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As we explained in our introductory post, rapid advancements in artificial intelligence (AI) present multifaceted risks for businesses of all types. The magnitude, fluidity and specificity of these risks underscore why businesses should continually audit their own unique AI risks profiles to best understand and respond to the hazards posed by AI.

Continue Reading The Hunton Policyholder’s Guide to Artificial Intelligence: Artificial Intelligence-Related Securities Exposures Underscore the Importance of Thorough AI Insurance Audits
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New York’s Commercial Division is a sophisticated forum for resolving complex commercial disputes.  The Commercial Division has many advantages over other forums: judges are hand-selected for their experience with commercial cases, discovery procedures are streamlined to save time and money, and dispute resolution is encouraged early and often.  However, the several sets of overlapping rules governing practice in the Commercial Division can intimidate outsiders and trip up the uninformed. 

For those new (and old) to the Commercial Division, the New York Law Journal is publishing a series of articles explaining the fundamentals of Commercial Division practice.  This series is authored by Hunton Andrews Kurth LLP lawyers Kevin V. Small, Joseph J. Saltarelli, and Charlotte E. Leszinske.  Part one of the New York Commercial Division practice series is available to read here.

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Policyholders purchase insurance policies as a safety net, promising financial protection in times of need. However, that safety net can disappear when an insurer rescinds a policy—a devastating consequence for potentially innocent policyholders. We recently published a post following a Fourth Circuit decision addressing this issue. The Ninth Circuit has also addressed this issue, most recently in the decision discussed below.

Continue Reading Policy Rescission: Avoid Relying Solely on the Broker
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Insurance policies usually have cooperation clauses requiring policyholders to work with the insurance company when making a claim. These clauses ensure policyholders actively participate in claims investigations. Failure to cooperate may be a breach of the policy, and the insurer may deny coverage.

Continue Reading Delay and Disorganization ≠ Failure to Cooperate
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Directors and officers (“D&O”) liability insurance policies typically include provisions that aim to treat two or more “related” claims as a single claim, back dating the later claim to the date the original claim was first made. Whether two or more claims are, in fact, “related” frequently leads to coverage disputes since the outcome can have significant coverage implications by shifting claims into or out of a particular policy period. Because policies change from one year to the next and can have different insurers, retentions, limits, sublimits, exclusions, and other terms, questions about relatedness can have an outsized effect on the availability and scope of coverage.

Continue Reading Recent Delaware Coverage Decisions on Relatedness Leaves D&O Claim Uncertainties
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A federal court recently ruled that a carrier must defend its policyholder against a claim involving the treasurer’s erroneous payment to a scammer. The ruling shows that a “wrongful act” under a D&O policy need not be an egregious act of wrongdoing, that coverage may hinge on whether extrinsic evidence can establish coverage, and that breach of contract claims are not always uninsurable as a matter of law.

Continue Reading Treasurer’s Payment Mistake Requires Defense Coverage Under Property Association’s D&O Policy
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We are pleased to announce that counsel Rachel E. Hudgins has been recognized as one of Business Insurance’s 2024 Break Out Award winners. The magazine’s Break Out Awards honor 40 top professionals each year from a competitive field of nominees who have under 15 years’ experience in the insurance and risk management sector and are “on track to be the next leaders in the risk management and property/casualty insurance field.”

Continue Reading Business Insurance Names Rachel Hudgins Among 2024 Break Out Award Winners
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The United States Supreme Court recently held in Great Lakes Ins. SE v. Raiders Retreat Realty Co., LLC, that choice-of-law provisions in maritime contracts, including maritime insurance policies, are presumptively enforceable under federal maritime law. In Great Lakes, a policyholder asserted counterclaims against its insurer under the state law of Pennsylvania, where the insurer had filed a federal-court action seeking a declaration of no coverage, even though the choice-of-law provision in the applicable maritime insurance policy designated New York law. The policyholder argued that Pennsylvania had the greatest interest in the dispute, and that enforcing the New York choice-of-law provision in the policy would contravene Pennsylvania’s fundamental public policy. The district court dismissed the policyholder’s counterclaims, but the Third Circuit reversed. The Supreme Court agreed to hear the case, and we explained here that the Court’s decision could have significant ramifications for insurance-coverage disputes both under maritime insurance policies and more generally if the Court adopted broad rules regarding the enforcement of choice-of-law provisions.  

Continue Reading Supreme Court Sinks Yacht Owner’s Insurance Counterclaim on Choice-of-Law Grounds
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No policyholder wants to hear the word “rescission” in the context of an insurance claim. The reality, however, is that when policyholders complete applications for insurance, they are typically focused on obtaining the best policy terms for the best rate. Nuances about question wording, the breadth of the applicant’s representations or how a court may analyze the insurer’s questions or the policyholder’s answers usually take a back seat to the central importance of placing and renewing coverage at a realistic price. But once a claim is made, insurers look back at applications to assess the accuracy and completeness of all information received during the underwriting process, especially in signed applications. If the insurer discovers a misrepresentation, it can be used to rescind the policy, leaving the insured with no coverage. 

Continue Reading Avoiding Rescission of Insurance Coverage: An Insured’s Worst Nightmare  
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A software company—Zywave, Inc. (“Zywave”)—recently filed a lawsuit in California federal court that may provide rare insight into how courts will resolve representations and warranties (“R&W”) insurance coverage disputes. Zywave purchased a buyer-side R&W policy in connection with its acquisition of an insurance product-distribution software company. Zywave alleged that, post-close, it learned that the seller had knowledge of “serious material performance issues with certain customers that it failed to disclose,” amounting to breaches of various sections of the acquisition agreement. The software company further alleged that if the seller had disclosed the performance issues, the software company would have either walked away from the transaction or paid a lower purchase price.

Continue Reading Recent Suit Filed in California Federal Court May Offer Glimpse Into Adjudicating RWI Disputes