Category: Property Damage and Business Interruption

Business Insurance: Perspectives: ‘Causation’ Key in Hurricane Ian Coverage Disputes

Business Insurance, September 29, 2022

Jared Zola and Kyle P. Brinkman ●

Hurricane Ian and its aftermath are wreaking havoc in the Caribbean and Florida. While the situation is developing rapidly, Ian has moved through Florida after initially making U.S. landfall as one of southwest Florida’s most intense hurricanes in history. It produced catastrophic storm surge exceeding 10 feet in certain locations, destructive winds packing maximum sustained winds of more than 140 mph and relentless rainfall.

The economic impact of the storm will be felt by businesses and individuals across Florida and the southeastern United States for some time. Many businesses have and will continue to suffer direct damage to property and lose income due to the resulting interruption of their operations, but many other businesses are also likely to lose substantial income due to evacuation orders, disruption of utility service and disruption of the operations of key suppliers or customers. Florida is home to many businesses in the real estate, retail, hospitality, senior living, distribution and entertainment sectors that may face significant exposures to their operations.

Businesses should examine their insurance policies closely and not indiscriminately accept coverage denials premised on flood exclusions, or other excluded perils.

Read more on our website.

The War Exclusion and State-Sponsored Cyberattacks: The Battle Is Won but Is the War Over?

James S. Carter

Sovereign nation states have been behind (or suspected of being behind) some of the worst cyberattacks. When a cyberattack has state involvement, the inevitable question is whether it constitutes an act of war. The answer can have a profound impact on insurance coverage because virtually every insurance policy has a war exclusion. In a case of first impression, a New Jersey trial court recently addressed whether a war exclusion applied to losses arising from the NotPetya cyberattack in 2017.[1]

The United States and several other countries contended that Russia was responsible for launching the NotPetya attack to destabilize Ukraine. NotPetya quickly spread beyond its intended targets in Ukraine, causing collateral damage to millions of computers worldwide. Among the many impacted organizations was the pharmaceutical company, Merck & Co. Inc., which suffered damage to 40,000 of its computers, costing it more than $1.4 billion.

Continue reading “The War Exclusion and State-Sponsored Cyberattacks: The Battle Is Won but Is the War Over?”

Resources for Hurricane Ida

Alan Rubin , John E. Heintz, and Jared Zola







In the aftermath of Hurricane Ida’s historic landfall on the Gulf Coast, and the subsequent destruction in several states in the south and along the Eastern seaboard, damage to life and property is still being assessed.

Hundreds of thousands of Louisiana residents are still without power, hampering rescue and recovery and endangering the health and welfare of the local population, including hospitals crowded with COVID-19 patients.

New York City subway and rail systems have been halted due to flooding, and public transportation and infrastructure has been impacted up and down the East Coast. Tornado damage and record flooding have been reported in Virginia, Maryland, Pennsylvania, New Jersey, Delaware, New York and New England.

Blank Rome’s interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has developed the following resources for those in the path of the storm, or with business interests in the affected regions, which we encourage you to share with your contacts via e-mail and/or social media:

Please share this information with anyone who has been impacted by the storm. These resources and many more can be found at our website at blankrome.com/SWERT. Our team stands ready to provide assistance on FEMA and insurance issues to individuals and businesses who are preparing for, or are impacted by, this events.

For additional information, please contact:

Alan Rubin, Co-Chair, Severe Weather Emergency Recovery Team
John E. Heintz, Co-Chair, Severe Weather Emergency Recovery Team
Jared Zola, Severe Weather Emergency Recovery Team

Winter Storm Resources

Alan Rubin, Linda Kornfeld, and John E. Heintz







In the wake of two major winter storms and continuing frigid temperatures across much of the Lower 48, states of emergency have been declared for Texas, Oklahoma, and Louisiana, and state governments across the southeast United States are operating under their own emergency declarations.

These events are forcing evacuations to emergency shelters, and first responders are overwhelmed across several states. The storms’ impacts will be widespread in the days and weeks to come, including challenges involving property damage, business interruption, and travel disruption for a large part of the country.

As power is restored, it will be important to contact the Federal Emergency Management Agency (“FEMA”) and other state and local resources for assistance. In Texas, experts say the storms that left millions without power and water this week are expected to generate the most insurance claims stemming from a single event in state history.

Blank Rome’s interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has developed the following resources for those affected by the storms, or with business interests in the affected regions, which we encourage you to share with your contacts via e-mail and/or social media:

Please share this information with anyone who has been impacted by the storms. These resources and many more can be found at our website at blankrome.com/SWERT. Our team stands ready to provide assistance on FEMA and insurance issues to individuals and businesses who are preparing for, or are impacted by, these events.

