Posts in California Insurance Law Commentary.
An Interview With Peter Selvin: Dispute Resolution 

Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes in major jurisdictions around the world. This interview discusses dispute resolution in the United States. 

1. What are the most popular dispute resolution methods for clients in your jurisdiction? Is there a clear preference for a particular method in commercial disputes? What is the balance between litigation and arbitration?

The principal alternatives to court litigation are arbitration and mediation.

As to arbitration, there has been considerable appellate ...

Rulings Disagree: Is Loss of Use of a Leasehold 'Property Damage'?

Is a party’s loss of use of a leasehold or other interest in real property considered “property damage” within the meaning of a comprehensive general liability (CGL) policy? Two recent cases go in different directions on this point.

The starting point is the CGL’s Coverage A which typically provides coverage for “bodily injury and property damage liability”. In turn, “property damage” is typically defined to include the “loss of use of tangible property that is not physically injured”. The key question addressed by the following cases is whether a party’s ...

Courts Wrestle With Coverage of Cyber-Related Claims

Cyber insurance is designed to fill an enterprise's coverage gaps, where coverage under other forms of in­surance may not be triggered by these kind of losses. At the same time, and because cyber insurance is a relatively new prod­uct, there are few reported cases involving coverage disputes. Importantly, those cases highlight the need for policyholders to scru­tinize the menu of available coverage grants in any proposed cyber insurance policy.

While to date there has been relative­ly few reported cases involving cyber in­surance coverage disputes, there has been much ...

Insureds Seek Coverage For Breaches Under Traditional Policies

There have been a number of high-profile insurance coverage cases arising from losses due to cyber fraud – especially data breaches, "spoofing'' and payment instruction fraud. While cyber insurance is specifically designed to address these kinds of losses, insureds covered under traditional insurance products such as commercial general liability, errors and omission and crime poli­cies have continued to seek coverage under those policies for cyber-related losses.

For example, in a case filed on Nov. 15, Target seeks recovery for its cyber fraud-related losses from its ...

Appellate Rulings Depart From Treaty Interpretation Norms 

International treaties and conventions such as the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (“the Hague Service Convention”), and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6998 (“the New York Convention”) are considered to be federal law and hence prevail over inconsistent state common law. U.S. Const., art. VI, cl. 2: American Ins. Assoc. v. Garamendi, 539 U.S. 396 (2003). For ...

Can Companies Be Liable If Third-Party Contractors Suffer Data Breaches?

The California Consumer Privacy Act became effective on Jan. 1. Included among its provisions is the grant of a private right of action on behalf of any consumer “whose nonencrypted and nonredacted personal information … is subject to an unauthorized access and exfiltration, theft or disclosure as a result of the business’s violation of the duty to implement and maintain reasonable security procedures and practices.” Civil Code Section 1798.150.

An interesting question is whether a company may face liability under this statute (or based on common law theories) where one ...

Ruling May Shed Light On Physical Losses and COVID-19

In the context of the numerous lawsuits have recently filed by policyholders seeking compensation for lost business income occasioned by the pending pandemic, a key issue will be whether those policyholders have suffered “direct physical loss or damage” to their businesses. A case decided earlier this year (albeit in a different factual context) sheds some light on whether this requirement can be satisfied in the present circumstances.

In Nat’l Ink & Stitch, LLC vs. State Auto Prop. & Cas. Ins. Co.,  2020 WL 374460 (D. Md. Jan. 23, 2020), plaintiff policyholder was the victim of ...

Exceptions to Insurers’ Right to Rescind for Inaccurate Information

Life insurers faced with a claim for benefits within two years after policy inception will often conduct a post-claim investigation to ascertain whether the statements made by an applicant about his or her medical history and health habits were accurate. In those cases where an insurer determines that those statements were inaccurate, the insurer may seek to rescind the policy.

But there are exceptions to the principle that inaccurate information in an application automatically gives the insurer an absolute right to rescind. Thus, while the general rule is that an insurer may ...

Business Interruption Insurance Coverage: A Guide for Restaurants

Restaurants whose operations have been shut down due to the coronavirus crisis are looking to their business interruption or business income insurance policies for relief, and have found resistance from insurance companies paying these claims.

As a general matter, in order to trigger coverage those policies require (1) direct physical loss or damage; (2) to covered property: (3) arising from a covered peril; and (4) resulting in the suspension of the business’ operations.

In cases where coverage is triggered, an insured business may be entitled to recover the net income it would ...

Business Interruption Insurance Coverage in the Age of Coronavirus

Businesses whose operations have been shut down due to the coronavirus crisis rightly look to their business interruption or business income policies for relief. As a general matter, in order to trigger coverage those policies require (1) direct physical loss or damage; (2) to covered property: (3) arising from a covered peril; and (4) resulting in the suspension of the business’ operations.

In cases where coverage is triggered, an insured business may be entitled to recover the net income it would have received but for the interruption and its operating expenses during the time ...

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