Jorge R. Aviles

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Earlier this month, the US District Court for the Northern District of Illinois ruled that Call One Inc., a tele-communications company, must litigate a claim by its insurer, Berkley Insurance Company, seeking to rescind coverage based on the information provided by the policyholder in its application for insurance. The coverage dispute is illustrative of insurers’ increased scrutiny of the answers to all policy application questions—including where no response is provided—to identify new or additional grounds to avoid coverage, even if it requires rescission of the policy. Policyholders should thus carefully consider all questions and requirements during the policy application process (including during renewal) to avoid potential disclosure disputes should a claim arise.…

Continue Reading Recent Decision Highlights the Importance of Avoiding Disclosure Pitfalls

The surge in prices for eggs—the fourth most-purchased US grocery item—over the past months has surprised many American shoppers.  Last December, a dozen eggs cost $4.25 on average; 120% higher than at the same time in 2021.  The price hike stems from many factors, including supply chain issues and inflation.  But the primary culprit is the outbreak of the deadliest bird flu in US history, which has killed millions of chickens.  Grocery shoppers, however, are not the only ones feeling the economic impact of the ravage to poultry flocks.  Livestock owners and businesses are also feeling the economic pinch, particularly in areas hit hardest by the bird flu.  Insurance is a key component of risk management for livestock businesses and owners.  Here, we explore how insurance can mitigate the risks to livestock owners and businesses of accidental or unexpected events that result in the death of animals or economic losses.…

Continue Reading Coverage for Rotten Eggs:  Livestock Coverage in the Event of a Crisis

An oft-seen version of the insuring agreement in Commercial General Liability (CGL) policies provides that the insurance company will pay for “any and all sums” the policyholder is “legally obligated to pay” for liabilities “imposed by law” or “assumed under contract.”  In an effort to disclaim coverage for liabilities arising out of or related to contract, insurers have argued that the prong for liabilities “imposed by law” refers to tort-based liabilities only, thus seeking to avoid liability with a relationship to contract.  This argument, however, defies the plain insuring language defining how the CGL policies are triggered.  This post explains why, under a proper reading of the insuring language, contract-based liabilities should qualify under the “imposed by law” prong of a CGL insuring agreement.
Continue Reading “Imposed by Law”: Coverage for Contract-Based Liabilities

The ongoing Covid-19 pandemic and supply chain issues have caused several major event organizers to cancel or postpone concerts, sporting events, and awards shows, among many other large-scale events. For example, this week, Elton John postponed tour concerts after testing positive for Covid-19; last week, Adele put on hold her much-anticipated Las Vegas residency over “delivery delays” and Covid-19 diagnoses among her team; last month, the NHL, NBA, and the NFL rescheduled major games, with the NHL citing concerns about “the fluid nature of federal travel restrictions,” and the NFL citing “medical advice” after “seeing a new, highly transmissible form of the virus;” and the Grammys postponed its January 31 awards show in Los Angeles—to now take place on April 3 in Las Vegas. The cancellations and postponements of these types of events often have major financial effects on its organizers and producers. Given the risk of substantial losses following the cancellation of big-ticket events, businesses should be aware that they can tap into event cancellation insurance to mitigate and protect against these risks.
Continue Reading From Adele to the NFL, Large-Scale Event Disruptions Show the Need for Policyholders to Have a Strategy to Recover in the Event of a Loss

As governments lift COVID-19 lockdown restrictions and economies begin to reopen, consumer demand for products has skyrocketed. Amid the spike in demand, businesses are struggling to meet consumers’ needs due to ongoing global supply chain disruption. The disruption stems from many factors, including the lingering effects of COVID-19 mitigation strategies that slashed the production of goods, as well as a shortage of warehouse workers and truck drivers. Insurance is a key component of supply chain risk management. Policyholders who rely on a supply chain can use insurance to protect against supply chain risks. Here, we explore supply chain risks and how insurance can mitigate those risks.
Continue Reading As Global Supply Chain Risks Continue to Grow, Policyholders Need a Strategy in the Event of a Loss

In a resounding victory for policyholders, a North Carolina court ruled that “all-risk” property insurance policies cover the business-interruption losses suffered by 16 restaurants during the COVID-19 pandemic.  North State Deli, LLC v. Cincinnati Ins. Co., No. 20-CVS-02569 (N.C. Sup. Ct., Cty. of Durham, Oct. 7, 2020).  This is the first judgment in the country to find that policyholders are, in fact, entitled to coverage for losses of business income resulting from the COVID-19 pandemic.  Equally important, the decision illustrates that a proper analysis of the operative policy provisions requires this result.
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Continue Reading First Judgment Upholding Coverage for COVID-19 Business-Interruption Losses

As we explained in our earlier post, in a decision that could influence how policyholders and insurers around the world address business-interruption coverage for COVID-19 losses, the London High Court recently handed down its much-anticipated judgment in the Financial Conduct Authority’s “Test Case,” The Financial Conduct Authority (FCA) v. Arch et al.  Because the judgment provided that coverage was available for COVID-19 business-interruption losses under most of the policy wordings at issue, it was highly anticipated that the insurance companies at issue would challenge the judgment in a fast-tracked “leapfrog” appeal to the Supreme Court of the U.K., expected to be heard by the end of the year.  Yesterday, however, six of the insurance companies subject to the judgment decided not to pursue an appeal in connection with some of the policies, and one of the insurers stated that it would instead begin to make payments where appropriate.
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Continue Reading Insurance Companies Drop Appeal Against the London High Court’s Ruling in the FCA’s “Test-Case”

In a decision that will influence how policyholders and insurers around the world address business-interruption coverage for COVID-19 losses, the English High Court recently handed down its much-anticipated judgment in the “Test Case,” The Financial Conduct Authority (FCA) v. Arch et al. The High Court’s comprehensive analysis will likely serve as an additional tool in policyholders’ arsenal in the ongoing battles over COVID-19 coverage.
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Continue Reading English High Court Finds That Business-Interruption Insurance Can Cover COVID-19 Losses

On Tuesday, the English High Court will issue its much-anticipated ruling in “test cases” for coverage of business-interruption losses during the COVID-19 pandemic under sample policy wordings. Irrespective of the outcome, the London court’s ruling promises to be a significant development for the insurance markets in the UK, as billions of pounds in potential insurance claims are at stake and––beyond this––policyholders and/or insurance companies can be expected to argue that one or another of the findings supports their position(s) for interpreting similar policy language in future COVID-19 business-interruption coverage cases.

The FCA Test Case

In the first action of its kind since the agency was established in 2013, the British markets regulator, the Financial Conduct Authority (FCA), engineered the test case process earlier this year to seek legal clarity over insurance companies’ obligations to cover business-interruption claims in the context of the ongoing COVID-19 pandemic. Brought before the English High Court (a trial level court in the UK), the FCA test case involves around 370,000 policyholders and eight insurance companies. The case was heard by Judge Christopher Butcher, who sits in the Commercial Court, and Judge Julian Flaux from the Court of Appeal.  Experienced English counsel prepared and presented arguments to the tribunal for expedited consideration and resolution. The FCA hired a solicitor firm, which instructed well-regarded barristers from Devereux Chambers and Fountain Court Chambers; the insurers engaged their own solicitors and barristers.…

Continue Reading Policyholders and Insurers Await Highly Anticipated English High Court Ruling Regarding Coverage for COVID-19 Business-Interruption Losses