For additional information, please contact:

Alan Rubin, Principal, Blank Rome Government Relations
Linda Kornfeld, Partner and Vice Chair, Insurance Recovery Practice
John E. Heintz, Partner, Insurance Recovery Practice

Top 10 Tips for Insurance Policyholders (Fall 2020)

John A. Gibbons

1. Assess the policies you have and reassess the policies you should buy in the future.

2020 has brought a host of unwelcome events: pandemics, fires, floods, cyberattacks, financial failures, etc. An insurance program tailored to the risks and business opportunities of your specific company can provide for recovery during dark times, and specialized insurance products can help you safely expand your business. It is time to consider how tailored your current program is, and how you can better align insurance assets to your business in the future.

2. Use indemnities and additional insured status to expand your insurance assets.

Everyday business for many companies involves the use of terms and conditions; sales or services orders; and leases that address indemnification, minimum insurance requirements, and additional insured status. A well-thought-out use of additional insured status can allow you to leverage the insurance assets and insurance premiums of counterparties.

3. Ensure that you get the full benefits of your liability and property insurances.

Insurance policies provide many coverages, policy limits, and extensions that may not be readily apparent, and all of which may provide substantial financial assistance in the event of a loss. In addition, specialized forms of insurance, additional riders, or policy wording upgrades can better tailor policies to your specific business attributes. Use the renewal season to explore your options.

4. Avoid “conventional wisdom” about what is or is not covered.

With insurance, words matter! In fact, the wording determines the outcome. Do not accept statements about what others think a policy does or should cover. For example, claims for intentional wrongdoing and punitive damages often are covered by liability policies. Likewise, losses from your supply chain may be covered under your property policies. Non-payments of debts and breaches of contractual promises are covered under various forms of policies. Let the words lead you to coverage.

5. Give notice once you know of a loss or claim.

Typically, notice should be given soon after a loss, claim, or lawsuit, but remember that a delay in giving notice will not necessarily result in the loss of coverage. Consider the potentially applicable insurance assets that may apply and give notice.

6. Insist your insurers fully investigate claims.

Insurers have a duty to investigate claims thoroughly and must look for facts that support coverage.

7. Watch what you say.

Communications with an insurer or an insurance broker regarding a lawsuit against you or a loss are not necessarily privileged.

8. Don’t take “no” for an answer.

A reservation of rights is almost always the start of the insurance claim process, and a denial should not dissuade you from pursuing your rights. Even if coverage is not obvious at first, it may be there, if you look in the right places.

9. Document, document, document your claim.

Whether it is a first-party loss or a liability suit against you, write to your insurer and document your submission of information and materials. Require your insurer to respond in writing and to explain its position. A well-documented chain of correspondence narrows disputes, helps to limit shifting of insurer positions, or helps to make such shifting very apparent if your claim proceeds to formal enforcement measures.

10. Insist that your insurers honor their duties.

In the liability context insurers frequently owe broad duties to defend with independent, conflict-free counsel, even if uncovered claims dominate the lawsuit against you. In property insurance contexts, insurers have duties to help you on an expedited emergency basis to protect your interests immediately after a loss. It is important to hold insurers to their duties to protect you immediately upon assertion of liability or after a loss—delay only benefits insurers.

 

Wildfire and Hurricane Resources

Linda Kornfeld, John E. Heintz, and Alan Rubin







As the 2020 severe weather season continues unabated, our thoughts are with those dealing with multiple historic wildfires in the western states and on the West Coast, as well as with those awaiting the landfall of Hurricane Sally in the Gulf Coast tomorrow. The long-duration hurricane is expected to cause historic flooding and extremely dangerous storm surge. In addition, the National Hurricane Center has issued advisories on five tropical cyclones over the Atlantic basin; this ties the record for the greatest number of tropical cyclones in that basin at one time.

These unprecedented events are forcing evacuations, and may cause widespread damage, business interruption, and travel disruption for a large part of the country for days and weeks to come.

Blank Rome’s interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has developed the following resources for those in the path of the wildfires and the storms, or with business interests in the affected regions, which we encourage you to share with your contacts via e-mail and/or social media:

Written by attorneys in our national Insurance Recovery practice who work with policyholder clients in the wake of property damage and business interruption losses.

Developed by Alan Rubin of Blank Rome Government Relations, who has years of experience working with FEMA in the aftermath of disasters.

