Last week, we reported that the New Jersey General Assembly passed a bill that would force property insurers to cover certain business interruption losses arising from COVID-19.  The bill presented a lifeline to small businesses in New Jersey that are being racked by the economic fallout stemming from COVID-19.  Before reaching the New Jersey

On March 16, 2020, the New Jersey General Assembly passed a bill that would force property insurers to cover business interruption losses arising from the COVID-19 virus sustained by small businesses (less than 100 employees working more than 25 hours a week); a copy of the bill can be found here.  Significantly, the bill would force coverage even where the insurer believes its policy should not apply.  In particular, the bill provides that property policies in effect as of March 9, 2020, will be construed as providing “coverage for business interruption due to global virus transmission or pandemic,” including COVID-19.  As written, the law would defeat any attempt by insurers to rely on exclusions that purport to preclude coverage for business income loss resulting from viruses, including the much-touted ISO CP 01 40 07 06 Virus or Bacteria Exclusion that insurer-side advocates have been championing as a purported bar to COVID-19 losses.  The bill would provide much-needed relief to the New Jersey policyholders that are enduring the worst of COVID-19’s economic impact with the least ability to withstand it.
Continue Reading The New Jersey General Assembly Passes Bill Ensuring Business Income Coverage for COVID-19 Losses

Social engineering attacks, particularly fraudulent transfers, are becoming one of the most utilized cyber scams.  As a result, there has been a flurry of litigation, and a patchwork of decisions, concerning coverage disputes over social engineering losses.  Most recently, the United States District Court for the Eastern District of Virginia found in Midlothian Enterprises, Inc. v. Owners Insurance Company, that a so-called “voluntary parting” exclusion provision in a crime policy should exclude coverage for a fraudulent transfer social engineering scheme.  The decision illustrates why policyholders must vigilantly analyze their insurance policies to ensure that their coverages keep pace with what has proven to be a rapidly evolving risk landscape.
Continue Reading Voluntary Parting Exclusion Bars Coverage for Social Engineering Scheme

A New York federal court denied AIG Specialty Insurance Company’s (“AIG”) motion to dismiss breach of contract and bad faith claims in a lawsuit filed by SS&C Technology Holdings, Inc. (“SS&C”). SS&C alleges that AIG breached its contract by failing to cover losses stemming from a cyber incident in which hackers duped the company out of millions of dollars.
Continue Reading Insurer Must Face Email Spoofing Lawsuit

The Seventh Circuit recently withdrew its controversial opinion that broadly interpreted an exclusion in Emmis Communications Corporation’s D&O policy, thereby barring coverage for losses in connection with claims of circumstances “as reported” under Emmis’ other insurance policy. The reversal, while very rare, was the correct result that alleviated concerns about the chilling effect the court’s broad reading of the exclusion may have on policyholders’ decisions to provide notice under all potentially applicable insurance policies.
Continue Reading Seventh Circuit Withdraws Decision, Affirms Coverage for Emmis Shareholder Lawsuit Despite Notices to Multiple Insurers

Notwithstanding the absence of a congressional war declaration since Japan bombed Pearl Harbor, Zurich American Insurance Company has invoked a “war exclusion” in an attempt to avoid covering Illinois snack food and beverage company Mondelez International Inc.’s expenses stemming from its exposure to the NotPetya virus in 2017. The litigation, Mondelez Intl. Inc. v. Zurich Am. Ins. Co., No. 2018-L-11008, 2018 WL 4941760 (Ill. Cir. Ct., Cook Cty., complaint filed Oct. 10, 2018), remains pending in an Illinois state court.
Continue Reading Zurich Invokes War Exclusion in Battle Over Coverage for NotPetya Attack

North Dakota’s highest court delivered a blow to Mid-Continent Casualty Company in Borsheim Builders Supply, Inc. v. Manger Insurance Co., ruling that a contract between a policyholder and general contractor fit the insured contract exception of contractual liability.
Continue Reading North Dakota Supreme Court Clarifies Breadth of Contractual Liability Coverage

In a victory for policyholders, a New York trial court rejected insurers’ summary judgment arguments, ruling that an insurer must establish a common “fact, circumstance, situation, transaction or event” underlying an investigation before it can rely on a prior and pending litigation and investigation (“PPLI”) exclusion based on that earlier investigation. The court further ruled that the insurer cannot base its coverage denial on a common “fact, circumstance, situation, transaction or event” learned during the investigation.
Continue Reading New York Court Rejects Insurers’ Use of Prior/Pending Investigation Exclusion; Requires Factual Predicate to Exist Before the Prior Investigation and not Arise From It

A Colorado district court held last week that a general liability insurer must defend a product disparagement claim despite a broadly-worded intellectual property exclusion in the policy. The court reached its ruling even though the alleged disparagement involved representations about patent infringement. In so holding, the court rejected the insurer’s attempt to deny coverage where the “crux of the dispute” fell within the policy’s personal injury coverage part and the insurer had failed to show that the underlying allegations “unequivocally” fell within the ambiguously worded exclusion.
Continue Reading District Court Unlocks Carrier’s Duty to Defend Key Maker’s Product Disparagement Claims