Who can incur losses associated with cryptocurrency or digital assets? The real question is who uses them.
Among the most obvious users would be exchanges in which cryptocurrency is traded. It has been reported that the largest insurance market in the cryptocurrency industry consists of exchanges that insure against thefts from cryptocurrency hackers. Among the more prominent exchanges are Coinbase, Crypto.com and Gemini. Similarly obvious are the third-party custodians that store cryptocurrency and other forms of digital assets on consumers behalf such as BNY Mellon Crypto Currency or Fidelity Digital Assets. They provide safekeeping of digital assets including keys and ensure accessibility.

Continue Reading Digital Asset Insurance Coverage Series, Part 2: Who Can Incur Losses Associated With Digital Assets And What Are The Potential Risks Of Loss And Liability Related To Digital Assets?

Crypto markets are experiencing the greatest crash in their history to date. The value of a Bitcoin (BTC) has plummeted 70% from its peak and Ethereum (ETH) has fallen 77%. Since last November, the value of cryptocurrency tokens has lost $2 billion in value. As noted financial publication Barron’s put it: “Crypto is having a ‘Lehman moment,’ a shattering of confidence triggered by plunging asset prices, liquidity freezing up, and billions of dollars wiped out in a few scary weeks.” Cryptocurrency companies are halting withdrawals and transfers, platforms are seizing up, and regulators are circling.
Nor has the devastation been limited to the coins themselves. Non-fungible token (NFT) sales have reduced by 90% since September 2021. The New York Times reported that Opensea.io (OpenSea), an NFT marketplace that receives 2.5% share of the proceeds for each NFT sale, has been plagued by “a surge of plagiarism, as sellers convert traditional artwork into NFTs and then list the images for sale without compensating the original creator.” For example, DeviantArt, an artist collective that scans OpenSea for copyright infringement of the work of its artists, found 290,000 instances of unauthorized NFTs copying its artists’ works. While infringing listings can be deleted in response to take down requests filed by the artist, buyers of counterfeit NFTs are rarely given a refund.

Continue Reading Hunton Insurance Group Advises Policyholders on Issues That Arise With Insurance Coverage for Digital Assets, Specifically Cryptocurrency and NFTs — A Seven-Part Series 

Recently, an Illinois federal judge ruled that where government shutdown orders due to COVID-19 in different states impacted one insured, that insured suffered separate occurrences in each effected state. Dental Experts, LLC v. Massachusetts Bay Ins. Co., No. 20 C 5887, 2022 WL 2528104 (N.D. Ill. July 7, 2022).
Continue Reading COVID-19 Losses and Number of Occurrences

Recently, Florida’s First District Court of Appeals handed down a victory for policyholders when it affirmed a Circuit Court’s order compelling an insurer to produce its underwriting manual in a breach of contract action. In People’s Trust Insurance Co. v. Foster, No. 1D21-845 (Fla. 1st DCA Jan. 26, 2022), the policyholder, Mr. Foster, filed a breach of contract claim against his insurer, People’s Trust, after People’s Trust failed to pay his insurance claim for damage caused to Mr. Foster’s home due to a leaking water pipe. People’s Trust denied Foster’s claim because “Foster’s pipe damage predated the policy’s inception.”
Continue Reading Florida Appellate Courts Holds Underwriting Manuals are Discoverable in Breach of Contract Case

Policyholders have scored another victory in the Delaware Superior Court, this time on the issue of whether a “mergers and acquisition” endorsement required payment of a higher retention in two securities class actions. In August, we reported that, in CVR Refining, LP v. XL Specialty Insurance Co., No. N21C-01-260 EMD CCLD, 2021 WL 3523925 (Del. Super. Ct. Aug. 11, 2021), a Delaware Superior Court judge upheld a policyholder’s preferred forum in Delaware, denying five insurers’ motion to dismiss or stay the Delaware coverage action filed after the insurers had filed suit preemptively in Texas.
Continue Reading Policyholder Prevails (Again) in Delaware D&O Retention Dispute

We are pleased to announce that Hunton Andrews Kurth LLP insurance coverage partner Lorelie S. Masters is one of only eight attorneys throughout the nation shortlisted for the Best in Insurance & Reinsurance category for the Women in Business Law Awards 2021. The award honors “the outstanding achievements of women in over thirty different practice areas in business law from across Americas. These are individuals who stand out as leaders amongst their peers and who have been instrumental to innovative approaches in their field.”
Continue Reading Lorelie S. Masters Nominated for Best in Insurance & Reinsurance for the Women in Business Law Awards 2021

A Delaware Superior Court judge recently upheld a policyholder’s preferred forum in Delaware, denying five insurers’ motion to dismiss or stay the Delaware coverage action filed after the insurers had filed suit preemptively in Texas. The court in CVR Refining, LP v. XL Specialty Insurance Co., No. N21C-01-260 EMD CCLD, 2021 WL 3523925 (Del. Super. Ct. Aug. 11, 2021), held that, although the insurers (XL Specialty, Twin City Fire, Allianz Global Risks US, Argonaut, and Allied World) filed suit three days before the insureds, both suits were filed “contemporaneously” under Delaware law and that the insurers had failed to demonstrate any “overwhelming hardship” necessary to dismiss the case. The court also found that, since the insurers were all licensed to do business in Delaware, they could not show overwhelming hardship. Thus, the policyholder’s preference to litigate its insurance claims in Delaware must stand.
Continue Reading Delaware Court Upholds Policyholder’s Choice of Forum, Denies Insurers’ “First-Filed” Argument Following Race to the Courthouse

The First Circuit recently held that a “Special Hazard and Fluids Limitation Endorsement” was ambiguous and therefore there was excess coverage for a fuel spill that occurred after a tanker-truck overturned.

In Performance Trans. Inc. v. General Star Indem. Co., the First Circuit reversed the District Court’s grant of summary judgment in favor of General Star Indemnity Company. The District Court held that the excess policy General Star issued to Performance Trans. Inc. precluded coverage for a spill that resulted in the leaking of thousands of gallons of fuel. The District Court relied on the existence of a total pollution exclusion to bar coverage and held that the policy’s Special Hazards and Fluids Limitation Endorsement could not create an ambiguity that would afford coverage.
Continue Reading First Circuit Rules Excess Insurer Must Provide Coverage for Fuel Spill

A Maryland federal court awarded summary judgment last week to policyholder National Ink in National Ink and Stitch, LLC v. State Auto Property And Casualty Insurance Company, finding coverage for a cyber-attack under a non-cyber insurance policy after the insured’s server and networked computer system were damaged as a result of a ransomware attack.  This is significant because it demonstrates that insureds can obtain insurance coverage for cyber-attacks even if they do not have a specific cyber insurance policy.

Continue Reading Maryland Court Finds Coverage For Lost Data And Slow Computers After Ransomware Attack