On Wednesday, the Fifth Circuit found that Lloyd’s syndicates may not subrogate against an additional insured and may not force that additional insured to arbitration. Lloyd’s Syndicate 457 v. FloaTEC, LLC, No. 17-20550 (5th Cir. Apr. 17, 2019).

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On March 22, 2019, a federal judge in Michigan found in Alticor Global Holdings, Inc. v. America Int’l Specialty Lines Ins. Co., that claims of copyright infringement by several major record labels are potentially covered under liability policies issued by AIG.  Alticor involved a claim for coverage stemming from suits by a group of entertainment companies against Amway, “accusing it of infringing hundreds of copyrighted sound recordings.”  Amway sought coverage from its umbrella insurer, AIG.  AIG claimed that the personal injury and advertising injury coverage did not apply because “coverage extends only to advertisements of a Named Insured,” i.e., Amway, and the underlying suit related to advertisements of Amway independent business owners.

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The Supreme Court of Virginia’s decision yesterday finding no coverage for fire damage to a building is a cautionary tale for companies acquiring other companies. Erie Ins. Exch. v. EPC MD 15, LLC, 2019 WL 238168 (Va. Jan. 17, 2019). In that case, Erie Insurance issued a property insurance policy to EPC. The policy covered EPC only and did not cover any subsidiaries of EPC. EPC then acquired the sole member interest in Cyrus Square, LLC.  Following the acquisition, fire damaged a building that Cyrus Square owned.
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In a recent Client Alert, Hunton insurance lawyers Mike Levine, Sergio Oehninger and Josh Paster discuss the impact of the Second Circuit’s recent opinion in Patriarch Partners, LLC v. Axis Insurance Co., where the Court confirmed that a warranty letter accompanying the policyholder’s insurance application barred coverage for a lengthy SEC investigation. The

A California federal court found coverage under AIG’s general liability policy for the defense and indemnity of email scanning suits against Yahoo!. Those suits generally alleged that Yahoo! profited off of scanning its users’ emails. Because the allegations gave rise to the possibility that Yahoo! disclosed private content to a third party, the court found

On April 17, 2018, the Ninth Circuit affirmed a district court decision finding that an exclusion barred coverage for a $700,000 loss resulting from a social engineering scheme. Aqua Star (USA) Corp. v. Travelers Cas. & Surety Co. of Am., No. 16-35614 (9th Cir. Apr. 17, 2018). The scheme involved fraudsters who, while posing as employees, directed other employees to change account information for a customer. The employees changed the account information and sent four payments to the fraudsters.

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In a recent brief filed in the Sixth Circuit, American Tooling Center, Inc. argued that the appellate court should reverse the district court’s decision finding no insurance coverage for $800,000 that American Tooling lost after a fraudster’s email tricked an employee into wiring that amount to the fraudster. As we previously reported here, the district court found the insurance policy did not apply because it concluded that American Tooling did not suffer a “direct loss” that was “directly caused by computer fraud,” as required for coverage under the policy. The district count pointed to “intervening events” like the verification of production milestones, authorization of the transfers, and initiating the transfers without verifying the bank account information and found that those events precluded a “finding of ‘direct’ loss ‘directly caused’ by the use of any computer.”

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A California state court recently rejected an excess insurer’s attempt at an early exit from litigation over whether it owes coverage for cyber liabilities. In that case (previously summarized here), the policyholder, Cottage Health, suffered a data breach resulting in the disclosure of patients’ private medical information. Subject to a reservation of rights, Cottage Health’s primary insurer, Columbia Casualty, paid millions of dollars to help respond to the data breach and to defend and settle a class action lawsuit filed against Cottage Health. Cottage Health’s excess insurer was Lloyd’s.

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