances.  But what about discrimination claims?  Is a discrimination claim an occurrence under a general liability policy?  The Second Circuit recently had that question and, instead, decided to certify the question to to the New York Court of Appeals.

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Breakaway Church Denied Coverage Under Directors and Officers Policy of Original Congregation

To obtain insurance coverage, you have to be an insured under the insurance policy. Pretty fundamental.  Successor and affiliate rights to coverage under the existing insurance policy is a big issue.  Determining who is an insured is fundamental to coverage.  In a recent case, the First Circuit had to decide whether a new church, which was formed out of members of an existing church, was covered under the directors and officers liability policy issued to the existing church, when the new church was sued by the original church. Continue Reading

Sixth Circuit Holds Insurers Have Duty to Defend City in Malicious Prosecution Action

Many municipalities protect their police force by purchasing insurance for law enforcement liability.  This coverage protects the municipality against law suits seeking damages for injuries resulting from law enforcement activities or operations caused by a wrongful act that is commented while conducting law enforcement activities.  Just exactly what is an injury that triggers coverage was addressed recently by the Sixth Circuit.

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Final Arbitration Award Including Attorney Fees Confirmed

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Awards of attorney fees are few and far between in reinsurance arbitrations, but they happen.  When they happen, the losing side sometimes seeks to vacate the award based on the arbitrators exceeding their powers in awarding attorney fees.  In a recent case, the court had to decide whether to confirm or vacate an award with attorney fees.

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