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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
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Directors and Officers (“D&O”) and cyber-related incidents continued to make headlines while ramped up regulatory enforcement and new legislation significantly altered the insurance landscape for both policyholders and insurers. Other noteworthy decisions reinforced the importance of foundational insurance coverage principals. Now that 2023 has wrapped, we highlight and review some of the most significant decisions and insurance developments that will continue to impact the world of insurance in 2024 and beyond.

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The Washington Supreme Court’s recent en banc decision in Pacific Lutheran University et al. v. Certain Underwriters At Lloyd’s London et al. looked to the broad language of the forum selection clause in the governing insurance policies in upholding the policyholders’ rights to select the forum for their coverage suit.

In Pacific Lutheran, 60 higher education institutions (the “Colleges”) filed suit in the Superior Court for Pierce County, Washington, against 16 insurers (the “Insurers”) that issued all risk insurance policies to the Colleges through the Educational & Institutional Insurance Administrators Inc. (“EIIA”), a risk retention group.  The Colleges brought suit to recover losses incurred as a consequence of the COVID-19 pandemic.  The Colleges selected the Washington state court based on the forum selection provisions contained in their insurance policies.  In particular, the Colleges relied on the policies’ “suit against the company” clause, which expressly allowed the Colleges to file suit “in any court of competent jurisdiction.”  The suit sought breach of contract damages and a declaration that the Colleges’ COVID-related losses are covered under the policies. 

Continue Reading Broad Forum Clause Favors Policyholders’ Choice of Venue
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Hunton Andrews Kurth’s 300-lawyer cross-disciplinary Retail Industry Team has released its annual 2023 Retail Industry Year in Review. The Review discusses retail industry issues that implicate multiple legal practice areas and highlights new and emerging risks retailers may encounter in the year ahead.

Significant issues from 2023, with insurance implications that will continue to evolve in 2024 and beyond, include copyright infringement claims for retailers engaged in social media and polyfluoroalkyl substances (PFAS) related liability claims and related putative class action lawsuits.

We discuss these risks in the 2023 Retail Industry Year in Review and on our insurance recovery blog, along with other risks that will continue to affect the retail industry in 2024.

Continue Reading Mitigation of Increased Risks to Retailers Through Insurance
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Last week, a California federal judge held that a D&O liability insurer must advance subpoena-related defense costs on behalf of two former biotech directors and officers after the insurer could not provide conclusive evidence that the subpoenas alleged actual wrongdoing by the individuals after the company’s merger, as required to trigger the policy’s “Change in Control” exclusion. See AmTrust Int’l Underwriters DAC, Plaintiff, v. 180 Life Sciences Corp., et al., N.D. Cal. No. 22-CV-03844-BLF, 2024 WL 557724 (N.D. Cal. Feb. 12, 2024). The decision highlights the interplay of two significant D&O coverage issues—government investigations and M&A transactions—and underscores why policyholders must pay close attention to how their liability insurance policies may be impacted by a merger, acquisition, asset sale or similar deal.

Continue Reading Government Investigations and M&A Transactions: Recent California Case Highlights Potential D&O Coverage Gaps
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While America was tuned into the big game, one California insurance broker faced its own treacherous showdown in the form of a putative class action filed on February 8, 2024 stemming from a data breach. With cyber incidents still on the rise, this is a story we know all too well: an unauthorized third party gains access to personally identifiable information, the company eventually detects the threat actor and leadership must decide how to respond. Once notifications to the public go out, the individuals impacted often file suit to recover for their alleged harm.

Continue Reading Data Breach Putative Class Action Questions Whether Broker Was Swift Enough in Notice and Response
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D&O, E&O, and other professional liability insurers often raise the insurability, or rather “uninsurability” loss defense. Consistent with our prior analysis of the ways the Ohio district court erred in assessing insurability, the Sixth Circuit’s recent decision in Huntington National Bank v. AIG outlines how courts should evaluate insurability defenses, particularly in the absence of public policy rendering a loss uninsurable.

Continue Reading Sixth Circuit Holds Settlement for Fraudulent Transfers Insurable Under Ohio Law
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It is not just your imagination:  verdicts are getting bigger.  So-called “nuclear verdicts” have increased in size and frequency over the past decade, particularly after the COVID-19 pandemic.  Litigation risk insurance is a little known, but highly effective, option meant to compliment traditional insurance products and provide additional protection for policyholders nervous about litigation exposure.

Continue Reading Judgment Proof:  Reducing Litigation Exposure with Litigation Risk Insurance