Attorneys from Hunton Andrews Kurth LLP’s Insurance Coverage practice group contributed to the Firm’s Recall Roundup by weighing in on a recently-filed product contamination insurance coverage dispute, Lake Country Foods, Inc. v. Houston Casualty Co., No. 18-CV-734 (E.D. Wis. filed May 11, 2018), where Lake Country Foods seeks an order permitting it to keep $1.2 million already paid by its insurer and requiring the insurer to provide coverage for the a product contamination claim involving alleged salmonella contamination of powdered whey protein processed in one of LCF’s facilities.

The Supreme Court of California has ruled that a general liability insurer must defend an employer against allegations of employee misconduct, reinforcing the breadth of (1) what constitutes an “occurrence” under an employer’s commercial general liability (CGL) policy and (2) the duty to defend regarding claims for negligent hiring, retention and supervision. The opinion in Liberty Surplus Ins. Corp. v. Ledesma & Meyer Constr. Co., Inc. can be found here.

Continue Reading California Supreme Court Rules That General Liability Insurer Must Defend Employer Against Employee Misconduct Allegations

The construction industry is no stranger to insuring its projects against the risks of physical and natural disasters. Policies purchased to cover these risks, however, often are not broad enough to reach cyber threats, which can be just as damaging and costly as a physical disaster. During the past decade, hacks have targeted the data held by several high profile companies, including Target Corp., Sony Corp., Equifax Inc. and Yahoo Inc.  So far, the construction industry has not yet been at the center of one of these attacks.  Still, builders are no less susceptible to these risks than any other industry, especially given that these companies often possess sensitive data related to buildings and projects.

Continue Reading Construction Industry May Be At Risk For Uncovered Losses Due To Cyber Attacks

There was nothing ambiguous in former U.S. Supreme Court Justice David Souter’s ruling in AIG Property Cas. Co. v. Cosby, No. 17-1505 (1st Cir. June 7, 2018), where, sitting by designation, Justice Souter ruled that AIG Property and Casualty Co. (“AIG”) must defend Bill Cosby in suits brought by eight women alleging that Cosby defamed them after they accused him of sexual misconduct.  Cosby held two insurance policies issued by AIG:  a homeowner’s policy and a personal excess liability policy (the “umbrella policy””).  Under each policy, AIG has a duty to “pay damages [Cosby] is legally obligated to pay [due to] personal injury or property damage caused by an occurrence covered[] by this policy anywhere in the world . . . .”  Both policies define “personal injury” to include “[d]efamation” and require AIG to pay the cost of defending against suits seeking covered damages.  Both policies also contain so-called “sexual misconduct” exclusions.  The homeowner’s policy’s exclusion bars coverage for liability or defense costs “arising out of any actual, alleged[,] or threatened . . . [s]exual molestation, misconduct or harassment[,] . . . or . . . [s]exual, physical or mental abuse.”  The umbrella policy contained similar wording.  However, that policy also contained another “sexual misconduct” exclusion under the “Limited Charitable Board Directors and Trustees Liability” coverage part.  That exclusion applied more broadly to claims for damages “[a]rising out of, or in any way involving, directly or indirectly, any alleged sexual misconduct” (emphasis added).

Continue Reading 1st Cir. and Former SCOTUS Justice Find Ambiguous “Arising Out Of” Requires Cosby Defense

Phishing attacks are on the rise, and they are targeting Microsoft’s flagship cloud-based products. According to a report by specialist data breach insurer Beazley, hackers have increased attempted and successful attacks on Microsoft Office 365, especially systems used by financial, health care, and professional services organizations. These attacks are deceptively simple, relying on employees and contractors falling for fake, yet well disguised, Microsoft communications, like a HelpDesk message or a survey. Once employees or contractors interact with these communications, they are prompted to enter personal information, which allows the hackers access to confidential information. This information allows the intruders to steal customer data, initiate bank transfers, and gain access to additional employees’ accounts. Microsoft 365’s default settings compound the dangers of these attacks because they decrease the ability to track how many accounts are compromised.

Continue Reading Insurance Catch Of The Day: Phishing Attacks On The Rise

Darshan Karboj described a grisly scene during an October 2016 wedding. She alleges that, during the festivities, a photography drone operated by wedding photographers of Hollycal Production Inc. hit her in the head, causing major injuries, including the loss of an eye. Even though it had some insurance, Hollycal might be on the hook for the bills from this unfortunate incident.

Continue Reading Another Example Of Why We Keep Droning On About Ensuring Adequate Coverage

The California Court of Appeal has affirmed that Lloyd’s of London and other insurers cannot escape coverage for $132.5 million in settlements arising from the 2008 Chatsworth train crash, in which 25 individuals were killed and more than 130 injured. In Those Certain Underwriters at Lloyd’s, London v. Connex Railroad LLC, No. B276373, 2018 WL 1871278 (Cal. App. 2d Dist. Apr. 19, 2018), the Second District Court of Appeal affirmed the Los Angeles Superior Court’s ruling, discussed in our November 9, 2015 blog post, that the insurers were obligated to indemnify Connex Railroad for the settlements.

Continue Reading California Appellate Court Affirms Coverage for $132 Million in Settlements in “Texting” Train Crash Case


Drug-maker Pfizer and one of its excess insurers, North River, are in the middle of a contentious dispute regarding the proper forum for their coverage dispute over directors and officers liability insurance following both parties’ race to the courthouse to file competing lawsuits in 2015. Pfizer argues that its own preferred forum of Delaware (where Pfizer is incorporated) is correct, while North River counters that New York (where Pfizer’s headquarters and its broker are located) is the proper forum. The dispute, which involves competing motions in Delaware and New York courts, highlights the importance of both the timing and location of forum selection in litigating insurance coverage disputes.

Continue Reading Insurer’s “Forum Shopping” in Pfizer Securities Coverage Dispute Provides Most Recent Example of Venue Battle

To follow up on our post last week recapping a recent Ninth Circuit decision regarding coverage for losses from a social engineering scheme, federal appellate courts continue to examine the coverage available for such losses. As Law360 highlighted, and as we previously reported (here, here, here, and here), appeals are pending in the Second, Sixth, and Eleventh circuits. These cases, some of which involve lower court findings of coverage while others do not, show that coverage for social engineering scams remains hotly contested, which means policyholders must carefully consider such coverage when purchasing insurance. While more and more insurers have introduced endorsements designed to specifically address social engineering schemes, as Hunton attorney Patrick McDermott recently pointed out in a separate Law360 piece, one issue policyholders ought to consider is “whether an endorsement providing coverage for losses resulting from social engineering schemes actually narrows the coverage available for those losses.”