Latosha M. Ellis

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A federal court recently denied an insurer’s motion to dismiss an insured’s claim for declaratory relief. The insurer argued that the policyholder’s declaratory judgment claim was redundant of its breach of contract claim. The Court ruled that “redundancy is not grounds for dismissal under Rule 12(b)(6).”

In The United Church of Marco Island, Inc. v. Lexington Insurance Company , the policyholder, The United Church of Marco Island, Inc., fell victim to a $1.2 million fraud after a series of emails impersonating church officials and a Registered Financial Advisor who had a relationship with the Church resulted in the Church sending funds to an “illicit bank account.” The Church was able to recover $600,000 and sought coverage under its Commercial Crime Policy issued by Lexington Insurance Company for the remaining $600,000.
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Continue Reading Insurer Can’t Dismiss Church’s Claim for Declaratory Relief

A New York federal judge recently ruled that an insurer waived its late notice defense because a generic reservation of rights was insufficient to preserve it. As a result, the policyholder’s claim was preserved despite being submitted more than three months after the loss—a delay which would ordinarily be fatal under New York law. The decision underscores the importance both of timely submission of claims and careful attention to reservation of rights letters.
Continue Reading It’s Too Late, Lloyd’s: New York Federal Court Finds Insurer Waived Late Notice Defense

A recent settlement filed by the Federal Trade Commission (FTC) and GoodRx may merit a review of your cyber insurance coverages. Earlier this month, the FTC took enforcement action for the first time under its Health Breach Notification Rule against the telehealth and prescription drug provider, GoodRx, for failing to notify consumers of its unauthorized disclosures of personal health information.

As detailed in a February 27 Hunton client alert, the Health Breach Notification Rule generally requires that vendors not covered by the Health Insurance Portability and Accountability Act (HIPAA) of personal health records give notice in the event of a “breach of security,” which is defined to include “unauthorized acquisition” of personal health records.
Continue Reading Recent FTC Enforcement Action Merits Cyber Insurance Coverage Review

A review of insurance policies at renewal should be on every business’s annual task list—and it should be checked twice! Just as your business grows and evolves every year, so should your insurance program. Together with staying proactive and preparing for renewal months before the policy expiration, there are a number of best practices to put your business in the best position to maximize insurance recovery, including shopping around, evaluating changes to your business, engaging the appropriate stakeholders, and performing a policy audit with a coverage attorney.…

Continue Reading Policy Renewals: Has Your Insurer Been Naughty or Nice?

One of the threshold issues in COVID-19 insurance coverage cases that have been brought across the country is whether the policyholder’s allegations meet the applicable pleading standard in alleging that the virus caused physical loss or damage. In many cases, the courts have gotten it wrong, effectively holding policyholders to a higher standard than required. But recently, a California federal judge righted those wrongs by acknowledging the correct pleading standard in that case, which is whether the allegations state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The Court, here, correctly recognized that the policyholder, the Los Angeles Lakers, met that pleading standard when it alleged that the COVID-19 virus can cause physical loss or damage by physically altering property.
Continue Reading California Court Forces Insurer to Play Ball in COVID-19 Insurance Coverage Suit

A federal court recently found that a policyholder adequately plead that a loss of hundreds of thousands of dollars through wire fraud is covered under a commercial crime policy. In Landings, Yacht, Golf, and Tennis Club v. Travelers Casualty and Surety Company of America Case No. 2:22-cv-00459 , Landings Yacht, Golf, and Tennis Club (“Landings”) sued Travelers Casualty and Surety Company of America (“Travelers”) under a crime policy for denying coverage for: (1) about $6,885.79 in unauthorized withdrawals (“First Withdrawal”) from users purporting to be Landings and (2) $575,723.95 in withdrawals made by a third-party purporting to act on behalf of Landings (“Second Withdrawal”). …
Continue Reading Covered Members Only: Federal Court Accepts Yacht Club’s Wire Fraud Allegations

If your company has an emergency response plan—and it likely does—filing an insurance claim needs to be included in that plan. But what if your insurer stretches out the consideration process by making continuous, costly information requests without making a coverage determination? Or decides to deny coverage under one clause of the policy, but accept coverage under another? Or outright denies coverage? Policyholders should be prepared to comply with policy obligations (which may vary depending on the controlling state law), such as the sharing of relevant information and documentation or participating in arbitration or a mediation prior to suing the insurer, but also understand the responsibilities insurers have to policyholders when a claim is tendered. …
Continue Reading It’s Not You, It’s Them: Dealing With Insurance Coverage Denials

Like other policyholders, hard insurance market trends, aggravated by cybersecurity risks, climate change, and COVID-19, have hit higher education policyholders, yielding reduced or limited coverages for increased premiums. These conditions – reduced coverages and higher premiums – are symptoms of a “hard” insurance market. (A hard market is caused by a mismatch between policyholders’ waxing demand for coverage and insurers’ waning risk appetite.) But higher education policyholders face unique risks that exacerbate existing market conditions, including:…

Continue Reading Back to School Blues: Risk Exposures Affecting Higher Education

As businesses continue to increase their reliance on technology, they are bound to face the inevitable risks associated with online transactions and other cyber exposures. This, in turn, emphasizes the importance of having the proper insurance policies and compliance methods in place to prevent or, at least, mitigate losses that ensue from these risks. In this context, many insurance policies require that there be a “direct” loss for there to be coverage, which has spawned numerous lawsuits about what the word “direct” means. The latest court to weigh in has sided with the insured and interpreted that term broadly to essentially mean proximate causation.
Continue Reading Court Does Not Beat Around The Bush and Is Rather Direct In Rejecting Insurer’s Causation Argument In Computer Fraud Claim

Supply chain disruptions caused by a number of unrelated events – the pandemic, ice storms, wildfires, and droughts – were commonplace in the retail industry in 2021.  Obtaining the correct insurance coverage can help mitigate present and future supply chain risks.  In the recently published Retail Industry 2021 Year In Review, we highlight some key concerns and coverages to look out for.  A copy of the full publication can be found here.
Continue Reading Supply Chain Disruption? Don’t Overlook Insurance