From event-driven litigation and event cancellations to securities claims and regulatory enforcement actions, the COVID-19 pandemic has led to a number of directors and officers liability exposures extending far beyond business interruption losses. The first wave of COVID-19 securities suits, for example, focused on allegations that companies made false and misleading statements or failed to disclose in securities filings how they responded to the pandemic (in the case of several cruise lines) or stood to benefit from it (in the case of pharmaceutical companies). Most, but not all, of those suits were dismissed on early motions. In all cases, however, those companies and individuals would have benefited from robust D&O liability insurance coverage.
Continue Reading New Year, New COVID-19 Securities Claims Present Continued D&O Exposures

An Ohio appellate court held last month that a cyberattack triggered coverage under a commercial property insurance policy in the case EMOI Services, LLC v. Owners Insurance Company, No. 29128, 2021 WL 5144828 (Ohio Ct. App. Nov. 5, 2021).  This is good news for policyholders in light of widespread cyberattacks over the last two years, and rising premiums in today’s cyber insurance markets. The decision also has wider implications, including in suits seeking coverage for losses caused by COVID-19 under property insurance policies.
Continue Reading Ohio Appellate Court Upholds Coverage for Cyberattacks Under Commercial Property Policies

While policyholders have experienced a wide range of conflicting rulings related to COVID-19 business interruption losses, a recent Northern District of Illinois decision shows that the pandemic continues to present a range of exposures beyond business interruption losses, including for claims under directors and officers liability policies. In Federal Insurance Co. v. Healthcare Information and Management Systems Society, Inc., No. 20 C 6797 (N.D. Ill. Oct. 19, 2021), the court rejected the insurer’s broad reading of a professional services exclusion, contract exclusion, and the insurability of alleged restitution to deny coverage under a D&O policy for losses arising from a cancelled trade show.

Continue Reading Policyholder Win Highlights Importance of D&O Policies In Mitigating COVID-19-Related Exposures

It has taken a pandemic, but the fallacy of Couch’s “physical alteration” standard, accepted blindly by myriad courts nationwide in COVID-19 insurance disputes and beyond, has been revealed in an article co-authored by Hunton insurance partner, Lorie Masters, with substantial assistance from Hunton insurance associate, Rachel Hudgins. The article, which received final publication in the American Bar Association’s TIPS Law Journal on October 26, 2021, makes a critical analysis of the landscape of judicial authority that existed when 10 Couch on Ins. § 148:46 (3d ed. 1998), the edition of Couch in which the standard first appeared, was published in the late 1990s. The article then traces the evolution of that landscape through the beginning of the COVID-19 pandemic, when courts nationwide (predominantly federal courts), seized upon Couch’s standard as though it were a constitutional mandate. But as the article reveals, the standard is flawed, and thus the decisions that rely on it, infirm.
Continue Reading Hunton Andrews Kurth LLP Insurance Partner Lorelie Masters Co-authors Article Revealing “Widely Held” “Physical Alteration” Fallacy

As governments lift COVID-19 lockdown restrictions and economies begin to reopen, consumer demand for products has skyrocketed. Amid the spike in demand, businesses are struggling to meet consumers’ needs due to ongoing global supply chain disruption. The disruption stems from many factors, including the lingering effects of COVID-19 mitigation strategies that slashed the production of goods, as well as a shortage of warehouse workers and truck drivers. Insurance is a key component of supply chain risk management. Policyholders who rely on a supply chain can use insurance to protect against supply chain risks. Here, we explore supply chain risks and how insurance can mitigate those risks.
Continue Reading As Global Supply Chain Risks Continue to Grow, Policyholders Need a Strategy in the Event of a Loss

Court dockets, both in the state and federal court systems, have seen a massive influx of COVID-19 business interruption insurance cases since the pandemic began in March of 2020.  More recently, cases have been moving more expeditiously through the federal courts, and the circuit courts are starting to issue decisions. Most recently, the Ninth Circuit has spoken and its decisions provide important guidance for policyholders with pending COVID-19 coverage cases in California federal courts.

Continue Reading Ninth Circuit Decisions Reject Coverage for COVID Orders, Leaving Door Open for Cases Presenting Damage Claims

On Tuesday, a New Hampshire trial court awarded summary judgment to the owner of scores of hotels after finding that the hotels sustained covered “physical loss of or damage to” insured property caused by the pandemic presence of COVID-19 and its viral agent, SARS-CoV-2. The merits ruling is yet another recent victory for policyholders who continue to make headway against an early wave of insurance company dismissals, most of which, unlike the ruling on Tuesday, never considered evidence in support of their decisions.
Continue Reading New Hampshire Court Finds Hoteliers Sustained Covered COVID-19 BI Loss

The Northern District of New York recently awarded summary judgment to insurer Affiliated Factory Mutual Insurance Co. against Mohawk Gaming Enterprises, a casino and resort operated by the Saint Regis Mohawk Tribe located on the border of New York and Canada. Mohawk Gaming sued AFM seeking recovery of business income losses due to the COVID-19 pandemic. In granting the insurer’s motion, however, the court failed to consider all parts of the AFM policy, as required under New York law, and failed to afford meaning to specific language contained in the policy’s two communicable disease sections, each of which specifically contemplate that “communicable disease,” as defined and covered under the AFM policy, can cause loss and damage to property. Instead, the court followed other decisions from “numerous courts around the country,” each of which is based on inherently flawed reasoning (e.g., reliance on cases where no presence of virus was alleged or cases that clearly and broadly excluded loss caused by virus), to conclude that the presence of virus “is insufficient to trigger coverage when the policy’s language requires physical loss or physical damage.” In fact, a federal court in Texas recently rejected the very same reasoning employed in Mohawk Gaming after recognizing that the FM/AFM policy form “is much broader than [others] and expressly covers loss and damage caused by ‘communicable disease.’” See Cinemark Holdings, Inc. v. Factory Mut. Ins. Co., No. 4:21-cv-00011 (E.D. Tex. May 5, 2021).

Continue Reading New York Federal Court Ignores Policy’s Uniquely Broad Wording in Favor of Following the Herd

On Wednesday, a federal judge in Texas denied Factory Mutual’s Rule 12(c) motion for judgment on the pleadings, finding that the plaintiffs adequately alleged that the presence of COVID-19 on their property caused covered physical loss or damage in the case of Cinemark Holdings, Inc. v. Factory Mutual Insurance Co., No. 4:21-CV-00011 (E.D. Tex. May 5, 2021). This is the third COVID-19-related business interruption decision from Judge Amos Mazzant since March, but the first in favor of a policyholder. Taken together, the three decisions have two key takeaways and provide a roadmap for policyholders in all jurisdictions.

Continue Reading Allegations That COVID-19 Was Physically Present and Altered Property are Sufficient to Sustain COVID-19 Business Interruption Suit