The CDC reports that, as of the end of last week, the coronavirus disease had spread through China and to 31 other countries and territories, including the United States, which has now seen its first two related deaths. The public health response in the United States has been swift and includes travel advisories, heightened airport screening, and repatriation and quarantine of potentially infected individuals. Outside the United States, countries like China, Italy, and South Korea have implemented more severe measures to combat the disease. From smart phones to automobiles, coronavirus has major short- and long-term implications for public and private companies facing potentially significant supply chain disruptions, store and office closures, and other logistical issues. These business losses, however, may be covered by insurance. Below are several key insurance considerations for policyholders to contemplate when evaluating the availability of insurance coverage for coronavirus-driven losses.

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Earlier last week, Hunton insurance partner Michael Levine spoke with Business Insurance about the mounting concerns over insuring Coronavirus-related business income and supply chain losses.  As of today, almost 80,000 cases have been reported world-wide and more than 2,250 are confirmed to have died as a result of the disease.  Companies across the globe have been impacted, with loss of materials, markets and distribution representing a common thread among reported losses and disruptions.  But these “supply chain” losses may be compensable through insurance.  Policyholders will be forced to evaluate complex policy provisions and endorsements to ascertain whether their insurance program should respond.  In particular, policyholders must determine whether their policy wording requires some element of physical loss or damage to property to trigger business interruption or contingent business interruption coverage.  Even where such a requirement exists, however, some policies are written so that loss of use of property is sufficient to implicate coverage.  Likewise, questions exist concerning contamination to property, and whether that too may constitute physical loss, damage or loss of use.  For these reasons, among others, Levine explained to Business Insurance that “contingent business interruption . . . is going to be one of the battlegrounds, if not the main battleground, particularly in the supply chain area.” Levine further noted that claims could be complicated by the physical damage requirement.

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A New York appellate court recently held that renewable bio-diesel fuel manufacturer BioEnergy Development Group LLC may pursue tens of millions of dollars in damages from its insurers under two all-risk insurance policies, including amounts in excess of the policy limits, where the insurers refused to pay claims in a timely manner.

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After a four-day trial, an Arizona federal jury found that Western Truck Insurance Services, Inc., an insurance broker, was negligent in selling Madison Alley Transportation and Logistics Inc. a business interruption policy with inadequate annual limits. Based on its finding of negligence, the jury determined that the broker was liable for $685,000 of $1,000,000 in damages suffered by Madison Alley as a result of a flood in its warehouse.  The verdict and Complaint, filed in Arizona state court before the case was removed, can be found here and here.

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A recent outbreak of Legionnaires’ Disease has been traced to a Sheraton hotel in Atlanta, Georgia.  According to the Georgia Department of Public Health, 11 cases are confirmed and 55 more cases are “probable.”  The Atlanta Sheraton closed on July 15 to investigate the outbreak.  The closure is certain to result in a substantial immediate loss of revenue for the property.  The closure and loss of advanced reservations also will likely result in an extended interruption of hotel revenue.  Add to that potential stigma-related losses that will result from those afraid to reenter the property after the hotel reopens.  Sheraton will likely turn to its insurers to seek payment for its business interruption costs.

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In the first part of a 3-part series, the Hunton insurance team discusses how policyholders can plan for this year’s hurricane season. Part 2 will address how to prepare a claim after a loss in order to maximize the potential recovery, including by taking photographs of any damage and tracking curfews that affect your operations.  Part 3 will discuss how to prevent denials of pending claims based on suit limitations periods.  The team’s goal is to provide a comprehensive outline that will guide policyholders before and after a loss.

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The cancellation of the first day of music mogul Pharrell Williams’s inaugural Something In the Water Music Festival (SITW) in Virginia Beach, Virginia due to stormy weather is a recent reminder of the importance of securing event cancellation and business interruption insurance to mitigate the significant economic risks posed by outdoor events.[1]

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In an Expert Analysis recently published in Law360, Hunton insurance recovery attorneys Sergio Oehninger and Latosha Ellis discuss the many ways that event cancellation insurance can help mitigate loss caused by government shutdowns and other disruptive events.  A copy of the Expert Analysis can be found here.

Gatwick airport has been shut down since Wednesday night UK time due to the presence of multiple drones around the perimeter of the runway. A drone was first spotted Wednesday evening in the vicinity of Gatwick’s runway. After being briefly re-opened several hours later, the runway was shut down for good when several more drones were discovered. Given the public safety risk of attempting to shoot the drones down from the ground, law enforcement is instead focusing on identifying and apprehending the drone operators to ensure that the area is safe for air travel.

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