Please share this information with anyone who has been impacted by the fires. These resources and many more can be found at our website at blankrome.com/SWERT. Our team stands ready to provide assistance on FEMA and insurance issues to individuals and businesses who are preparing for, or are impacted by, these events.

For additional information, please contact:

Linda Kornfeld, Partner and Vice Chair, Insurance Recovery Practice
John E. Heintz, Partner, Insurance Recovery Practice
Alan Rubin, Principal, Blank Rome Government Relations

CANCELED: Guidance for Policyholders on Event Cancellation Insurance in the Wake of COVID-19

Dominique A. Meyer

Across the globe, governments and public health officials are banning large gatherings and imploring citizens to practice “social distancing” in order to slow and prevent the spread of the coronavirus outbreak, or “COVID-19.” As a result, festivals, sporting events, conferences, and community celebrations are being canceled or postponed, leaving event organizers of all sizes—from major production companies, to would-be newly-weds—wondering how to recoup their substantial losses.

The pandemic has led to an unprecedented number of high-profile event cancellations and the potential for billions of dollars in lost income and other damages to the entertainment and sports industries. Just last week, concert giants Live Nation and AEG Presents suspended all tour engagements in North America, and world-famous gatherings like the Coachella Valley Music Festival and Stagecoach Music Festival were postponed until October. The threat of the virus has also taken its toll on professional sports—both the National Basketball Association and the National Hockey League suspended the remainder of their 2019–2020 seasons, and the National Collegiate Athletic Association canceled its March Madness tournament altogether. Not even “America’s favorite pastime” has been immune from the effects of the virus—Major League Baseball postponed the start of its 2020 season indefinitely. The economic cost of these cancellations is certain to be substantial. Continue reading “CANCELED: Guidance for Policyholders on Event Cancellation Insurance in the Wake of COVID-19”

California Corner: Resources for Those Impacted by California Wildfires

Linda Kornfeld, John E. Heintz, Alan Rubin

Communities and businesses throughout California are dealing with the serious, and for some, catastrophic effects of historic wildfires. The fires have devastated homes and businesses across a large swath of the state, and while their full impact is not yet known, they are sure to cause long-term disruption to individuals and families, residential areas, businesses and the economic health of the entire region. Our thoughts are with those affected by these events, and our interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has prepared two resources that are immediately helpful to those in the affected areas: Continue reading “California Corner: Resources for Those Impacted by California Wildfires”

Pay Attention to Policy Language in a Hardening Insurance Market

Ian Ascher[1] and Jared Zola

The insurance market has proven to be a difficult environment for buyers in 2019. The long tenure of the soft insurance market cycle is changing, and is presenting challenges with pricing, capacity, and sustainability of favorable coverage terms. Coming out of difficult natural catastrophe years in 2017 and 2018, the property insurance market took a sharp turn to protect insurers’ bottom lines. While hardening of the property insurance market was expected, the broader casualty market has taken this opportunity to drive corrective action on their portfolios as well, leaving insurance buyers with little leverage.

How Insurers Are Reacting to the Market Shift

Insurers are approaching the market shift with different strategies, some focused on rate increases, while others are focused on restricting terms, or both. While individual loss experience still plays a role in renewal outcomes, there appears to be more of a portfolio-level push on rate and terms regardless of individual quality of risk factors for any given policyholder. In this environment, stricter control over capacity deployment leads to less competition, which may force the buyer into tough decisions regarding what utility insurance provides for its organization. The guarantee of comprehensive coverage at a fair price becomes harder to balance in a setting where definitively having both is less than certain. Continue reading “Pay Attention to Policy Language in a Hardening Insurance Market”

Hurricane Harvey Insurance Claim Gets Twisted

Jared Zola and Daniel R. Belzil

Almost two years after Hurricane Harvey devastated parts of Texas and Louisiana, Central America, and several Caribbean islands, the coverage issues arising out of it are far from resolved. The court decisions addressing these coverage issues have not all been positive from the insured’s perspective. In particular, one recent decision in the United States District Court for the Southern District of Texas, Pan Am Equities, Inc. v. Lexington Insurance Company, No. H-18-2937 (May 2, 2019) (“Pan Am Equities”), should give insureds in Texas and elsewhere pause heading into the 2019 Hurricane Season.

The Dispute—Which Deductible Applies?

The insured in that case owned several commercial properties in Houston, including an apartment building and parking garage that sustained more than $6.7 million in flood damage as a result of Hurricane Harvey. Its properties were insured by a commercial property insurance policy that provided “Flood” coverages as well as coverages for loss caused by the peril of “Windstorm and Hail.” Continue reading “Hurricane Harvey Insurance Claim Gets Twisted”

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