Whether a policyholder’s losses are “direct” or “indirect” can be coverage-determinative. Most financial institution bonds exclude “indirect” or “consequential” losses. A recent decision in Fed. Deposit Ins. Corp. v. Arch Ins. Co., No. CV C14-0545RSL, 2017 WL 5289547 (W.D. Wash. Nov. 13, 2017) addressed the issue of “direct” versus “indirect” losses in a dispute under a financial institution bond issued by Arch Insurance Company (Arch) to Washington Mutual Bank (WaMu). The court held that WaMu’s losses resulting from its purchase of fraudulent loans were “direct” losses, and that WaMu’s sale and contractual obligation to repurchase the fraudulent loans did not convert its losses from direct to indirect. Continue Reading WaMu’s Losses on Fraudulent Mortgages Are Covered; Not “Indirect” as Carrier Argued
An eye-popping settlement in Georgia serves as a cautionary tale for insurers who refuse to provide a straight answer when responding to a demand for policy limits and as a lesson for insureds dealing with recalcitrant insurers: Don’t just take “no” for an answer.
The Sports Litigation Alert has published an article written by Hunton & Williams insurance recovery attorneys Lorelie S. Masters, Michael S. Levine, and Tae Andrews. The article, entitled “Recent Catastrophic Storms Emphasize the Need for Event-Cancellation Insurance for Professional Sports Organizations,” originally ran in the October 13th issue of the Alert. In the article, Masters, Levine, and Andrews discuss the need for event-cancellation insurance for games and other events held in professional sports organizations’ stadiums.
A federal district court judge has dismissed one of a poultry farm’s claims for “remediation costs” against its insurer with prejudice, but allowed the other to proceed. In Rembrandt Enterprises, Inc. v. Illinois Union Insurance Company, Rembrandt brought suit against its insurer for losses it sustained after a bird flu epidemic broke out at its farms in 2015. Regulators ultimately ordered Rembrandt to quarantine its facilities and put down millions of birds, forcing Rembrandt to spend millions of dollars to purchase new chicks to repopulate its farms.
In the wake of the continued aftermath from Hurricane Irma, Georgia Tech and Central Florida have decided to cancel their game, scheduled for this upcoming Saturday in Orlando. The cancellation joins a long and growing list of games cancelled due to hurricanes in recent weeks. Last weekend alone, Florida State and Louisiana Monroe; Miami and Arkansas State; South Florida and Connecticut; and Florida and Northern Colorado all had to scratch their contests due to the impending arrival of Hurricane Irma. The week before, Hurricane Harvey forced UTSA and Houston to cancel their game, while BYU and LSU had to relocate their game from Houston to New Orleans.
Update: A federal district-court judge has denied a group of insurers’ motion to dismiss Coca-Cola’s claim for attorneys’ fees in a cross-border insurance coverage dispute.
Hunton & Williams Insurance Recovery partner, Michael Levine, was quoted in an August 29, 2017 article appearing in Business Insurance, regarding the rapid increase in lawsuits, and insurance issues, surrounding concussions in high school and college sports. Among other things, the article discusses a coverage lawsuit filed by Great American Assurance Company against Conference USA in federal court in Dallas, Texas. In the lawsuit, the insurer alleges that its policy did not afford coverage for football concussion injuries because the policy included a “limited event coverage endorsement,” which limited bodily injury coverage to a list of sports that apparently did not include football. As Mr. Levine noted, the use of policy endorsements to limit coverage for bodily injury claims to those arising in some sports, but not when they arise in football – where injuries are most likely to occur – is troubling. Football is where the coverage is needed most; yet the insurer apparently removed it using a policy endorsement that purports to afford coverage, not restrict it. As Mr. Levine notes, cases like this underscore the need for policyholders to carefully review all policy endorsements to ensure that the policy when read as a whole actually provides the coverages that are needed the most.
In this coverage dispute, Coca-Cola claims that its insurers wrongfully refused to reimburse nearly $1 million in business interruption losses it suffered at two bottling plants in Nepal resulting from a blockade of the Nepal-India border.
A federal judge has ordered an insurer to show cause why he should refrain from dismissing the insurer’s case against an NCAA football conference over the availability of insurance for concussion-related lawsuits. Back in May, Great American Assurance Company filed a complaint against Conference USA, seeking a declaration that it need not defend or indemnify the conference against a lawsuit brought by a former football player. In the underlying lawsuit, the former player alleged that he suffered neurodegenerative disorders and diseases, including chronic traumatic encephalopathy (“CTE”), Alzheimer’s disease, memory loss, mood swings, headaches, and anxiety stemming from repeated concussive brain impacts he sustained while playing for the University of Louisville. In the coverage action, Great American argues that a Limited Event Coverage endorsement added to Conference USA’s policies did not include football as a covered event and therefore the policies do not provide coverage for “bodily injury” arising from football.
In recent months, insurers have increasingly used New York rescission law as a means to not only deny coverage for specific claims, but also to void any protection an insurance policy may provide for other losses down the road. For example, H.J. Heinz Company recently found itself without coverage for a $30 million recall after its insurer rescinded its policy based on a misrepresentation in Heinz’s insurance application. In an article for FC&S Legal, Syed S. Ahmad, Tae Andrews, and Kelly Oeltjenbruns analyze recent rescission claims and illustrate the dangerous exposure—and high price tag—that can accompany misstatements or non-disclosures, even unintentional ones, when procuring coverage. The article, available here, tackles the issue of minimizing risks associated with recession claims and shares helpful tips for policyholders.