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In 2020, Americans faced a shortage of toilet paper. This year, companies face a shortage of microchips. Microchips are a crucial component in a growing number of electronic products, everything from smartphones to cars and household appliances. As the shortage trickles down the supply chain, downstream businesses are now unable to obtain the microchips or other components they need to make their products. This forced companies to slow or, in some cases, totally shut down their production lines until the supply of microchips can be restored. These slowdowns and closures have led to substantial losses of income for affected businesses. Fortunately, insurance coverage is likely available for these types of business income losses.…
Continue Reading Can’t Find Microchips? Insurance May Help Ease the Pain

On Wednesday, a federal judge in New York denied FM’s Rule 12(c) motion for judgment on the pleadings after finding the Contamination Exclusion in the Factory Mutual policy to be ambiguous as to whether it bars coverage for business interruption losses resulting from communicable disease.  The case is Thor Equities, LLC v. Factory Mutual Ins. Co., No. 20 Civ. 3380 (AT) (SDNY).  This is a critical decision under the Factory Mutual policy form, which is substantively the same as policies issued by Factory Mutual’s sister company, Affiliated FM Insurance Company.  Factory Mutual and Affiliated FM have maintained that the contamination coverages are “exceptions” to this exclusion, with the exclusion precluding coverage for communicable disease loss under other policy coverages.  But the ruling validates what policyholders have been arguing – that communicable disease “loss” is covered throughout the Factory Mutual policy, in addition to under the sublimited communicable disease emergency response coverages.
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Continue Reading Factory Mutual’s “Contamination” Exclusion Is Ambiguous; May Not Limit Coverage For COVID-19 Business Interruption Loss

The unprecedented impact of COVID-19 on the American economy has forced many businesses of all sizes and in all industries to seek some form of financial relief. Perhaps the most prominent source is the Coronavirus Aid, Relief, and Economic Security Act (commonly known as the CARES Act), which provides more than $2 trillion in assistance…

On May 26, 2020, a California Court of Appeals (4th District) issued its decision in Mosley et al. v. Pacific Specialty Ins. Co.  The case arose in the context of a marijuana-growing tenant who rerouted a home’s electrical system and caused an electrical fire.  The issue was whether the homeowner’s policy covered the loss.  The trial court granted the insurer’s motion for summary judgment and, in a divided decision, the Court of Appeals reversed in part.
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Continue Reading California Appellate Court Holds “Minimal Causal Connection” Satisfies Causation Requirement in All Risk Policies

Louisiana joins a growing list of states, including New Jersey, Massachusetts, Ohio, and New York that are considering legislation, here and here,  that would require insurance coverage for the business interruption losses caused by COVID-19.  We have discussed other legislative efforts here and here.  The Louisiana House and Senate have each put forth…

Following New Jersey, where similar legislation remains under informal discussion, lawmakers in Ohio, Massachusetts, and New York have now introduced legislation that would provide relief to small businesses for COVID-19 business interruption losses.  The legislation is conceptually identical to the legislation introduced in New Jersey, discussed here last week.  Although the New Jersey bill was…

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.
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Continue Reading The New Jersey General Assembly Passes Bill Ensuring Business Income Coverage for COVID-19 Losses

As crypto-asset losses continue to rise, the industry is taking steps to protect clients and investors through insurance. Crypto-exchange and custody provider, Gemini Trust Company, LLC (“Gemini”), recently launched its own captive insurance provider, Nakamoto, Ltd. Captive insurance is an alternative to self-insurance whereby a company creates a licensed insurance company to provide coverage for itself. According to a statement from Gemini, Nakamoto is “the world’s first captive to insure crypto custody” and allows Gemini “to increase its insurance capacity beyond the coverage currently available in the commercial insurance market” for cryptocurrency wallets not connected to the internet, commonly referred to as “cold storage.” According to Gemini, this move makes Nakamoto the world’s most insured crypto-asset cold storage solution, which signals an expectation of increased demand in the crypto market.
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Continue Reading Captive Insurance Offers Protection to Growing Crypto-Currency Industry

Last week, in an exciting moment, the U.S. House of Representatives, voted 321 to 103 in favor of H.R.1595, the Secure and Fair Enforcement Banking Act of 2019 (“SAFE Banking Act”). If enacted into law, the SAFE Banking Act, would provide financial institutions, including insurers, a safe harbor to do business with “cannabis-related legitimate businesses” in the United States. In particular, the act would protect insurers, independent agents, and brokers from criminal and civil liability when offering insurance coverage to state-legalized cannabis businesses. The SAFE Banking Act would grant the cannabis business community access to many of the financial services most companies take for granted, like electronic payment processing, employer-sponsored 401(k) accounts and small business loans.
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Continue Reading Insurers Have High Hopes After House Passes SAFE Banking Act