Lorelie S. Masters

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On June 27, 2017, the skies over New Jersey were clear and the ground steady. But Merck & Co., a New Jersey-based pharmaceutical company, was under attack. Malware ripped through its computers, damaging 40,000 of them and causing over $1.4 billion in losses.
Merck was not the sole target. Dubbed “NotPetya,” the virus tore through the US economy, and did an estimated $10 billion in damage. (This post describes losses experienced by other companies.) The US Department of Justice charged six Russian nationals, alleged officers of Russia’s Intelligence Directorate (the GRU), for their roles in the NotPetya attack, among others. …
Continue Reading Boots on the Ground or Hands on a Keyboard: Merck and Insurers Battle Out the War Exclusion

In First Mercury Insurance Co. v. First Florida Building Corp., et al.[AY1] , a federal district court ordered that an insurer had a duty to defend its insured against an underlying personal injury lawsuit. 2023 WL 23116, at *1 (M.D. Fla. Jan. 3, 2023). First Mercury is a cautionary tale about how insurers may try to circumvent their obligations by improperly considering extrinsic evidence when determining whether they have a duty to defend their insureds.
Continue Reading Insurer Could Not Rely on Extrinsic Evidence to Circumvent Its Duty to Defend  

In Yahoo, Inc. v. National Union Fire Insurance Co. of Pittsburgh, PA., the California Supreme Court confirmed that contra proferentem and other rules of policy interpretation apply even to language insurers argue is “manuscript” as long as the provisions in question use standard-form policy terms. There, the United States Court of Appeals for the Ninth Circuit asked the California Supreme Court to answer a certified question regarding whether a commercial general liability policy (CGL) covers defense costs related to claims under the Telephone Consumer Protection Act of 1991 (TCPA) (47 U.S.C. § 227). Following a thorough and thoughtful assessment of California law involving fundamental rules of policy interpretation, the California Supreme Court ruled in favor of the policyholder, Yahoo, Inc. (“Yahoo!”). The authors of this article represented amicus curiae, United Policyholders, in support of Yahoo! before the California Supreme Court. …

Continue Reading Unanimous California Supreme Court Affirms Breadth of Policy-Interpretation Rules in Confirming That CGL Policies Cover TCPA Liabilities

In Sherwin-Williams Co. v. Certain Underwriters at Lloyd’s London, et al., the Court of Appeals for Ohio’s Eighth District, reversed the lower court, finding that money paid by the insured into an abatement fund was “damages” as that undefined term was used in the policyholder’s insurance policies. 2022-Ohio-3031, ¶ 1. Sherwin-Williams is a cautionary tale about how insurers may try to narrow the meaning of undefined terms in their insurance policies.
Continue Reading Court Finds That $400 Million Paid Into Abatement Fund Qualifies as “Damages” Under the Insured’s Policies  

As reported on this blog, policyholders have long been of the view that the presence of substances like COVID-19 and its causative virus  SARS-CoV-2, which render property dangerous or unfit for normal business operations, should be sufficient to trigger coverage under commercial all-risk insurance, as has been the case for more than 60 years.

However, many courts, federal courts in particular, despite decades of pro-policyholder precedent, have embraced the view that “viruses harm people, not [property].”  Thirty-one months after the start of the pandemic, the first state high court has gone in a different direction, according greater weight to pro-policyholder precedent.…

Continue Reading Vermont Supreme Court Finds COVID-19 May Damage Property

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

With the circumstances in Ukraine intensifying and companies either shutting down or suspending operations in the region, the sparingly used war exclusion will become more relevant as policyholders seek to recover losses. The economic effects will be broadly felt. Some companies may have to close operations entirely, some partially, and others may have their supply chains severely disrupted. This is compounded by the worldwide risk of cyber-incidents. The US government has been adamantly warning companies to protect themselves against cyberattacks. The impact on policyholders, however, may take different forms, potentially implicating their business interruption, contingent business interruption, cyber, shipping and cargo, and political risk insurance coverages. These are only a few examples. Other coverages could be implicated.
Continue Reading The War Exclusion Will Be a Leading Issue in the Months and Years Ahead

In this final post in the Blog’s Landmark Montana Supreme Court Decision Series, we discuss the court’s ruling on the known loss doctrine and its interpretation of “occurrence” in National Indemnity Co. v. State, 499 P.3d 516 (Mont. 2021).
Continue Reading Landmark Montana Supreme Court Decision Series: Known Loss Doctrine & Interpretation of “Occurrence”

This post in our Landmark Montana Supreme Court Decision Series discusses the Montana Supreme Court’s consideration of an insurer’s duty to defend in National Indemnity Co. v. State, 499 P.3d 516 (Mont. 2021).
Continue Reading Landmark Montana Supreme Court Decision Series: The Duty to Defend